Item 1. Financial Statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED BALANCE SHEETS
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
(Unaudited) | | |
| |
Assets: | |
| | |
| |
Current Assets: | |
| | |
| |
Cash | |
$ | 5,864 | | |
$ | 37,743 | |
Prepaid expenses | |
| 405,365 | | |
| 33,454 | |
Total current assets | |
| 411,229 | | |
| 71,197 | |
Cash and investments held in Trust Account | |
| 46,851,428 | | |
| 314,517,268 | |
Total Assets | |
$ | 47,262,657 | | |
$ | 314,588,465 | |
| |
| | | |
| | |
Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 1,750,704 | | |
$ | 973,996 | |
Due to related party | |
| 30,000 | | |
| — | |
Promissory notes – related party | |
| 227,208 | | |
| 258,780 | |
Convertible Promissory Note - Related Party | |
| 741,688 | | |
| — | |
Total current liabilities | |
| 2,749,600 | | |
| 1,232,776 | |
Deferred underwriting fee | |
| 10,850,000 | | |
| 10,850,000 | |
Warrant liability | |
| 1,488,360 | | |
| 474,000 | |
Total Liabilities | |
| 15,087,960 | | |
| 12,556,776 | |
Commitments and Contingencies (Note 6) | |
| | | |
| | |
Class A ordinary shares subject to possible redemption, 4,493,843 and 31,000,000 shares at redemption value at approximately $10.43 and $10.15 per share as of March 31, 2023 and December 31, 2022, respectively | |
| 46,851,428 | | |
| 314,517,268 | |
Shareholders’ Deficit: | |
| | | |
| | |
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of March 31, 2023 and December 31, 2022 | |
| — | | |
| — | |
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; no shares issued and outstanding (excluding 4,493,843 and 31,000,000 shares subject to possible redemption) as of March 31, 2023 and December 31, 2022, respectively | |
| — | | |
| — | |
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 7,750,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | |
| 775 | | |
| 775 | |
Additional paid-in capital | |
| — | | |
| — | |
Accumulated deficit | |
| (14,677,506 | ) | |
| (12,486,354 | ) |
Total Shareholders’ Deficit | |
| (14,676,731 | ) | |
| (12,485,579 | ) |
Total Liabilities, Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | |
$ | 47,262,657 | | |
$ | 314,588,465 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
For the Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Formation and operating costs | |
$ | 1,315,104 | | |
$ | 231,395 | |
Loss from Operations | |
| (1,315,104 | ) | |
| (231,395 | ) |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Interest earned on investments held in Trust Account | |
| 1,369,906 | | |
| 4,332 | |
Change in fair value of convertible promissory note – related party | |
| (27,267 | ) | |
| — | |
Change in fair value of warrant liability | |
| (1,014,360 | ) | |
| 4,743,398 | |
Total other income, net | |
| 328,279 | | |
| 4,747,730 | |
| |
| | | |
| | |
Net (loss) income | |
$ | (986,825 | ) | |
$ | 4,516,335 | |
| |
| | | |
| | |
Weighted average shares outstanding, Class A ordinary shares | |
| 12,151,177 | | |
| 31,000,000 | |
Basic and diluted net (loss) income per share, Class A ordinary shares | |
$ | (0.05 | ) | |
$ | 0.12 | |
Weighted average shares outstanding, Class B ordinary shares | |
| 7,750,000 | | |
| 7,750,000 | |
Basic and diluted net (loss) income per share, Class B ordinary shares | |
$ | (0.05 | ) | |
$ | 0.12 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2023
| |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of January 1, 2023 | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (12,486,354 | ) | |
$ | (12,485,579 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Proceeds in excess of Fair Value of Convertible Note on issuance | |
| — | | |
| — | | |
| 615,579 | | |
| — | | |
| 615,579 | |
Accretion of Class A ordinary shares subject to redemption | |
| — | | |
| — | | |
| (615,579 | ) | |
| (1,204,327 | ) | |
| (1,819,906 | ) |
Net loss | |
| — | | |
| — | | |
| — | | |
| (986,825 | ) | |
| (986,825 | ) |
Balance as of March 31, 2023 (unaudited) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (14,677,506 | ) | |
$ | (14,676,731 | ) |
FOR THE THREE MONTHS ENDED MARCH 31, 2022
| |
Class B Ordinary Shares | | |
Additional Paid-in | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
Balance as of January 1, 2022 | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (20,845,365 | ) | |
$ | (20,844,590 | ) |
Net income | |
| — | | |
| — | | |
| — | | |
| 4,516,335 | | |
| 4,516,335 | |
Balance as of March 31, 2022 (unaudited) | |
| 7,750,000 | | |
$ | 775 | | |
$ | — | | |
$ | (16,329,030 | ) | |
$ | (16,328,255 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
For the Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net (loss) income | |
$ | (986,825 | ) | |
$ | 4,516,335 | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |
| | | |
| | |
Interest earned on investments held in Trust Account | |
| (1,369,906 | ) | |
| (4,332 | ) |
Change in fair value of warrant liability | |
| 1,014,360 | | |
| (4,743,398 | ) |
Change in fair value of convertible promissory note – related party | |
| 27,267 | | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| (371,911 | ) | |
| 65,033 | |
Accrued expenses | |
| 776,708 | | |
| 14,918 | |
Due to related party | |
| 30,000 | | |
| — | |
Prepaid expenses - noncurrent | |
| — | | |
| 26,396 | |
Net cash used in operating activities | |
| (880,307 | ) | |
| (125,048 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Investment of cash in Trust Account | |
| (450,000 | ) | |
| — | |
Cash withdrawn from Trust Account in connection with redemption | |
| 269,485,746 | | |
| — | |
Net cash provided by investing activities | |
| 269,035,746 | | |
| — | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Payments on promissory note to related party | |
| (31,572 | ) | |
| — | |
Proceeds from convertible promissory note to related party | |
| 1,330,000 | | |
| — | |
Redemption of ordinary shares | |
| (269,485,746 | ) | |
| — | |
Net cash used in financing activities | |
| (268,187,318 | ) | |
| — | |
| |
| | | |
| | |
Net change in cash | |
| (31,879 | ) | |
| (125,048 | ) |
Cash, beginning of the period | |
| 37,743 | | |
| 223,378 | |
Cash, end of the period | |
$ | 5,864 | | |
$ | 98,331 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
CONSTELLATION ACQUISITION CORP I
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Constellation Acquisition Corp I (the “Company”)
is a newly organized blank check company incorporated in Cayman Islands on November 20, 2020. The Company was formed for the purpose of
effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses (“Business Combination”).
As of March 31, 2023, the Company had not commenced
any operations. All activity through March 31, 2023 relates to the Company’s formation and the Initial Public Offering (“IPO”)
which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues
until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest
income from the proceeds derived from the IPO.
The registration statement for the Company’s
IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on January 26, 2021 (the “Effective
Date”). On January 29, 2021, the Company consummated the IPO of 31,000,000 units (the “Units” and, with
respect to the shares of Class A ordinary shares included in the Units sold, the “Public Shares”), including 1,000,000 Units
issued pursuant to the partial exercise of the underwriters’ over-allotment option, at $10.00 per Unit, generating gross proceeds
of $310,000,000, which is discussed in Note 3. Each Unit consists of one Class A ordinary share, and one-third of one redeemable warrant
to purchase one Class A ordinary share at a price of $11.50 per whole share.
Simultaneously with the closing of the IPO,
the Company consummated the sale of 5,466,667 private placement warrants (the “Private Placement Warrants”),
at a price of $1.50 per Private Placement Warrant, in a private placement to certain affiliates of the Company’s sponsor,
Constellation sponsor GmbH & Co. KG, a German limited partnership (the “Sponsor”), generating gross proceeds of
$8,200,000, which is discussed in Note 4.
Transaction costs of the IPO amounted to
$17,586,741 consisting of $6,200,000 of underwriting fees, $10,850,000 of deferred underwriting fees (the "Deferred Underwriting Fees"), and
$536,741 of other offering costs.
Following the closing of the IPO on January
29, 2021, $310,000,000 ($10.00 per Unit) from the net offering proceeds of the sale of the Units in the IPO and the sale
of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the
Trust Account that may be released to the Company to pay the income taxes, if any, the Company’s amended and restated
memorandum and articles of association will provide that the proceeds from the IPO and the sale of the Private Placement Warrants
held in the Trust Account will not be released from the Trust Account (1) to the Company, until the completion of the initial
Business Combination, or (2) to the public shareholders, until the earliest of (a) the completion of the initial Business
Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem,
subject to the limitations, (b) the redemption of any Public Shares properly tendered in connection with a (A) shareholder vote to
amend the amended and restated memorandum and articles of association to modify the substance or timing of the Company’s
obligation to provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial
Business Combination or to redeem 100% of the Public Shares if the Company does not complete the initial Business Combination
by the date by which we are required to consummate a Business Combination pursuant to the Company’s amended and restated
memorandum and articles of association (such date, the “Termination Date” and, such period, the “Combination
Period”), or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares or
pre-initial Business Combination activity, and (c) the redemption of the Public Shares if the Company has not consummated the
initial Business Combination within the Combination Period. Public shareholders who redeem their Class A ordinary shares in
connection with a shareholder vote described in clause (b) in the preceding sentence shall not be entitled to funds from the Trust
Account upon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an
initial Business Combination within the Combination Period, with respect to such Class A ordinary shares so redeemed.
The proceeds deposited in the Trust Account could
become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the public shareholders.
The Company will provide its public shareholders
with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either
(i) in connection with a shareholder meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer
will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion
of the amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible, but not more than ten business days, redeem the Public Shares, at a per-share price, payable in cash, equal to
the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously
released to the Company to pay the income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the
number of the then-outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii), to the obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law.
There will be no redemption rights or liquidating
distributions with respect to the warrants, which will expire worthless if the Company fails to consummate an initial Business Combination
within the Combination Period.
The Sponsor, officers and directors have agreed
to waive their redemption rights with respect to their Founder Shares and any Public Shares purchased during or after the IPO in connection
with (i) the completion of the initial Business Combination and (ii) a shareholder vote to approve an amendment to the Company’s
amended and restated memorandum and articles of association, and (iii) waive their rights to liquidating distributions from the Trust
Account with respect to their Founder Shares if the Company fails to complete its initial Business Combination within the Combination
Period.
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement
or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share
and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less
than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply
to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust
Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters
of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor
to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to
satisfy its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities of the Company. Therefore,
the Company cannot assure that its Sponsor would be able to satisfy those obligations.
On January 26, 2023, the Sponsor underwent a reorganization
pursuant to which the limited partners of the Sponsor transferred all of their limited partnership interests to Constellation Sponsor
LP, a newly formed Delaware limited partnership (the “New Sponsor”). On January 26, 2023, the Sponsor was liquidated pursuant
to applicable law by the retirement of the general partner of the Sponsor (the second to last partner of the Sponsor) and all securities
held by the Sponsor were distributed by operation of law to its sole remaining limited partner, the New Sponsor, following which, on January
30, 2023, control of the New Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC.
On January 27, 2023, the Company held the Extension
Meeting to amend the Company’s amended and restated memorandum and articles of association (the “Articles Amendment”)
to extend the date by which the Company has to consummate a Business Combination from January 29, 2023 (the “Original Termination
Date”) to April 29, 2023 (the “Articles Extension Date”) and to allow the Company, without another shareholder vote,
to elect to extend the Termination Date to consummate a Business Combination on a monthly basis for up to nine times by an additional
one month each time after the Articles Extension Date, by resolution of the Company’s board of directors if requested by the Sponsor,
and upon five days’ advance notice prior to the applicable Termination Date, or a total of up to twelve months after the Original
Termination Date, unless the closing of the Company’s initial Business Combination shall have occurred prior to such date (the “Extension
Amendment Proposal”). Upon each of the nine one-month extensions, the Sponsor or one or more of its affiliates, members or third-party
designees may contribute to the Company $150,000 as a loan to be deposited into the Trust Account. The shareholders of the Company approved
the Extension Amendment Proposal at the Extension Meeting and on January 31, 2023, the Company filed the Articles Amendment with the Registrar
of Companies of the Cayman Islands.
In connection with the vote to approve the Extension
Amendment Proposal, the holders of 26,506,157 Class A ordinary shares, par value $0.0001 per share, of the Company properly exercised
their right to redeem their shares for cash at a redemption price of approximately $10.167 per share, for an aggregate redemption amount
of $269,485,746.
On April 28, 2023, the Company drew an aggregate
of $150,000 from the unsecured promissory note, dated January 30, 2023 between the Company and Constellation Sponsor LP and deposited
the amount into the Company’s Trust Account. This deposit enables the Company to extend the date by which it must complete its initial
Business Combination from April 29, 2023 to May 29, 2023 under the amended and restated memorandum and articles of association (see Note
9)
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic
on the industry and has concluded that while it is reasonably possible that it could have a negative effect on the Company’s financial
position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date
of these condensed financial statements. The condensed financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Management acknowledges that the Company depends
on a variety of U.S. and multi-national financial institutions for banking services. Market conditions can impact the viability of these
institutions, which in effect will effect the Company’s ability to maintain and provide assurances that the Company can access its
cash and cash equivalents in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect
the Company’s liquidity, business and financial condition.
In February 2022, the Russian Federation
and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United
States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these condensed financial statements. The specific impact on the
Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these condensed
financial statements.
Liquidity and Going Concern Consideration
As of March 31, 2023, the Company had $5,864 in its operating
bank account, and a working capital deficit of $1,596,683, net of the convertible promissory note - related party.
The Company is within 12 months of its mandatory
liquidation as of the time of filing this 10Q. In connection with the Company’s assessment of going concern considerations in accordance
with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” the liquidity condition and mandatory liquidation raise substantial doubt about the Company’s ability
to continue as a going concern until the earlier of the consummation of the Business Combination or the Termination Date.
These unaudited condensed financial statements
do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
As such, management plans to consummate a Business
Combination prior to the mandatory liquidation date. If the Company’s estimates of the costs of identifying a target business, undertaking
in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have
insufficient funds available to operate its business prior to an initial Business Combination. Moreover, the Company may need to obtain
additional financing either to complete an initial Business Combination or because it becomes obligated to redeem a significant number
of its Public Shares upon completion of an initial Business Combination, in which case the Company may issue additional securities or
incur debt in connection with such initial Business Combination.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information
and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which
include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The
interim results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending
December 31, 2023 or for any future period.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form
10-K filed by the Company with the SEC on March 31, 2023.
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and
proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use of Estimates
The preparation of unaudited condensed financial
statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the
reported amounts of expenses during the reporting period. Accordingly, actual results could differ from those estimates.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements
is the determination of the fair value of the warrant liability and convertible promissory notes. Such estimates may be subject to change
as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of March 31, 2023 and December 31, 2022.
Investments Held in Trust Account
At March 31, 2023, the assets held in the Trust
Account were held in a bank deposit account. At December 31, 2022, the assets held in the Trust Account were held in money market mutual
funds which invest in U.S. Treasury securities. During the period ended March 31, 2023, the Company withdrew $269,485,746 from the Trust
Account in connection with the redemption.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts and trust account in a financial institution, which, at times, may
exceed the Federal Deposit Insurance Corporation coverage of $250,000. Any loss incurred or a lack of access to such funds could have
a significant adverse impact on the Company’s financial condition.
Warrant Liabilities
The Company evaluated the Public Warrants (defined
below) and Private Placement Warrants (collectively, “Warrants”, which are discussed in Notes 3, 4, and 8) in accordance with
ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, and concluded that a provision in the
Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity.
As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on
the condensed balance sheets and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance
with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the condensed statement of operations in
the period of change.
Convertible Promissory Note
The Company accounts for their convertible promissory
note under ASC 815, Derivatives and Hedging (“ASC 815”). Under 815-15-25, the election can be at the inception of a financial
instrument to account for the instrument under the fair value option under ASC 825. The Company has made such election for their convertible
promissory note. Using the fair value option, the convertible promissory note is required to be recorded at its initial fair value on
the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the notes are recognized as a non-cash
gain or loss on the statements of operations.
Offering Costs Associated with the Initial
Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial
Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial
instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering
costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations.
Transaction costs amounted to $17,586,741, of which $1,143,138 were allocated to expense associated with the warrant liability. Offering
costs associated with the Class A ordinary shares were charged to temporary equity upon the completion of the Initial Public Offering.
Class A Ordinary Shares Subject to Possible
Redemption
All of the 31,000,000 Class A Ordinary
shares sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such Public Shares
in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Business Combination
and in connection with certain amendments to the Company’s second amended and restated certificate of incorporation. In accordance
with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions
not solely within the control of the Company require Ordinary shares subject to redemption to be classified outside of permanent equity.
Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded
from the provisions of ASC 480. Accordingly, at March 31, 2023 and December 31, 2022, all shares of Class A Ordinary shares subject
to possible redemption is presented as temporary equity, outside of the shareholders’ deficit section of the Company’s condensed
balance sheets.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of the Class A Ordinary shares subject to possible redemption to equal the redemption
value at the end of each reporting period. Increases or decreases in the carrying amount of the Class A Ordinary shares subject to possible
redemption are affected by charges against additional paid-in capital and accumulated deficit.
The Class A ordinary shares subject to possible
redemption reflected on the condensed balance sheets as of March 31, 2023 and December 31, 2022 are reconciled in the following table:
Gross Proceeds | |
$ | 310,000,000 | |
Less: | |
| | |
Proceeds allocated to public warrants | |
| (20,150,000 | ) |
Class A ordinary shares issuance costs | |
| (16,443,603 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 41,110,871 | |
Class A ordinary shares subject to possible redemption as of December 31, 2022 | |
| 314,517,268 | |
Less: | |
| | |
Redemptions | |
| (269,485,746 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 1,819,906 | |
Class A ordinary shares subject to possible redemption as of March 31, 2023 | |
$ | 46,851,428 | |
Income Taxes
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
There were no unrecognized tax benefits as of March 31, 2023 and December 31, 2022. The Company’s management determined that the
Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2023 and December
31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.
The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.
Net (Loss) Income Per Ordinary Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. Net (loss) income per share is computed by dividing net (loss) income
by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. The
Company has not considered the effect of the warrants sold in the IPO and the Private Placement to purchase an aggregate of 15,800,000
Class A ordinary shares in the calculation of diluted (loss) income per ordinary share, since the exercise of the warrants are contingent
upon the occurrence of future events. As a result, diluted (loss) income per ordinary share is the same as basic (loss) income per ordinary
share for the periods presented.
Basic and diluted net (loss) income per ordinary
share for Class A ordinary shares and Class B ordinary shares is calculated by dividing net (loss) income attributable to the Company
by the weighted average number of Class A ordinary shares and Class B ordinary shares outstanding, allocated proportionally to each class
of ordinary shares. This presentation assumes a Business Combination as the most likely outcome. Accretion associated with the redeemable
Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
Reconciliation of Net (Loss) Income per Ordinary
Share
The Company’s condensed statement of operations
includes a presentation of (loss) income per share for ordinary shares subject to redemption in a manner similar to the two-class method of
income per share. Accordingly, basic and diluted (loss) income per Class A ordinary shares and Class B ordinary shares is calculated as
follows:
| |
For the Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Class A Ordinary Shares | |
| | |
| |
Allocation of net (loss) income to Class A ordinary shares subject to possible redemption | |
$ | (602,531 | ) | |
$ | 3,613,068 | |
Weighted average Class A ordinary shares subject to possible redemption | |
| 12,151,177 | | |
| 31,000,000 | |
Basic and diluted net (loss) income per share | |
$ | (0.05 | ) | |
$ | 0.12 | |
| |
| | | |
| | |
Class B Ordinary Shares | |
| | | |
| | |
Allocation of net (loss) income to Class B ordinary shares | |
$ | (384,294 | ) | |
$ | 903,267 | |
Weighted average Class B ordinary shares | |
| 7,750,000 | | |
| 7,750,000 | |
Basic and diluted net (loss) income per share | |
$ | (0.05 | ) | |
$ | 0.12 | |
Fair Value of Financial Instruments
The Company follows the guidance in ASC 820, “Fair
Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1 — |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
|
|
Level 2 — |
Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
|
|
Level 3 — |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820 (other than warrant liability) approximates the carrying amounts
represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
See Note 8 for additional information on assets
and liabilities measured at fair value on a recurring basis.
Recent Accounting Pronouncements
The Company’s management does not believe
that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the accompanying
condensed financial statements.
Note 3 — Initial Public Offering
Public Units
On January 29, 2021, the Company sold 31,000,000
Units, at a purchase price of $10.00 per Unit, including 1,000,000 Units issued pursuant to the partial exercise of the underwriters’
over-allotment option. Each Unit consists of one Class A ordinary share, and one-third of one redeemable warrant to purchase one Class
A ordinary share (the “Public Warrants”).
Public Warrants
Each whole warrant will entitle the holder to
purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. Each warrant will become exercisable on
the later of 30 days after the completion of the initial Business Combination or 12 months from the closing of the IPO and will expire
five years after the completion of the initial Business Combination, or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any
Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration
statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus
relating thereto is current, or a valid exemption from registration is available. No warrant will be exercisable and the Company will
not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant
exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder
of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant,
the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no
event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the
exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the
Class A ordinary share underlying such unit.
In addition, if (x) the Company issues additional
Class A ordinary shares or equity linked securities for capital raising purposes in connection with the closing of the initial Business
Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective
issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the initial shareholders
or their affiliates, without taking into account any Founder Shares held by the initial shareholders or such affiliates, as applicable,
prior to such issuance including any transfer or reissuance of such shares (the “Newly Issued Price”)), (y) the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest, available for the funding of the
initial Business Combination, and (z) the volume-weighted average trading price of the Class A ordinary shares during the 10 trading day
period starting on the trading day after the day on which the Company consummates the initial Business Combination is below $9.20 per
share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value
and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices adjacent to “Redemption of warrants for
Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00.” and “Redemption of warrants for
Class A ordinary shares when the price per Class A ordinary share equals or exceeds $18.00.” will be adjusted (to the nearest cent)
to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The Company will not be obligated to deliver any
shares of Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise
unless a registration statement under the Securities Act with respect to the shares of Class A ordinary shares underlying the warrants
is then effective and a prospectus is current. No warrant will be exercisable and the Company will not be obligated to issue shares of
Class A ordinary shares upon exercise of a warrant unless Class A ordinary shares issuable upon such warrant exercise has been
registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for
the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for
the share of Class A ordinary shares underlying such unit.
Redemptions of warrants for cash when the price
per Class A ordinary share equals or exceeds $18.00.
Once the warrants become exercisable, the Company
may call the warrants for redemption (except as described herein with respect to the Private Placement Warrants):
|
● |
in whole and not in part; |
|
|
|
|
● |
at a price of $0.01 per warrant; |
|
● |
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| | |
| ● | if, and only if, the closing price of the Class A ordinary shares equals
or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like)
for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of the redemption
is given to the warrant holders (the “Reference Value”). |
Redemptions of warrants for cash when the price
per Class A ordinary share equals or exceeds $10.00.
Once the warrants become exercisable, the Company
may call the warrants for redemption (except as described herein with respect to the Private Placement Warrants):
|
● |
in whole and not in part; |
|
|
|
|
● |
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that during such 30 day period holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table in the registration statement, based on the redemption date and the “fair market value” of the Class A ordinary shares (as defined below) except as otherwise described below; provided, further, that if the warrants are not exercised on a cashless basis or otherwise during such 30 day period, the Company shall redeem such warrants for $0.10 per share; |
|
|
|
|
● |
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before the Company sends the notice of redemption to the warrant holders; and |
|
|
|
|
● |
if the Reference Value is less than $18.00 per share (as adjusted for
share subdivisions, share dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently
called for redemption on the same terms as the outstanding Public Warrants. |
The “fair market value” of the Class
A ordinary shares shall mean the volume-weighted average price of the Class A ordinary shares for the 10 trading days immediately following
the date on which the notice of redemption is sent to the holders of warrants. This redemption feature differs from the typical warrant
redemption features used in other blank check offerings. The Company will provide the warrant holders with the final fair market value
no later than one business day after the 10-day trading period described above ends. In no event will the warrants be exercisable in connection
with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of 5,466,667 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, for an aggregate
purchase price of $8,200,000, in a private placement. A portion of the proceeds from the private placement was added to the proceeds from
the IPO held in the Trust Account.
Each of the Private Placement Warrants are
identical to the warrants sold as part of the Units in the IPO except that, so long as they are held by the Sponsor or its permitted
transferees: (1) they will not be redeemable by the Company; (2) they (including the Class A Ordinary Shares issuable upon exercise
of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days
after the completion of the initial Business Combination; (3) they may be exercised by the holders on a cashless basis; and (4) they
(including the Class A Ordinary Shares issuable upon exercise of these warrants) are entitled to registration rights.
If the Company does not complete a Business Combination
within the Combination Period, the Private Placement Warrants will expire worthless.
Note 5 — Related Party Transactions
Founder Shares
On November 23, 2020, an executive officer of
the Company purchased 8,625,000 shares of the Company’s Class B ordinary shares for $25,000, or approximately $0.003 per share,
in connection with formation (the “Founder Shares”). On December 23, 2020, such 8,625,000 shares of the Company’s Class
B ordinary shares were transferred to the Sponsor for $25,000. The Founder Shares included an aggregate of up to 1,125,000 shares subject
to forfeiture if the over-allotment option was not exercised by the underwriters in full. On January 29, 2021, the underwriters partially
exercised their over-allotment option, hence, 250,000 Founder Shares were no longer subject to forfeiture, and on March 1, 2021, the remaining
875,000 Founder Shares were forfeited by the Sponsor.
The Sponsor, officers and directors have agreed
not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year after the date of the consummation
of the initial Business Combination or (ii) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary
shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which the Company complete a liquidation, merger, share exchange, reorganization or other similar transaction that
results in all of the public shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Promissory Notes — Related Party
In November 2020, the Company issued an unsecured
promissory note to an executive officer of the Company. This loan was non-interest bearing, unsecured and due at the earlier of December
31, 2021 or the closing of the IPO. On December 31, 2020, the amount borrowed under the note was $1,300. During the period from January
1, 2021 to January 28, 2021, an additional $88,540 was borrowed under the promissory note, and on January 29, 2021, the balance of
$89,840 repaid in full from the proceeds of the IPO, and is no longer available to be drawn upon.
On February 23, 2021, the Company issued an unsecured
promissory note (the “Note”) in the amount of up to $699,999 to certain affiliates of Constellation Sponsor GmbH &
Co. KG (the “Sponsor”). The proceeds of the Note, which may be drawn down from time to time until the Company consummates
its initial Business Combination, will be used as general working capital purposes.
The Note bears no interest and is payable in full
upon the earlier to occur of (i) the Termination Date or (ii) the consummation of the Company’s Business Combination. A failure
to pay the principal within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy
action shall be deemed an event of default, in which case the Note may be accelerated. The affiliates of the Sponsor had the option to
convert any unpaid balance of the Note into Private Placement Warrants (the “Conversion Warrants”), each warrant exercisable
for one ordinary share of the Company at an exercise price of $1.50 per share. The terms of the Conversion Warrants would be identical
to the warrants issued by the Company to affiliates of the Sponsor in a private placement that was consummated in connection with the
Company’s initial public offering. The affiliates of the Sponsor shall be entitled to certain registration rights relating to the
Conversion Warrants. On May 3, 2021, the Note was amended to remove the option to convert any unpaid balance of the Note into Private
Placement Warrants. As of March 31, 2023 and December 31, 2022, there were no amounts outstanding under the Note, respectively.
During the year ended December 31, 2022, the Company
issued a number of unsecured promissory notes (the “Notes”) totaling $258,780 to certain executive officers and affiliates
of the Company. The proceeds of the Notes will be used as general working capital purposes.
The Notes bear no interest and is payable in full upon the earlier
to occur of (i) the Termination Date or (ii) the consummation of the Company’s Business Combination. Failure to pay the principals
within five business days of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall be deemed
an event of default, in which case the Notes may be accelerated. As of March 31, 2023 and December 31, 2022, $227,208 and $258,780 is
outstanding under the Notes, respectively.
Administrative Support Agreement
As of January 26, 2021 the Company had agreed, commencing on the date
of the securities of the Company are first listed on The New York Stock Exchange (the “Listing Date”), to pay the Sponsor
up to $10,000 per month for office space, utilities and secretarial and administrative support, and other obligations of the sponsor.
Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
For the three months ended March 31, 2023 and 2022, the Company recorded $30,000 and $0 administrative service fees, respectively.
Working Capital Loans
In order to finance transaction costs in connection with a Business
Combination, the Sponsor or any of its affiliates or certain of the Company’s officers and directors may, but are not obligated
to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination,
the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close,
the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds
from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible
into warrants of the post-Business Combination company at a price of $1.50 per warrant at the option of the lender.
On January 18, 2023, the Company issued an unsecured promissory note
(the “Note”) in the amount of $230,000.00 to the Sponsor. The proceeds of the Note will be used for general working capital
purposes. The Note bears no interest and is payable in full upon the earlier to occur of (i) the consummation of the Company’s Business
Combination or (ii) the date that the winding up of the Company is effective. A failure to pay the principal within five business days
of the date specified above or the commencement of a voluntary or involuntary bankruptcy action shall be deemed an event of default, in
which case the Note may be accelerated. At the election of the Sponsor, all or a portion of the unpaid principal amount of the Note may
be converted into warrants of the Company, at a price of $1.50 per warrant, each warrant exercisable for one Class A ordinary share, $0.0001
par value per share, of the Company. The Warrants shall be identical to the Private Placement Warrants issued to the Sponsor at the time
of the Company’s initial public offering. As of March 31, 2023, $230,000 is outstanding under this Note.
As disclosed in the definitive proxy statement
filed by the Company with the SEC on December 30, 2022 (the “Proxy Statement”), relating to the extraordinary general
meeting of shareholders of the Company (the “Extension Meeting”), the Sponsor agreed that if the Extension Amendment Proposal
is approved, it or one or more of its affiliates, members or third-party designees (the “Lender”) will contribute to the Company
as a loan, within ten (10) business days of the date of the Extension Meeting, $450,000, to be deposited into the Trust Account established
in connection with the Company’s initial public offering (the “Trust Account”). In addition, in the event the Company
does not consummate an initial Business Combination by the Articles Extension Date, the Lender may contribute to the Company $150,000
as a loan to be deposited into the Trust Account for each of nine one-month extensions following the Articles Extension Date.
Accordingly, on January 30, 2023, the Company issued an unsecured promissory
note in the total principal amount of up to $3,000,000 (the “Promissory Note”) to the Sponsor. The Sponsor funded the
initial principal amount of $450,000 on January 30, 2023. The Promissory Note does not bear interest and matures upon closing of the Company’s
initial Business Combination. In the event that the Company does not consummate a Business Combination, the Promissory Note will be repaid
only from amounts remaining outside of the Trust Account, if any. The proceeds of the Promissory Note will be deposited in the Trust Account.
At the election of the Payee, $1,270,000 of the total principal amount of the Promissory Note may be converted, in whole or in part, at
the option of the Lender into warrants of the Company at a price of $1.50 per warrant, which warrants will be identical to the Private
Placement Warrants issued to the Sponsor at the time of the initial public offering of the Company. As of March 31, 2023, $1,100,000 is
outstanding under this Note.
As of March 31, 2023 and December 31, 2022 there
was $1,330,000 and $0 of borrowings under the Working Capital Loans, respectively. The notes were valued using the fair value method.
The fair value of the notes as of March 31, 2023 was $741,688, which resulted in a change in fair value of the convertible promissory
note of $27,267 recorded in the statements of operations for the three months ended March 31, 2023 (see Note 8).
Note 6 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class
A ordinary shares underlying the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and
any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed
prior to or on the Effective Date of the IPO. The holders of these securities are entitled to make up to three demands, excluding short
form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. In addition, the
holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion
of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities
Act. In addition, if the Sponsor affiliates acquire shares in the IPO, they would become affiliates (as defined in the Securities Act)
of the Company following the IPO, and the Company would file a registration statement following the IPO to register the resale of the
Public Shares purchased by the Sponsor affiliates (or their nominees) in the IPO. The Sponsor affiliates will not be subject to any lock-up
period with respect to any Public Shares they may purchase. The registration rights agreement does not contain liquidated damages or other
cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an aggregate of 4,500,000 additional Units at the public offering price less the underwriting commissions
to cover over-allotments, if any. On January 29, 2021, the underwriters partially exercised the over-allotment option to purchase 1,000,000
Units, and was paid an underwriting discount in aggregate of $6,200,000. As of March 15, 2021, the remaining over-allotment option expired.
Additionally, the underwriters will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the IPO held in the Trust Account, or $10,850,000, upon the completion of the Company’s
initial Business Combination subject to the terms of the underwriting agreement.
Investment Agreement
On January 26, 2023, the Company, entered into an Investment Agreement
(the “Investment Agreement”) with the Sponsor, and Endurance Constellation, LLC, a Delaware limited liability company (the
“Investor”), pursuant to which the Investor agreed to contribute to the Sponsor an aggregate amount in cash equal up to $3,000,000
(the “Investment Contribution”), which amount will be loaned to the Company in accordance with the Promissory Note (as defined
below) (the “Investment Loan”), in consideration for which, the New Sponsor shall issue to the Investor interests in certain
equity securities.
In connection with the closing of the transactions
contemplated by the Investment Agreement, on January 26, 2023, the Sponsor underwent a reorganization pursuant to which the limited partners
of the Sponsor transferred all of their limited partnership interests to the New Sponsor. On January 26, 2023, the Sponsor was liquidated
pursuant to applicable law by the retirement of the general partner of the Sponsor (the second to last partner of the Sponsor) and all
securities held by the Sponsor were distributed by operation of law to its sole remaining limited partner, the New Sponsor, following
which, on January 30, 2023, control of the New Sponsor was transferred to affiliates of Antarctica Capital Partners, LLC.
The Investment Agreement contains customary representations
and warranties of the parties, including, among others, with respect to corporate organization, corporate authority, and compliance with
applicable laws. The representations and warranties of each party set forth in the Investment Agreement were made solely for the benefit
of the other parties to the Agreement, and shareholders of the Company are not third-party beneficiaries of the Investment Agreement.
In addition, such representations and warranties (a) are subject to materiality and other qualifications contained in the Investment Agreement,
which may differ from what may be viewed as material by shareholders of the Company, (b) were made only as of the date of the Investment
Agreement or such other date as is specified in the Investment Agreement and (c) may have been included in the Investment Agreement for
the purpose of allocating risk between the parties rather than establishing matters as facts. Accordingly, the Investment Agreement is
included with this filing only to provide shareholders of the Company with information regarding the terms of the Investment Agreement,
and not to provide shareholders of the Company with any other factual information regarding any of the parties or their respective businesses.
Letter Agreement
On January 30, 2023, the Company, the Sponsor, certain officers and
directors of the Company, and other parties thereto (the “Insiders,” and together with the Sponsor, the “Letter Agreement
Parties”) entered into an amendment to the Letter Agreement, dated January 26, 2021 (the “Letter Agreement”), to allow
the Sponsor to transfer its holdings in the Company, directly or indirectly, to affiliate(s) of Antarctica Capital Partners, LLC prior
to the expiration of the applicable lock-up (the “Letter Agreement Amendment”). In connection with the resignation of certain
Insiders (as described below), the Letter Agreement Parties agreed that all Insiders that have resigned from their positions as officers
and/or directors of the Company and that no longer hold Class B ordinary shares, par value $0.0001 per share, shall no longer be parties
to the Letter Agreement.
Note 7 — Shareholders’ Deficit
Preference Shares — The Company
is authorized to issue a total of 1,000,000 preference shares at par value of $0.0001 each. On March 31, 2023 and December
31, 2022, there were no shares of preference shares issued or outstanding.
Class A Ordinary Shares —
The Company is authorized to issue a total of 200,000,000 Class A ordinary shares at par value of $0.0001 each. On
March 31, 2023 and December 31, 2022, there were no shares issued and outstanding, excluding 4,493,843 and 31,000,000 and no shares
subject to possible redemption, respectively.
Class B Ordinary Shares —
The Company is authorized to issue a total of 20,000,000 Class B ordinary shares at par value of $0.0001 each. On
March 31, 2023 and December 31, 2022, there were 7,750,000 shares issued and outstanding.
The Sponsor, officers and directors have agreed
not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year after the date of the consummation
of the initial Business Combination or (ii) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary
shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination,
or (y) the date on which the Company complete a liquidation, merger, share exchange, reorganization or other similar transaction that
results in all of the public shareholders having the right to exchange their ordinary shares for cash, securities or other property.
The Founder Shares will automatically convert
into Class A ordinary shares on the first business day following the consummation of the initial Business Combination at a ratio such
that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted
basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of the IPO, plus (ii) the sum
of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities
or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination,
excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued,
deemed issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor,
officers and directors or any of their affiliates upon conversion of Working Capital Loans. In no event will the Class B ordinary shares
convert into Class A ordinary shares at a rate of less than one to one.
Holders of the Class A ordinary shares and holders of the Class B ordinary
shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, with each share of
ordinary shares entitling the holder to one vote.
Note 8 — Fair Value Measurements
The following table presents information about the Company’s
assets and liabilities that are measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Level | | |
March 31, 2023 | | |
Level | | |
December 31, 2022 | |
Assets: | |
| | |
| | |
| | |
| |
Investments held in Trust Account | |
| 1 | | |
$ | 46,851,428 | | |
| 1 | | |
$ | 314,517,268 | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Public Warrant Liability | |
| 2 | | |
$ | 973,400 | | |
| 1 | | |
$ | 310,000 | |
Private Warrant Liability | |
| 2 | | |
$ | 514,960 | | |
| 2 | | |
$ | 164,000 | |
Convertible Promissory Note – Related Party | |
| 3 | | |
$ | 741,688 | | |
| — | | |
$ | — | |
The Warrants are accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed balance sheets. The warrant liabilities are
measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant
liabilities in the condensed statements of operations.
The Company established the initial fair value
for the Public Warrants on January 29, 2021, the date of the Company’s Initial Public Offering, using a Monte Carlo simulation model,
and for the Private Warrants on January 29, 2021, using a Black Scholes Model. As of March 31, 2023 and December 31, 2022, the fair value
for the Private Warrants was estimated using a Black Scholes Model, and the fair value of the Public Warrants by reference to the quoted
market price of the warrants. The Public and Private Warrants were classified as Level 3 at the initial measurement date, and the Private
Warrants were classified as Level 3 as of December 31, 2021 due to the use of unobservable inputs. Transfers between levels are recognized
at the end of each quarterly reporting period. As of March 31, 2021, the Public Warrants were reclassified from a Level 3 to
a Level 1 classification due to use of the observed trading price of the separated Public Warrants. The estimated fair value
of the Public Warrants transferred from a Level 1 measurement to a Level 2 fair value measurement during the three months ended March
31, 2023 was $973,400.
The following table presents the changes in the
fair value of Level 3 warrant liabilities:
| |
Private Placement Warrants | |
Fair Value as of December 31, 2021 | |
$ | 3,473,299 | |
Change in fair value | |
| (1,642,365 | ) |
Fair Value as of March 31, 2022 | |
$ | 1,830,934 | |
The estimated fair value of the Convertible Promissory
Note was based on the following significant inputs:
| |
March 31, 2023 | | |
January 18, 2023 | |
Risk-free interest rate | |
$ | 3.58 | % | |
$ | 3.41 | % |
Expected volatility | |
| 3.00 | % | |
| 3.00 | % |
Conversion Price | |
$ | 1.50 | | |
$ | 1.50 | |
Unobserved Deal Scenario Stock Price | |
$ | 2.70 | | |
$ | 2.15 | |
Probability of transaction | |
| 60.0 | % | |
| 60.0 | % |
The following table presents the changes in the
fair value of the Level 3 Convertible Promissory Note:
| |
Convertible | |
| |
Promissory | |
| |
Note | |
Fair value as of December 31, 2022 | |
$ | — | |
Proceeds received through Convertible Promissory Note | |
| 1,330,000 | |
Proceeds in excess of Fair Value of Convertible Note on issuance | |
| (615,579 | ) |
Change in valuation inputs or other assumptions | |
| 27,267 | |
Fair value as of March 31, 2023 | |
$ | 741,688 | |
There were no transfers in or out of Level 3 from
other levels in the fair value hierarchy during the three months ended March 31, 2023 for the convertible promissory note.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based on this review, other
than as described below, the Company determined no events have occurred that would require adjustments to the disclosures in the condensed
financial statements.
On April 28, 2023, the Company drew an aggregate of $150,000 (the “Extension
Funds”), as approved by unanimous director resolution, dated April 24, 2023, pursuant to the unsecured promissory note, dated January
30, 2023 between the Company and Constellation Sponsor LP (the “Note”), which Extension Funds the Company deposited into the
Company’s Trust Account for its public shareholders. This deposit enables the Company to extend the date by which it must complete
its initial Business Combination from April 29, 2023 to May 29, 2023 (the “Extension”). The Extension is the first of nine
one-month extensions permitted under the Company’s amended and restated memorandum and articles of association and provides the
Company with additional time to complete its initial Business Combination. The Note does not bear interest and matures upon closing of
the Company’s initial Business Combination. In the event that the Company does not consummate a Business Combination, the Note will
be repaid only from amounts remaining outside of the Company’s Trust Account, if any.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
References to the “Company,” “Constellation Acquisition
Corp I,” “our,” “us” or “we” refer to Constellation Acquisition Corp I. The following discussion
and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim
condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these
forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject
to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated in Cayman
Islands on November 20, 2020. We were formed for the purpose of effecting a “Business Combination”.
Our Sponsor is Constellation Sponsor GmbH &
Co. KG, a German limited partnership. The registration statement for the Initial Public Offering was declared effective on January 26,
2021. On January 29, 2021, we consummated the Initial Public Offering of 31,000,000 Units, at $10.00 per Unit, generating gross proceeds
of $310.0 million, and incurring offering costs of $17,586,741 million, inclusive of $10,850,000 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial
Public Offering, we consummated the Private Placement of 5,466,667 Private Placement Warrants, at a price of $1.50 per Private Placement
Warrant to our Sponsor, generating gross proceeds to us of $8.2 million.
Since the closing of the Initial Public Offering and the Private Placement,
$310.00 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement
was placed in the Trust Account and was invested in permitted United States “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations.
On January 27, 2023, we liquidated the U.S. government treasury obligations or money market funds held in the trust account.
Our management has broad discretion with respect
to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
We will only have until the Combination Period.
If we do not complete a Business Combination within this period of time, we will (i) cease all operations except for the purposes of winding
up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share
pro rata portion of the Trust Account, including interest and not previously released to us to fund our working capital requirements (less
taxes payable and up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption,
dissolve and liquidate the balance of our net assets to our remaining shareholders, as part of our plan of dissolution and liquidation.
Our Sponsor and our executive officers and independent director nominees (the “initial shareholders”) entered into a letter
agreement with us, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares;
however, if the initial shareholders or any of our officers, directors or affiliates acquire ordinary shares in or after the Initial Public
Offering, they will be entitled to a pro rata share of the Trust Account upon our redemption or liquidation in the event we do not complete
a Business Combination within the required time period. In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including Trust Account assets) will be less than the Initial Public Offering
price per Unit in the Initial Public Offering.
On January 27, 2023, the Company held the Extension Meeting to amend
the Company’s Articles Amendment by accepting the Extension Amendment Proposal. The shareholders of the Company approved the Extension
Amendment Proposal at the Extension Meeting and on January 31, 2023, the Company filed the Articles Amendment with the Registrar of Companies
of the Cayman Islands.
Liquidity and Going Concern Consideration
As of March 31, 2023, the Company had $5,864 in
its operating bank account, and a working capital of deficit of $1,596,683, net of the convertible promissory note - related party.
The Company is within 12 months of its mandatory
liquidation as of the time of filing this 10Q. In connection with the Company’s assessment of going concern considerations in accordance
with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the liquidity
condition and mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern until the
earlier of the consummation of the Business Combination or the date the Company is required to liquidate.
These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the
Company be unable to continue as a going concern.
If the Company’s estimates of the costs
of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount
necessary to do so, the Company may have insufficient funds available to operate its business prior to an initial Business Combination.
Moreover, the Company may need to obtain additional financing either to complete an initial Business Combination or because it becomes
obligated to redeem a significant number of its Public Shares upon completion of an initial Business Combination, in which case the Company
may issue additional securities or incur debt in connection with such initial Business Combination.
On January 24, 2023, we held an Extension Meeting
to, in part, amend our amended and restated memorandum and articles of association to extend the date by which we have to consummate a
Business Combination. In connection with that vote, the holders of 26,506,157 Class A ordinary shares of the Company properly exercised
their right to redeem their shares for an aggregate price of approximately $10.167 per share, for an aggregate redemption amount of approximately
$269,485,746. After the satisfaction of such redemptions, the balance in our Trust Account was approximately $46,138,503.
Results of Operations
Our entire activity from inception through March
31, 2023 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering,
the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date.
We will not generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income
in the form of interest income and dividends on investments held in Trust Account. We expect to incur increased expenses as a result of
being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2023, we
had a net loss of approximately $0.9 million, which included a loss from operations of $1.30 million, a loss from the change in fair value
of convertible notes – related party of $0.02 million and a loss from the change in fair value of warrant liabilities of $1.0 million,
offset by an interest earned on investments held in Trust Account of $1.4 million.
For the three months ended March 31, 2022, we had a net income of approximately
$4.5 million, which included a gain from the change in fair value of warrant liabilities of $4.7 million and a loss from operations of
$0.23 million.
Contractual Obligations
We do not have any long-term debt obligations,
capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Registration Rights
The initial shareholders and holders of the Private
Placement Warrants will be entitled to registration rights pursuant to a registration rights agreement. The initial shareholders and holders
of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that register
such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to
include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing
of any such registration statements.
Underwriting Agreement
We paid an underwriting discount of 2% of the
per Unit offering price, or approximately $6,200,000 million in the aggregate at the closing of the Initial Public Offering, and agreed
to pay an additional fee (the “Deferred Underwriting Fees”) of 3.5% of the gross offering proceeds, or approximately $10,850,000
in the aggregate upon the Company’s completion of an Initial Business Combination. The Deferred Underwriting Fees will become payable
to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition
and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates
and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. One of the more significant accounting estimates included in these financial statements is the determination of the fair value
of the warrant liability and convertible promissory notes. Actual results may differ from these estimates under different assumptions
or conditions.
Off-Balance Sheet Arrangements
As of March 31, 2023, we did not have any off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material
impact on our business, revenues or operating results during the period presented.
JOBS Act
The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and
under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly
traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with
new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.
As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as
of public company effective dates.
Additionally, we are in the process of evaluating
the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to
Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank
Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information
about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related
items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median
employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering
or until we are no longer an “emerging growth company,” whichever is earlier.