UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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As of September 9, 2024,
PLUM ACQUISITION CORP. I
Quarterly Report on Form 10-Q
Table of Contents
i
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Cash held in Trust Account | ||||||||
| Total current assets | ||||||||
| Cash and investments held in Trust Account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Ordinary shares to be redeemed | ||||||||
| Advance from sponsor | ||||||||
| Due to related party | ||||||||
| Convertible promissory note – related party | ||||||||
| Promissory Note – related party | ||||||||
| Subscription liability | ||||||||
| Total current liabilities | ||||||||
| Warrant liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 8) | ||||||||
| Class A Ordinary shares subject to possible redemption, | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | For the June 30, | |||||||||||||||
| 2024 | 2023 (as restated) | 2024 | 2023 (as restated) | |||||||||||||
| Formation and operating expenses | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income: | ||||||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||||||||||
| Issuance of Forward Purchase Agreement | ( | ) | ||||||||||||||
| Reduction of deferred underwriter fee payable | ||||||||||||||||
| Interest Expense—Debt Discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income – trust account | ||||||||||||||||
| Other income | ||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
| Weighted average shares outstanding, Class A ordinary shares subject to possible redemption | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
| Weighted average shares outstanding, Class A ordinary shares | ||||||||||||||||
| $ | ( | ) | ||||||||||||||
| Weighted average shares outstanding, Class B ordinary shares | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
| Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Remeasurement adjustment of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of Subscription Shares | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of subscription shares | — | — | ||||||||||||||||||||||||||
| Forgiveness of promissory notes | — | — | ||||||||||||||||||||||||||
| Remeasurement adjustment of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 (as restated)
| Class A | Class B | Additional | ||||||||||||||||||||||||||
| Ordinary Shares | Ordinary Shares | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Reduction of deferred underwriter fees | — | — | ||||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of subscription shares | — | — | ||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Accretion of Class A ordinary shares to redemption value | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of subscription shares | — | — | — | — | — | |||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PLUM ACQUISITION CORP. I
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 (as restated) | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Interest earned on cash and investments held in Trust Account | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Reduction of deferred underwriter fees | ( | ) | ||||||
| Issuance of Forward Purchase Agreement | ||||||||
| Change in fair value of Forward Purchase Agreement | ( | ) | ||||||
| Interest expense—debt discount | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expense | ( | ) | ( | ) | ||||
| Due to related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Extension payment deposit in Trust | ( | ) | ( | ) | ||||
| Cash withdrawn for redemptions | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from the subscription liability | ||||||||
| Advance from sponsor | ||||||||
| Redemption of ordinary shares | ( | ) | ||||||
| Proceeds from promissory note – related party | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash – Beginning of period | ||||||||
| Cash – End of period | $ | $ | ||||||
| Non-Cash investing and financing activities: | ||||||||
| Accretion of Class A ordinary shares subject to possible redemption | $ | $ | ||||||
| Forgiven promissory notes | $ | $ | ||||||
| Ordinary shares to be redeemed | $ | $ | ||||||
| Issuance of subscription shares | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
NOTE 1 — ORGANIZATION AND BUSINESS OPERATIONS
Plum Acquisition Corp. I (the “Company”
or “Plum”) was incorporated as a Cayman Islands exempted company on
As of June 30, 2024, the Company had not commenced any operations. All activity for the period from January 11, 2021 (inception) through June 30, 2024 relates to the Company’s formation and the initial public offering (“IPO”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a business combination. The Company believes it will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on investments in the Company’s Trust account and will recognize changes in the fair value of the warrant liabilities as other income (expense).
The Company’s Sponsor is Plum Partners,
LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s IPO was declared
effective on March 15, 2021 (the “Effective Date”). On March 18, 2021, the Company consummated the initial public
offering (the “Public Offering” or “IPO”) of
Simultaneously with the closing of the IPO, the
Company consummated the sale of
The Company granted the underwriter a 45-day option
from March 18, 2021 to purchase up to an additional
The underwriter partially exercised the over-allotment
option on April 14, 2021 and purchased
A total of $
5
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Following the closing of the Public Offering on
March 18, 2021 and the partial exercise of the underwriter’s over-allotment option, $
The Company will provide shareholders (the “Public
Shareholders”) of its Class A ordinary shares, par value $
These Public Shares have been classified as temporary equity upon the completion of the IPO in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company receives the approval of an ordinary resolution.
The Company had until June 18, 2024, to complete
a business combination. On June 14, 2024, the Company held a vote to extend the time the Company has to complete a business combination,
the Company now has until September 14, 2024 to complete a business combination. However, 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 thereafter, 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 its taxes, if any (less up to $
6
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
On January 31, 2024, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating the Company failed to hold an annual meeting of shareholders within twelve months of the end of its fiscal year ended December 31, 2022, as required by Nasdaq Listing Rule 5620(a). In accordance with Nasdaq Listing Rule 5810(c)(2)(G), the Company had 45 calendar days (or until March 16, 2024) to submit a plan to regain compliance and, if Nasdaq accepted the plan, Nasdaq could have granted the Company up to 180 calendar days from its fiscal year end (or until June 28, 2024) to regain compliance. The Company held its Annual General Meeting of the shareholders on March 25, 2024.
On March 18, 2024, the Company received a notice from the Listing Qualifications Department from Nasdaq stating that the Company has failed to complete a business combination pursuant to Nasdaq Listing Rule IM 5101-2, which requires that a special purpose acquisition company must complete one or more business combinations within 36 months of the effectiveness of its IPO registration statement. The Company submitted a request for an oral hearing to request an extension to complete the Business Combination. The oral hearing was held on May 16, 2024. On May 24, 2024, the Nasdaq Hearings Panel granted the Company an exception until September 16, 2024 to complete the Business Combination provided that on or before September 16, 2024, the Company will demonstrate compliance with all applicable initial listing standards for the Nasdaq Capital Market.
Extraordinary General Meeting and Redemption of Shares
On March 15, 2023, Plum held an Extraordinary
General Meeting of its Shareholders (1) to amend Plum’s amended and restated memorandum and articles of association (the “Articles”)
to extend the date (the “Termination Date”) by which Plum has to consummate a business combination (the “Articles Extension”)
from March 18, 2023 (the “Original Termination Date”) to June 18, 2023 (the “Articles Extension Date”)
and to allow Plum, 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 Plum’s
board of directors if requested by the Sponsor, and upon five days’ advance notice prior to the applicable Termination Date,
until March 18, 2024, or a total of up to twelve months after the Articles Extension Date, unless the closing of Plum’s
initial business combination shall have occurred prior to such date (the “Extension Amendment Proposal”) and (2) to amend
the Articles to eliminate from the Articles the limitation that Plum may not redeem Class A ordinary shares to the extent that such
redemption would result in Plum having net tangible assets (as determined in accordance with Rule 3a 51-1(g)(1)of the Securities
Exchange Act of 1934, as amended) of less than $
In connection with the vote to approve the Extension
Amendment Proposal, the holders of
The Sponsor, officers and directors have agreed
to (i) waive their redemption rights with respect to their Founder Shares, (ii) waive their redemption rights with respect to
their Founder Shares and public shares in connection with a shareholder vote to approve an amendment to the Company’s amended and
restated memorandum and articles of association (A) that would 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
On September 13, 2023, Plum held an Extraordinary
General Meeting of its Shareholders (“September Shareholder Meeting”) (1) to amend the Articles to extend Articles Extension
Termination Date from the Articles Extension Date to December 18, 2023 (the “Second 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 six times by an additional one month each time after the Second 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, until
June 18, 2024, or a total of up to nine months after the Termination Date, unless the closing of the Company’s initial business
combination shall have occurred prior to such date (the “Second Extension Amendment Proposal”) and (2) to authorize a reduction
in the funds held in the Trust Account to an amount equal to $
7
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
In connection with the vote to approve the Second
Extension Amendment Proposal at the September Shareholder Meeting, (i) the Sponsor, as the sole holder of Class B Ordinary Shares, voluntarily
elected to convert all Class B Ordinary Shares to Class A Ordinary Shares on a one-for-one basis in accordance with the Memorandum and
Articles of Association (the “Class B Conversion”) and (ii) the holders of
As approved by its stockholders at the September Shareholder Meeting (the “EGM”), the Company filed an Amended and Restated Memorandum and Articles of Association (the “A&R Charter”) on October 25, 2023, which (i) extended the date by which the Company has to consummate a business combination to December 18, 2023 and (ii) allowed the Company, without another shareholder vote, to elect to extend the Termination Date (as defined in the Proxy Statement) to consummate a business combination on a monthly basis for up to six times by an additional one month each time after December 18, 2023 (or such shorter period as necessary to comply with applicable listing requirements), by resolution of the Company’s board of directors, if requested by Plum Partners, LLC, and upon five days advance notice prior to the applicable termination date, until June 18, 2024, or a total of up to nine months after September 18, 2023.
An aggregate of
On June 4, 2024, Plum held an Extraordinary General
Meeting of its Shareholders (the “BC EGM”) to approve, among other things, Plum’s entry into the Business Combination
Agreement and related matters, including domestication to become a Delaware entity. The shareholders approved all of the proposals at
the BC EGM. An aggregate of
On June 14, 2024, Plum held an Extraordinary General Meeting of its
Shareholders (“June Shareholder Meeting”) to amend the Articles to extend Articles Extension Termination Date from the Articles
Extension Date to September 14, 2024 (the “Third Articles Extension Date”). As approved by its shareholders at the June Shareholder
Meeting, Plum filed an Amended and Restated Memorandum and Articles of Association (the “A&R Charter”) on June 18, 2024
which extended the date by which the Company has to consummate a business combination to September 14, 2024. An aggregate of
On January 13, 2024, Rigrodsky Law P.A. sent a demand letter to the Company, purportedly on behalf of a stockholder of the Company, alleging deficiencies in the draft registration statement on Form S-4 filed by the Company, with the U.S. Securities and Exchange Commission on January 5, 2024. As of the filing of this Quarterly Report the Company has received no further correspondence from Rigrodsky Law P.A.
Liquidity, Capital Resources, and Going Concern
The Company’s liquidity needs up to March 18,
2021 had been satisfied through a capital contribution from the Sponsor of $
As of June 30, 2024, the Company had $
In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern”, management has determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Accounts. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
8
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Further, management has determined that if the Company is unable to complete a Business Combination by September 14, 2024 (the “Combination Period”), then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. The Company intends to complete a Business Combination before the mandatory liquidation date.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as filed with the SEC on March 1, 2024, which contains the audited financial statements and notes thereto. The interim results for the period ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.
The accompanying unaudited condensed consolidated financial statements of the Company include its wholly owned subsidiaries in connection with the initial Business Combination, namely Plum SPAC I Merger Sub, Inc., a Delaware corporation (“Merger Sub I”), Plum SPAC 2 Merger Sub, LLC, a Delaware limited liability company (“Merger Sub II”), and Plum SPAC Merger Sub, a Delaware corporation. All inter-company accounts and transactions are eliminated in consolidation.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Merger Sub I and Merger Sub II. There has been no intercompany activity since inception.
Emerging Growth Company
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 independent registered public accounting firm 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 stockholder approval of any golden parachute payments not previously approved.
9
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
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 condensed consolidated 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 the condensed consolidated financial statements in conformity with U.S. 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting period.
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 condensed consolidated 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 condensed consolidated financial statements is the determination of the fair value of the conversion option within the subscription, the forward purchase agreements and warrants liabilities. 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 June 30, 2024 and December 31, 2023.
Cash and Investments Held in Trust Account
At June 30, 2024 and December 31, 2023, funds
held in the Trust Account include $
Convertible Promissory Note
The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing derivative financial instruments.
The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.
10
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal
depository insurance coverage of $
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s condensed consolidated balance sheets.
On June 4, 2024, Plum held an Extraordinary General
Meeting of its Shareholders (the “BC EGM”) to approve, among other things, Plum’s entry into the Business Combination
Agreement and related matters, including domestication to become a Delaware entity. The shareholders approved all of the proposals at
the BC EGM. An aggregate of
On June 14, 2024, Plum held an Extraordinary General Meeting of its
Shareholders to amend the Articles to extend Articles Extension Termination Date from the Articles Extension Date to September 14, 2024.
As approved by its shareholders at the June Shareholder Meeting, Plum filed an Amended and Restated Memorandum and Articles of Association
(the “A&R Charter”) on June 18, 2024 which extended the date by which the Company has to consummate a business combination
to September 14, 2024. An aggregate of
| Ordinary shares subject to possible redemption, December 31, 2022 | $ | |||
| Less: | ||||
| Redemptions of ordinary shares | ( | ) | ||
| Plus: | ||||
| Accretion adjustment of carrying value to redemption value | ||||
| Ordinary shares subject to possible redemption, December 31, 2023 | $ | |||
| Plus: | ||||
| Accretion adjustment of carrying value to redemption value | ||||
| Ordinary shares subject to possible redemption, March 31, 2024 | $ | |||
| Less: | ||||
| Redemption | ( | ) | ||
| Plus: | ||||
| Accretion adjustment of carrying value to redemption value | ||||
| Ordinary shares subject to possible redemption, June 30, 2024 | $ |
Offering Costs
The Company complies with the requirements of ASC340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering. Offering costs are charged to shareholders’ deficit or the condensed consolidated statements of operations based on the relative value of the Warrants to the proceeds received from the Units sold upon the completion of the IPO.
11
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, (excluding the promissory note and Warrants) which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheets.
Warrant Liabilities
The Company accounts for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of such warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations.
The Company accounts for the Public and Private warrants in accordance with guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability (See Note 6).
Forward Purchase Agreement
The Company evaluated the forward purchase agreement
(“FPA”) to determine if such instrument is a derivative or contains features that qualify as embedded derivatives, pursuant
to ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, will be re-assessed at the end of each reporting period. The
On June 15, 2023, the Company received a termination notice (the “Notice”) from Sakuu Corporation (“Sakuu”), that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023, and in light of the termination of the Business Combination Agreement, the FPA was also terminated.
Subscription Agreements
The Company analyzed its Subscription Agreements
(as described in Note 5 and Note 8) under ASC 480 “Distinguishing Liabilities from Equity” and ASC 815 “Derivatives
and Hedging” and concluded that, (i) the Subscription Shares issuable under the Subscription Agreements are not required to be accounted
for as a liability under ASC 480 or ASC 815, and (ii) bifurcation of a single derivative that comprises all of the fair value of the Subscription
Share feature(s) (i.e., derivative instrument(s)) is not necessary under ASC 815-15-25-7 through 25-10. As a result, all debt proceeds
received from Polar and Palmeira have been recorded using the relative fair value method of accounting under ASC 470 “Debt”.
As of June 30, 2024, the Sponsor received an aggregate of $
On June 26, 2024, the Sponsor and Company entered
into a letter agreement by which the Sponsor agreed to forgive the principal balance of Promissory Notes entered into on March 16, 2024
(amended July 14, 2024), July 25, 2023 and October 18, 2023 in the amount of $
12
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
| 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 certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed consolidated balance sheets. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, and promissory note to related parties are estimated to approximate the carrying values as of June 30, 2024 and December 31, 2023 due to the short maturities of such instruments. See Note 7 for additional information on assets and liabilities measured at fair value.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” ASC Topic 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. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of June 30, 2024 and December 31, 2023, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. 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 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.
13
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Net (Loss) Loss Per Ordinary Share
The Company complies with accounting and disclosure
requirements of ASC Topic 260, “Earnings Per Share.” The Company has one class of share, which is referred to as Class A
ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The potential
| For the Three Months Ended June 30, 2024 | For the Six Months Ended June 30, 2024 | |||||||||||||||||||||||
| Class A | Class A | |||||||||||||||||||||||
| ordinary share | ordinary share | |||||||||||||||||||||||
| subject | subject | |||||||||||||||||||||||
| to possible | to possible | |||||||||||||||||||||||
| redemption | Class A | Class B | redemption | Class A | Class B | |||||||||||||||||||
| NUMERATOR | ||||||||||||||||||||||||
| Allocation of net income | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
| DENOMINATOR | ||||||||||||||||||||||||
| Weighted Average Shares Outstanding including common stock subject to redemption | ||||||||||||||||||||||||
| $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| For the Three Months Ended June 30, 2023 (as restated) |
For the Six Months Ended June 30, 2023 (as restated) |
|||||||||||||||
| Class A | Class A | |||||||||||||||
| ordinary share | ordinary share | |||||||||||||||
| subject | subject | |||||||||||||||
| to possible | to possible | |||||||||||||||
| redemption | Class B | redemption | Class B | |||||||||||||
| Numerator | ||||||||||||||||
| Allocation of net income | $ | $ | $ | $ | ||||||||||||
| Denominator | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
14
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Recent Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its condensed consolidated financial statements and disclosures.
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
NOTE 3 — INITIAL PUBLIC OFFERING
On March 18, 2021, the Company sold
On April 14, 2021, the Company sold an additional
All of the
The Class A ordinary share is subject to SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable ordinary share resulted in charges against additional paid-in capital and accumulated deficit.
NOTE 4 — PRIVATE PLACEMENTS
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of
15
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
The Private Placement Warrants have terms and provisions that are identical to those of the warrants sold as part of the units in the IPO. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination (except pursuant to limited exceptions to the Company’s officers and directors and other persons or entities affiliated with the initial purchasers of the Private Placement Warrants) and they will not be redeemable by the Company so long as they are held by the Sponsor or its permitted transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis.
If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units sold in the IPO.
NOTE 5 — RELATED PARTY TRANSACTIONS
Founder Shares
On January 13, 2021, the Sponsor paid $
The Sponsor and the Company’s directors
and executive officers have agreed not to transfer, assign or sell any of their Founder Shares until earliest of (A) year
after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the
closing price of our Class A ordinary shares equals or exceeds $
Promissory Note — Related Party
On January 13, 2021, the Sponsor agreed to
loan the Company up to $
On March 16, 2023, Plum issued an unsecured
promissory note in the total principal amount of up to $
Advance from Sponsor
On April 10, 2024, May 14, 2024, June 4, 2024
and June 10, 2024 the Sponsor advanced the Company $
16
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Working Capital Loans
In addition, in order to finance transaction costs
in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers
and directors, and third parties have committed 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 it. 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 held in the Trust Account would be used to repay the Working Capital
Loans. Up to $
On January 31, 2022, the Company issued an
unsecured promissory note (the “Dinsdale Note”) in the principal amount of $
On July 11, 2022, the Company issued an unsecured
promissory note (the “Burns Note”) in the principal amount of $
The Dinsdale Note and Burns Note are
reported at cost in the condensed consolidated financial statements as the fair value adjustment associated with the conversion is deemed
to be immaterial. As of June 30, 2024 and December 31, 2023, the outstanding balance on the Dinsdale Note and Burns Note is $
17
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
In connection with the Subscription Agreements
(as described below), the Company issued unsecured promissory notes (“Convertible Promissory Notes”), dated as of March 17,
2023, July 25, 2023, October 18, 2023, and November 12, 2023, in the principal amount of up to $
Subscription Agreements
On March 16, 2023, the Sponsor entered into
a Subscription Agreement with Polar Multi-Strategy Master Fund (the “Investor”), pursuant to which Investor agreed to
pay the Sponsor an aggregate of $
Subsequently, on May 23, 2023, Investor agreed
to pay the Sponsor an aggregate of $
On July 14, 2023, the Company entered into an
amended and restated subscription agreement (“A&R Subscription Agreement”) with Investor and Sponsor, which amends and
restates the subscription agreement entered into by the Parties on March 16, 2023. The purpose of the A&R Subscription Agreement remains
for the Sponsor to raise up to $
On July 25, 2023, the Company entered into a second
subscription agreement (“Second Subscription Agreement”) with the Investor and Sponsor, the purpose of which is for the Sponsor
to raise up to $
On October 18, 2023, the parties to the A&R
Subscription Agreement entered into Amendment No. 1 to the A&R Subscription Agreement, in which the parties amended the consideration
of a Capital Call made pursuant to the A&R Subscription Agreement to the following: (a)
18
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
On October 18, 2023, the parties to the Second
Subscription Agreement entered into Amendment No. 1 to the Second Subscription Agreement, in which the parties (a) limited the total amount
of the Investor’s Capital Commitment that may be called subject to the Second Subscription Agreement to $
On October 18, 2023, the Company entered into
a third subscription agreement (“Third Subscription Agreement”) with Investor and Sponsor, the purpose of which is for the
Sponsor to raise up to $
On November 12, 2023, the Company entered into
a subscription agreement (“Fourth Subscription Agreement”) with Palmeira Investment Limited (the “Palmeira”) and
Sponsor and, together with the Company and Palmeira, the “Parties”, the purpose of which is for the Sponsor to raise up to
$
As of June 30, 2024 and December 31, 2023, Polar
and Palmeira (collectively the “Investors”) have paid the Sponsor an aggregate of
On June 26, 2024, the Sponsor and Company entered
into a letter agreement by which the Sponsor agreed to forgive the principal balance of Promissory Notes entered into on March 16, 2024
(amended July 14, 2024), July 25, 2023 and October 18, 2023 in the amount of $
Administrative Support Agreement
The Company will pay the Sponsor or an affiliate
of the Sponsor $
19
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
NOTE 6 — WARRANTS
The Public Warrants will become exercisable at
$
The Company has agreed that as soon as practicable,
but in no event later than
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.
20
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Redemption of Warrants When the Price per Class A
Ordinary Share Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon not less than | |
| ● | if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $ |
Redemption of Warrants When the Price per Class A Ordinary
Share Equals or Exceeds $
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
| ● | in whole and not in part; | |
| ● | at $ | |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ | |
| ● | if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $ |
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 $
NOTE 7 — RECURRING FAIR VALUE MEASUREMENTS
Cash and Investments Held in Trust Account
As of June 30, 2024 and December 31, 2023, the cash and investments
in the Company’s Trust Account consisted of approximately $
Fair values of the Company’s investments are classified as Level 1 utilizing quoted prices (unadjusted) in active markets for identical assets.
21
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Recurring Fair Value Measurements
The Company’s permitted investments consist of U.S. Money Market funds. Fair values of these investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets. The Company’s initial value of the warrant liability was based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets and classified as level 3. The subsequent measurement of the Public Warrants is classified as Level 1 due to the use of an observable market price of these warrants. The subsequent measurement of the Private Warrants is classified as Level 2 because these warrants are economically equivalent to the Public warrants, based on the terms of the Private Warrant agreement, and as such their value is principally derived by the value of the Public Warrants. Significant deviations from these estimates and inputs could result in a material change in fair value. For the three and six months ended June 30, 2024, there were no transfers amongst level 1, 2, and 3 values during the period.
The conversion feature of the Convertible Promissory
Notes, in connection with the Subscription Purchase Agreement, is measured at fair value using a Monte Carlo model that fair values the
compound option. The fair value of the conversion feature of the Convertible Promissory Notes was
| June 30, 2024 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account—Demand Deposit | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Public warrant liability | ||||||||||||||||
| Private warrant liability | ||||||||||||||||
| Sponsor loan conversion option | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Investments held in Trust Account—Demand Deposit | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Public warrant liability | ||||||||||||||||
| Private warrant liability | ||||||||||||||||
| Sponsor loan conversion option | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement
Warrants and any 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 Company’s completion of its initial Business Combination. However, the registration and shareholder rights
agreement provide that the Company will not permit any registration statement filed under the Securities Act to become effective until
termination of the applicable Lock-up period, which occurs (i) in the case of the Founder Shares, as described in Note 5, and
(ii) in the case of the Private Placement Warrants and the respective Class A ordinary shares underlying such warrants,
22
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Underwriting Agreement
The Company granted the underwriter a
On March 18, 2021, the Company paid the underwriter’s
fee of $
In addition, the Underwriting Agreement provides
$
Waiver of Deferred Underwriting Discount
On January 16, 2023, Goldman Sachs, the underwriter
of the Company’s initial public offering, waived any entitlement it had to its deferred underwriting discount in the amount of $
Service Provider Agreements
From time to time the Company has entered into and may enter into agreements with various services providers and advisors, including investment banks, to help us identify targets, negotiate terms of potential Business Combinations, consummate a Business Combination and/or provide other services. In connection with these agreements, the Company may be required to pay such service providers and advisors fees in connection with their services to the extent that certain conditions, including the closing of a potential Business Combination, are met. If a Business Combination does not occur, the Company would not expect to be required to pay these contingent fees. There can be no assurance that the Company will complete a Business Combination.
Business Combination Agreement
On March 2, 2023, the Company entered into a Business Combination Agreement by and among the Company, Sakuu Corporation, a Delaware corporation (the “Sakuu”), Merger Sub I, and Merger Sub II. The Business Combination Agreement with Sakuu was terminated on June 14, 2023.
On November 27, 2023, the Company, Plum SPAC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Plum (“Merger Sub”), and Veea Inc., a Delaware corporation (“Veea”), entered into a Business Combination Agreement (the “Business Combination Agreement”).
Founded in 2014, Veea offers edge-to-cloud computing with its VeeaHub smart computing hub products that can replace or complement Wi-Fi Access Points (APs), IoT gateways, routers, basic firewalls, network attached storage, and other types of hubs and appliances at user premises.
Subscription Agreement
As disclosed in the definitive proxy statement
filed by the Company on February 24, 2023 (the “Proxy Statement”), relating to the extraordinary general meeting of shareholders
(the “Shareholder Meeting”), the Sponsor agreed that if the Extension Amendment Proposal (as defined below) is approved, it
or one or more of its affiliates, members or third-party designees (the “Lender”) will deposit into the Trust Account the
lesser of (A) $
In addition, in the event that the Company has
not consummated an initial business combination by the Articles Extension Date (defined below), without approval of the Company’s
public shareholders, the Company may, by resolution of the Board, if requested by the Sponsor, and upon five days’ advance
notice prior to the applicable Termination Date (as defined below), extend the Termination Date up to nine times, each by one additional month
(for a total of up to nine additional months to complete a Business Combination), provided that the Lender will deposit into the
Trust Account for each such monthly extension, the lesser of (A) $
23
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Accordingly, on March 16, 2023, the Company
entered into a subscription agreement (“Subscription Agreement”) with Polar Multi-Strategy Master Fund (the “Investor”)
and the Sponsor (collectively, the “Parties”), the purpose of which is for the Sponsor to raise up to $
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”); | |
| (b) | in consideration of the Capital Calls, Sponsor will transfer | |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under this Agreement; | |
| (d) | any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under the Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of | |
| (e) | on the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in connection with the Subscription Agreement not to exceed $ |
On July 14, 2023, the Company entered into
an amended and restated subscription agreement (“A&R Subscription Agreement”) with Investor and Sponsor, which amends
and restates the subscription agreement entered into by the Parties on March 16, 2023. The purpose of the A&R Subscription Agreement
remains for the Sponsor to raise up to $
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon on at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”); |
24
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
| (b) | in consideration of the Capital Calls, Sponsor will transfer (i) | |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under this Agreement; | |
| (d) | any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under the A&R Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of | |
| (e) | on the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in connection with the A&R Subscription Agreement not to exceed $ | |
| (f) | an amount that is up to $ |
On July 25, 2023, the Company entered into
a subscription agreement (“Second Subscription Agreement”) with Investor and Sponsor, the purpose of which is for the Sponsor
to raise up to $
| (a) | from time to time, the Company will request funds from the Sponsor for working capital purposes or for the Sponsor to fund an extension payment pursuant to the Company’s Amended and Restated Memorandum and Articles of Association (each a “Drawdown Request”). The Sponsor, upon at least five (5) calendar days’ prior written notice (“Capital Notice”), may require a drawdown against the Investor’s Capital Commitment under a Drawdown Request (each a “Capital Call”). An amount of up to $ |
25
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
| (b) | in consideration of the Capital Calls, Sponsor will transfer 1 share of Class A ordinary share for each dollar the Investor funds pursuant to the Capital Call(s) in respect of the second contribution (together, the “Subscription Shares”) to the Investor at the closing of the Business Combination (the “Business Combination Closing”). The Subscription Shares shall be subject to the Lock-Up Period as defined in section 5 of the Sponsor Letter Agreement dated March 2, 2023 (the “Letter Agreement”). The Subscription Shares shall not be subject to any additional transfer restrictions or any additional lock-up provisions, earn outs, or other contingencies and shall promptly be registered pursuant to the first registration statement filed by the Company or the surviving entity in relation to the Business Combination; | |
| (c) | each member of the Sponsor has the right to contribute any amount requested under each Drawdown Request (“Sponsor Capital Contribution”), provided that such Sponsor Capital Contributions will be made on terms no more favorable than the Investor’s Capital Commitment. In addition, the Company and Sponsor maintain the ability to enter into other agreements with each other or with other parties which shall provide for funding of the Company (through the issuance of equity, entry into promissory notes, or otherwise) outside of Drawdown Requests, provided that the terms of any such agreement between the Company or Sponsor with each other or any party or parties will be no more favorable than the terms under the Second Subscription Agreement; | |
| (d) | any amounts funded by the Sponsor to the Company under a Drawdown Request shall not accrue interest and shall be promptly repaid by the Company to the Sponsor upon the Business Combination Closing. Following receipt of such sums from the Company, and in any event within 5 business days of the Business Combination Closing, the Sponsor or Company shall pay to the Investor, an amount equal to all Capital Calls funded under the Second Subscription Agreement (the “Business Combination Payment”). The Investor may elect at the Business Combination Closing to receive such Business Combination Payment in cash or Class A ordinary shares at a rate of | |
| (e) | on the Business Combination Closing, the Sponsor will pay the Investor an amount equal to the reasonable attorney fees incurred by the Investor in connection with the Second Subscription Agreement not to exceed $ |
In connection with the Second Subscription Agreement,
the Company issued an unsecured promissory note, dated as of July 25, 2023, in the principal amount of up to $
On October 18, 2023, the parties to the A&R
Subscription Agreement entered into Amendment No. 1 to the A&R Subscription Agreement, in which the parties amended the consideration
of a Capital Call made pursuant to the A&R Subscription Agreement to the following: (a)
On October 18, 2023, the parties to the Second
Subscription Agreement entered into Amendment No. 1 to the Second Subscription Agreement, in which the parties (a) limited the total amount
of the Investor’s Capital Commitment that may be called subject to the Second Subscription Agreement to $
26
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
On October 18, 2023, the Company entered into
a third subscription agreement (“Third Subscription Agreement”) with Investor and Sponsor, the purpose of which is for the
Sponsor to raise up to $
On November 12, 2023, the Company entered into
a subscription agreement (“Fourth Subscription Agreement”) with Palmeira Investment Limited (“Palmeira”) and Sponsor
and, together with the Company and Palmeira, the “Parties”, the purpose of which is for the Sponsor to raise up to $
As of June 30, 2024 and December 31, 2023, Polar and Palmeira (collectively
the “Investors”) have paid the Sponsor an aggregate of and $
Forward Purchase Agreement
Prior to the execution of the Business Combination
Agreement, the Company and Polar entered into a letter agreement dated March 1, 2023 (the “Forward Purchase Agreement”),
pursuant to which Polar will purchase (either in the open market, or from the Company) up to
Seller has agreed to waive any redemption rights with respect to any FPA Shares and separate shares in connection with the Business Combination.
The Forward Purchase Agreement provides that at Closing, the Company will pay to Polar, out of funds held in Trust Account, an amount equal to the sum of (x) the Public Shares (as defined in the Forward Purchase Agreement) multiplied by the Redemption Price (as defined in the Amended and Restated Certificate of Incorporation), and (y) the proceeds of the Private Shares (as defined in the Forward Purchase Agreement) purchased by Polar (collectively, such amount, the “Prepayment Amount”), to Polar.
At the maturity of the Forward Purchase Agreement,
which will be one year from the Closing unless accelerated or deferred (but up to two years) by Seller, the Company will repurchase
the Public and Private Shares then held by Seller for a price equal to the Redemption Price plus $
On June 15, 2023, the Company received a termination notice from Sakuu, that terminated, effective June 14, 2023, the Business Combination Agreement, dated March 2, 2023. In light of the termination of the Business Combination Agreement, the FPA was also terminated.
Release Agreement
On October 31, 2022, the Company entered into a termination agreement with a potential party to a business combination (“Target”), pursuant to which the Company and Target agreed to release each other from any obligations and claims related to a certain Amended and Restated Non-Binding Term Sheet, dated as of June 22, 2022 (“Term Sheet”), and related Term Sheet Extension Letter Agreements, dated July 18, 2022, July 22, 2022, August 1, 2022, and August 8, 2022.
27
PLUM ACQUISITION CORP. I
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(Unaudited)
Non-Redemption Agreement
On June 4, 2024, the Company entered into a non-redemption agreement (the “Non-Redemption Agreement”) with certain investors named therein (each, a “Backstop Investors”). Pursuant to the Non-Redemption Agreement, the Backstop Investors agreed that, on or prior to Closing, the Backstop Investors will rescind or reverse their previous election to redeem an aggregate of up to the number of shares of Plum common stock subject to the Non-Redemption Agreement (the “Backstop Shares”), which redemption requests were made in connection with the extraordinary general meeting of stockholders held on June 4, 2024 for the purpose of approving the Business Combination. Upon consummation of the Business Combination, Plum shall pay or cause to be paid to each Backstop Investor a payment in respect of its respective Backstop Shares in cash released from Plum’s trust account in an amount equal to the product of (x) the number of Backstop Shares and (y) the price per share for a pro rata portion of the amount then on deposit in the trust account, less $9.50.
Engagement Letter
On November 15, 2022 and as amended in November of 2023, the Company and J.V.B. Financial Group, LLC acting through its Cohen & Company Capital Market division (“CCM”) entered into an engagement letter (the “Engagement Letter”) whereby CCM will provide financial advising services. On June 26, 2024, the Company and CCM entered into an amendment to the Engagement Letter (the “Amendment”), which, among other things, provided that, instead of receiving a cash fee contingent upon the Closing of the Business Combination, CCM would purchase a number of Class A ordinary shares (the “Acquired Shares”) that had been tendered for redemption in connection with the extraordinary general meeting held of stockholders held on June 4, 2024 and reverse the redemption of those Acquired Shares. Contingent upon the Closing of the Business Combination, the Company would then pay CCM the lesser of (i) the amount actually paid for the Acquired Shares or (ii) an amount equal to the redemption price per share to be paid to shareholders at the Closing of the Business Combination for the Acquired Shares.
NOTE 9 — SHAREHOLDERS’ DEFICIT
Preference Shares — The Company
is authorized to issue
Class A Ordinary Shares —
The Company is authorized to issue a total of
Class B Ordinary Shares —
The Company is authorized to issue a total of
NOTE 10 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the condensed consolidated financial statements were issued. Based upon this review, other than below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Plum Acquisition Corp. I. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Plum Partners, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special 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 and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company on January 11, 2021 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on March 18, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.
Recent Developments
As previously reported, on November 27, 2023, the Company executed a Business Combination Agreement by and between the Company, Plum SPAC Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly-owned subsidiary of Plum, and Veea Inc., a Delaware corporation (“Veea”) (the “Business Combination Agreement”). Pursuant to the Business Combination Agreement, the Company and Veea are working toward closing their business combination (the “Business Combination”).
On June 4, 2024, Plum held an Extraordinary General Meeting of its Shareholders (the “BC EGM”) to approve, among other things, Plum’s entry into the Business Combination Agreement and related matters, including domestication to become a Delaware entity. The shareholders approved all of the proposals at the BC EGM. An aggregate of 2,662,592 Class A ordinary shares of the Company were tendered for redemption in connection with the shareholders’ vote at the BC EGM, for an aggregate price of $29,926,030. Plum will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of the remaining funds in the trust account, calculated as of two business days prior to the consummation of the Business Combination.
On June 14, 2024, Plum held an Extraordinary General Meeting of its Shareholders (“June Shareholder Meeting”) to amend the Articles to extend Articles Extension Termination Date from the Articles Extension Date to September 14, 2024 (the “Third Articles Extension Date”). As approved by its shareholders at the June Shareholder Meeting, Plum filed an Amended and Restated Memorandum and Articles of Association (the “A&R Charter”) on June 18, 2024 which extended the date by which the Company has to consummate a business combination to September 14, 2024. An aggregate of 19,230 Class A ordinary shares of the Company were tendered for redemption in connection with the shareholders’ vote at June Shareholder Meeting, for an aggregate price of $216,134, which were paid on or around August 23, 2024
Results of Operations
For the three months ended June 30, 2024, we had an income of $3,225,787. In addition to the loss from operations of $789,241, we recognized other income of $4,015,028 consisting of an unrealized gain on our warrant liabilities of $3,855,365, interest expense of debt discount of $234,465, offset by interest earned on cash held in the Trust Account of $394,128.
For the six months ended June 30, 2024, we had a loss of $981,242. In addition to the loss from operations of $1,708,374, we recognized other income of $727,132 consisting of an unrealized loss on our warrant liabilities of $568,824, interest expense of debt discount of $651,742, offset by interest earned on cash held in the Trust Account of $810,050.
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For the three months ended June 30, 2023, we had a loss from operations of $2,552,400. In addition to the loss from operations, we recognized other income $3,131,354 consisting of an unrealized loss on our warrant liabilities of $1,978,245, change in fair value of FPA of $633,205, interest expense – debt discount of $106,416 and interest earned on cash held in the Trust Account of $626,320.
For the six months ended June 30, 2023, we had a loss from operations of $2,132,353. In addition to the loss from operations, we recognized other income $3,864,589 consisting of an unrealized loss on our warrant liabilities of $44,241, change in fair value of FPA of $308,114 issuance of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474, interest expense – debt discount of $134,93 and interest earned on cash held in the Trust Account of $3,715,287.
Through June 30, 2024, our efforts have been limited to organizational activities, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We have not generated any realized income, other than interest income. The change in fair value of our warrant liabilities had no impact on cash. As of June 30, 2024, $36,591,026 was held in the Trust Account, $1,969 of cash held outside of Trust Account and $5,661,736 of accounts payable and accrued expenses.
Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay taxes, if any, the proceeds in the Trust will not be released from the Trust Account (1) to us, until the completion of our initial Business Combination, or (2) to the Public Shareholders, until the earliest of (i) the completion of our 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, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial Business Combination or to redeem 100% of the public shares if we do not complete an initial Business Combination within the combination period or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares, and (iii) the redemption of the public shares if we have not consummated a Business Combination within the Combination Period, subject to applicable law.
Liquidity, Capital Resources and Going Concern
As of June 30, 2024, we had cash outside our Trust Account of $1,969, available for working capital needs. We intend to use the funds held outside the Trust Account to complete our initial business combination with Veea Inc.
In March, 2021 and April 2021, we sold 31,921,634 units (the “Units” and, with respect to the shares of Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $319,216,340. In connection with the vote to approve the Extension Amendment Proposal, the holders of 26,693,416 Class A ordinary shares properly exercised their right to redeem their shares for cash at a redemption price of $10.23 per share, for an aggregate redemption amount of $273,112,311.
Additionally, we sold 6,256,218 warrants (the “Private Warrants”), at a price of $1.50 per Private Warrant, generating gross proceeds of $9,384,327. Following the sale of our Units and the sale of the Private Warrants, a total of $319,216,340 ($10.00 per Unit) was placed in the Trust Account. We incurred $18,336,269 in Initial Public Offering related costs, including $6,384,327 of underwriting fees, $11,172,572 of deferred underwriting discount and $779,370 of other costs with $564,701 which was allocated to the Public Warrants and Private Warrants, included in the condensed consolidated statements of operations and $17,771,568 included in temporary equity.
On January 31, 2022, the Company issued an unsecured promissory note (the “Dinsdale Note”) in the principal amount of $500,000 to Mike Dinsdale. The Dinsdale Note does not bear interest and is repayable in full upon consummation of a Business Combination. The Company may draw on the Dinsdale Note from time to time, in increments of not less than $50,000, until the earlier of March 18, 2023 or the date on which the Company consummates a Business Combination. If the Company does not complete a Business Combination, the Dinsdale Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, the Mr. Dinsdale shall have the option, but not the obligation, to convert the principal balance of the Dinsdale Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Dinsdale Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Dinsdale Note and all other sums payable with regard to the Dinsdale Note becoming immediately due and payable. The Dinsdale Note was issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
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On July 11, 2022, the Company issued an unsecured promissory note (the “Burns Note”) in the principal amount of $500,000 to Ursula Burns. The Burns Note does not bear interest and is repayable in full upon consummation of a Business Combination. Up to fifty percent (50%) of the principal of the Burns Note may be drawn down from time to time at the Company’s option prior to August 25, 2022 and any or all of the remaining undrawn principal of the Burns Note may be drawn down from time to time at the Company’s option after August 25, 2022, in each case in increments of not less than $50,000. If the Company does not complete a Business Combination, the Burns Note shall not be repaid and all amounts owed under it will be forgiven. Upon the consummation of a Business Combination, Ms. Burns shall have the option, but not the obligation, to convert the principal balance of the Burns Note, in whole or in part, into private placement warrants (as defined in that certain Warrant Agreement, dated March 18, 2021, by and between the Company and Continental Stock Transfer & Trust Company), at a price of $1.50 per private placement warrant. The Burns Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Burns Note and all other sums payable with regard to the Burns Note becoming immediately due and payable.
On March 16, 2023, the Company issued an unsecured promissory note in the total principal amount of up to $250,000 (the “Roy Note”) to Mr. Kanishka Roy, individually and as a member of Plum Partners LLC. Mr. Roy funded the initial principal amount of $250,000 on March 14, 2023. The Roy Note does not bear interest and matures upon the consummation of the Company’s initial business combination with one or more businesses or entities. In the event the Company does not consummate a business combination, the Roy Note will be repaid upon the Company’s liquidation only from amounts remaining outside of the Company’s trust account, if any. The Roy Note is subject to customary events of default, the occurrence of which automatically trigger the unpaid principal balance of the Roy Note and all other sums payable with regard to the Roy Note becoming immediately due and payable.
On March 17, 2023, July 25, 2023, October 18, 2023 and November 12, 2023, the Company issued unsecured promissory notes (“Convertible Promissory Notes”) in the principal amount of up to $1,500,000, $1,090,000, $340,000 and $800,000, respectively, to Sponsor, which may be drawn down by the Company from time to time prior to the consummation of the Company’s Business Combination. The Convertible Promissory Notes do not bear interest, mature on the date of consummation of the Business Combination and is subject to customary events of default. The Convertible Promissory Notes will be repaid only to the extent that the Company has funds available to it outside of its trust account established in connection with its initial public offering and is convertible into private placement warrants of the Company at a price of $1.50 per warrant at the option of the Sponsor. The warrants would be identical to the Private Placement Warrants.
As of June 30, 2024, we had cash held in the Trust Account of $36,591,026.
For the six months ended June 30, 2024, cash used in operating activities was $580,734. Net loss of $981,242 which consisted of interest earned on cash held in the Trust Account of $810,050, offset by an unrealized gain on our warrant liabilities of $568,824, interest expense – debt discount of $651,742 and other operational activities including amounts for accounts payable and accrued expenses and due to related party of $1,127,640.
For six months ended June 30, 2023, cash used in operating activities was $431,465. Net income of $2,132,353 was primarily offset by an unrealized loss on our warrant liabilities of $44,241, change in fair value of FPA of $308,114, issuance of FPA of $308,114, reduction of deferred underwriter fee payable of $328,474, interest expense – debt discount of $134,931 and interest earned on cash held in the Trust Account of $3,715,287. Other operational activities including amounts due to related party generated $1,300,771.
As of June 30, 2024, we had cash outside our Trust Account of $1,969, available for working capital needs. We intend to use the funds held outside the Trust Account to complete our initial business combination with Veea Inc.
Further, our Sponsor, officers and directors or their respective affiliates have committed to loaning us funds as may be required (the “Working Capital Loans”). If we complete a business combination, we will repay the Working Capital Loans. In the event that a business combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, or converted upon consummation of a business combination into additional Private Warrants at a price of $1.50 per Private Warrant. As of June 30, 2024, the fair value of the conversion feature embedded in the Convertible Promissory Note has been determined to have de minimis value (Note 5).
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In connection with the Company’s assessment of going concern considerations in accordance with FASB ASC 205-40, Presentation of Financial Statements—Going Concern”, management has determined that the Company has and will continue to incur significant costs in pursuit of its acquisition plans which raises substantial doubt about the Company’s ability to continue as a going concern. Moreover, we may need to obtain additional financing either to complete the Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of the Business Combination, in which case we may issue additional securities or incur debt in connection with the Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of the Business Combination. If we are unable to complete the Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Accounts. In addition, following the Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Further, management has determined that if the Company is unable to complete the Business Combination by September 14, 2024, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution as well as the Company’s working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after the Combination Period. The Company intends to complete a Business Combination before the mandatory liquidation date.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2024. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
Critical Accounting Estimates
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our financial information. We describe our significant accounting policies in Note 2 – Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in this report. Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our condensed consolidated financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. Some of the more significant estimates are in connection with determining the fair value of the warrant liabilities, the fair value of the conversion option within the subscription and the forward purchase agreements . However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.
Warrant Liabilities
We account for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the Warrants are indexed to the Company’s own ordinary shares and whether the holders of the Warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and as of each subsequent quarterly period end date while the Warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, liability-classified warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of such warrants are recognized as a non-cash gain or loss on the statements of operations. We account for the Public and Private warrants in accordance with guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.
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Convertible Promissory Notes
The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free-standing derivative financial instruments.
The Company reviews the terms of convertible debt issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.
Subscription Liability
Pursuant to ASC 470, the Company recorded the relative fair value of the subscription liability on the condensed consolidated balance sheets using the relative fair value method and the related amortization of the debt discount on its condensed consolidated statements of operations. The initial relative fair value of the subscription liability at issuance was estimated using a Black Scholes and Probability Weighted Expected Return Model.
Redeemable Shares of Class A Ordinary shares
All of the 31,921,634 shares of Class A ordinary shares included in the Units sold as part of the Public Offering contain a redemption feature as described in the prospectus for the Public Offering. In accordance with FASB ASC 480, “Distinguishing Liabilities from Equity”, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying amount of redeemable shares will be affected by charges against additional paid-in capital.
Net Income (Loss) Per Ordinary Share
The Company has two classes of shares, which are referred to as Class A ordinary shares and Class A ordinary shares subject to possible redemption. Earnings and losses are shared pro rata between the two classes of shares. The potential ordinary shares for outstanding warrants to purchase the Company’s shares were excluded from diluted earnings per share for the three and six months ended June 30, 2024 and 2023 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods.
Recent accounting standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its condensed consolidated financial statements and disclosures.
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2024 due to the material weakness in our internal controls over accounting and reporting complex financial instruments including the accounting for our subscription agreements and other service provider or investor agreements, proper classification of warrants as liabilities and redeemable Class A ordinary shares as temporary equity and prepaid expenses between current and non-current, misclassification of the trust account between current and long term assets, misclassification of redeemed shares between current liabilities and temporary equity and under accrual of liabilities. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on March 1, 2024. As of the date of this Report, there have been no material changes to the risk factors disclosed in such Annual Report on Form 10-K. We may disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Item 6. Exhibits.
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected on the SEC website at www.sec.gov.
| * | Filed herewith |
| ** | Furnished herewith |
| (1) | Incorporated by reference to the registrant’s Current Report on Form 8-K filed with the SEC on December 1, 2023. |
| (2) | Incorporated by reference to the registrant’s Current Report on Form 8-K filed with the SEC on October 31, 2023. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 9th day of September 2024.
| Plum Acquisition Corp. I | ||
| By: | /s/ Michael Dinsdale | |
| Name: | Michael Dinsdale | |
| Title: | Chief Financial Officer | |
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