QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-third of one redeemable warrant |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Auditor Firm Id: PCAOB ID 688 |
Auditor Name: Marcum LLP |
Auditor Location: Houston, Texa s |
TARGET GLOBAL ACQUISITION I CORP.
TABLE OF CONTENTS
| Page | ||||||
| 1 | ||||||
| Item 1. |
1 | |||||
| Condensed Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 |
1 | |||||
| 2 | ||||||
| 3 | ||||||
| Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 |
4 | |||||
| 5 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 | ||||
| Item 3. |
Quantitative and Qualitative Disclosures Regarding Market Risk |
33 | ||||
| Item 4. |
33 | |||||
| 34 | ||||||
| Item 1. |
34 | |||||
| Item 1A. |
34 | |||||
| Item 2. |
35 | |||||
| Item 3. |
35 | |||||
| Item 4. |
35 | |||||
| Item 5. |
36 | |||||
| Item 6. |
36 | |||||
| Part III. Signatures | ||||||
September 30, 2024 (Unaudited) |
December 31, 2023 |
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| Assets: |
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| Current assets: |
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| Cash |
$ | $ | ||||||
| Prepaid expenses |
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| Total current assets |
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| Investment held in Trust Account |
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| Total assets |
$ |
$ |
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| Liabilities, Shares Subject to Redemption and Shareholders’ Deficit |
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| Current liabilities: |
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| Accounts payable and accrued expenses |
$ | $ | ||||||
| Due to related party |
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| Promissory Note—Related Party |
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| Total current liabilities |
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| Deferred underwriting commissions |
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| Total liabilities |
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| Commitments and Contingencies (Note 6) |
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| Class A ordinary shares subject to possible redemption, |
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| Shareholders’ Deficit |
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| Preference shares, $ |
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| Class A ordinary shares, $ |
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| Class B ordinary shares, $ |
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| Accumulated deficit |
( |
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| Total Shareholders’ Deficit |
( |
) |
( |
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| Total Liabilities, Shares Subject to Redemption and Shareholders’ Deficit |
$ |
$ |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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| General and administrative expenses |
$ | $ | $ | $ | ||||||||||||
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| Loss from operations |
( |
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( |
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( |
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| Other income (expense): |
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| Recovery of previously incurred costs |
— | |||||||||||||||
| Finance cost |
( |
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| Interest income on investment held in Trust Account |
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| Total other income (expense) |
( |
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| Net (loss) income |
$ |
( |
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$ |
$ |
( |
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$ |
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| Basic and diluted weighted average shares outstanding, Class A ordinary shares subject to possible redemption |
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| Basic and diluted net (loss) income per share, Class A ordinary shares subject to possible redemption |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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| Basic and diluted, weighted average shares outstanding, Class A and Class B non-redeemable ordinary shares |
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| Basic and diluted net (loss) income per share, Class B non-redeemable ordinary shares |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Class A Ordinary Shares Not subject to redemption |
Class B Ordinary Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Shareholders’ Deficit |
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Shares |
Amount |
Shares |
Amount |
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Balance as of December 31, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance as of March 31, 2024 |
$ |
$ |
$ |
— |
$ |
( |
) |
$ |
( |
) | ||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Waiver of deferred underwriting commissions |
— | — | — | — | — | |||||||||||||||||||||||
Equity contribution from previous sponsor |
— | — | — | — | — | |||||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Balance as of June 30, 2024 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Contribution from previous sponsor |
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Spons or equity cont rib ut ion |
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Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance as of September 30, 2024 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Class A Ordinary Shares subject to redemption |
Class B Ordinary Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Shareholders’ Deficit |
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Shares |
Amount |
Shares |
Amount |
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Balance as of December 31, 2022 |
$ | $ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Partial waiver of deferred underwriters’ discount |
— | — | ||||||||||||||||||||||||||
Net income |
— | — | — | |||||||||||||||||||||||||
Balance as of March 31, 2023 |
$ | $ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||
Net income |
— | — | — | |||||||||||||||||||||||||
Balance as of June 30, 2023 |
$ | $ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion for Class A ordinary shares to redemption value |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Conversion of Class B ordinary shares to Class A ordinary shares |
( |
) | ( |
) | — | — | — | |||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Balance as of September 30, 2023 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||||||||
For the Nine Months Ended September 30, |
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2024 |
2023 |
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| Cash flows from operating activities: |
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| Net (loss) income |
$ | ( |
) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: |
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| Finance cost |
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| Interest earned on investment held in Trust Account |
( |
) | ( |
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| Changes in operating assets and liabilities: |
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| Prepaid expenses |
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| Accounts payable and accrued expenses |
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| Due to related party |
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| Net cash used in operating activities |
( |
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( |
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| Cash flows from investing activities: |
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| Extension contributions in Trust Account |
( |
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| Cash withdrawn from Trust Account in connection with redemption |
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| Net cash provided by investing activities |
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| Cash flow from financing activity: |
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| Redemption of shares |
( |
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| Proceeds of promissory note—related party |
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| Contribution from previous sponsor |
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| Net cash used in a financing activity |
( |
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( |
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| Net change in cash |
( |
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| Cash, beginning of the period |
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| Cash, end of the period |
$ |
$ |
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| Supplemental disclosure of cash flow information: |
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| Waiver of deferred underwriting commissions |
$ | $ | ||||||
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| Equity contribution from previous sponsor |
$ | $ | ||||||
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| Accretion for Class A ordinary shares to redemption |
$ | $ | ||||||
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| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Class A ordinary shares subject to possible redemption, December 31, 2022 |
$ |
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Less: |
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Redemptions |
( |
) | ||
Plus: |
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Remeasurement of carrying value to redemption value |
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Class A ordinary shares subject to possible redemption, December 31, 2023 |
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Less: |
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Redemptions |
( |
) | ||
Plus: |
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Remeasurement of carrying value to redemption value |
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Class A ordinary shares subject to possible redemption, September 30, 2024 |
$ |
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For the Three Months Ended September 30, |
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2024 |
2023 |
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Class A redeemable |
Class A and Class B non-redeemable |
Class A redeemable |
Class A and Class B non-redeemable |
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Basic and diluted net per ordinary share |
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Numerator: |
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Allocation of net (loss) income |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net (loss) income per ordinary share |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||
For the Nine Months Ended September 30, |
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2024 |
2023 |
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Class A redeemable |
Class A and Class B non-redeemable |
Class A redeemable |
Class A and Class B non-redeemable |
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Basic and diluted net per ordinary share |
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Numerator: |
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Allocation of net (loss) income |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||
Denominator: |
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Basic and diluted weighted average shares outstanding |
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Basic and diluted net (loss) income per ordinary share |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||
| • |
| • | 30-trading day period commencing at least |
| • |
| • | On November 11, 2022, the Sponsor agreed, under a separate promissory note, to loan the Company up to $ |
| • | On June 27, 2023, the Sponsor agreed, under a separate promissory note, to loan the Company additional $ |
| • | On August 17, 2023, the Sponsor agreed, under a separate promissory note, to loan the Company additional $ |
| • | On August 17, 2023, the Sponsor agreed, under a separate promissory note, to loan the Company additional $ |
| • | On December 15, 2023, the Sponsor agreed, under a separate promissory note, to loan the Company additional amount of $ |
| • | On March 26, 2024, the Sponsor agreed, under a separate promissory note, to loan the Company additional amount of $ December 31, 2025 |
| • | On May 14, 2024, the Sponsor agreed, under an additional promissory note, to loan the Company additional amount of $ |
| • | On May 17, 2024, the Sponsor agreed, under an additional promissory note, to loan the Company additional amount of $ |
| • | in whole and not in part; |
| • | at a price of $ |
| • | upon a minimum of 30 days’ prior written notice of redemption; and |
| • | if, and only if, the last reported sale price of the Class A ordinary shares equals or exceeds $ a ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
September 30, 2024 |
Quoted Prices In Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
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Demand Deposit Account |
$ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
December 31, 2023 |
Quoted Prices In Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||||||
Demand Deposit Account |
$ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Target Global Acquisition I Corp.,” “our,” “us” or “we” refer to Target Global Acquisition I Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings. The Company’s filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Unless otherwise required by law, we disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this Quarterly Report on Form 10-Q.
Overview
We are a blank check company incorporated on February 2, 2021 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).
Our Sponsor is Target Global Sponsor Ltd., a Cayman Islands company limited by shares. The registration statement for our IPO was declared effective on December 8, 2021. On December 13, 2021, we commenced our IPO of 20,000,000 units at $10.00 per unit. Transaction costs related to the IPO amounted to $12,535,264 consisting of $4,000,000 of underwriting commissions, $7,000,000 of deferred underwriting commissions (including the portion of the deferred underwriting commission subsequently waived by BofA on January 10, 2023), $510,000 in value of the over-allotment option, and $1,025,264 of other offering costs. Simultaneously with the consummation of the IPO, we consummated the private placement of 6,666,667 Private Placement Warrants to the Sponsor, at a price of $1.50 per Private Placement Warrant in a private placement. The sale of the Private Placement Warrants in connection with the IPO generated gross proceeds of $10,000,000. On December 29, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 1,489,658 Units issued for gross proceeds of $14,896,580.
Following the closing of the IPO on December 13, 2021, and the subsequent close of the partial over-allotment option on December 29, 2021, a total of $219,194,512 from the net proceeds of the sale of the Units in the IPO and over-allotment and the sale of the Private Placement Warrants was deposited into the Trust Account. On November 24, 2023, we instructed Continental to maintain the funds in the Trust Account in cash in an interest-bearing demand deposit account at a bank until the earlier of the consummation of our Business Combination or the liquidation of our Company. Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest of (i) the completion of the initial Business Combination, (ii) the redemption of our public shares if
26
we are unable to complete the initial Business Combination by deadline prescribed in the our Articles, subject to applicable law, or (iii) the redemption of our public shares properly submitted in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of its public shares if we have not consummated an initial Business Combination by the deadline prescribed in our Articles or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders.
27
We initially had 18 months from the closing of the IPO, until June 13, 2023 (or up to 24 months from the closing of our IPO if we extended the period of time to consummate a Business Combination, subject to our Sponsor depositing additional funds in our Trust Account) to complete an initial Business Combination.
On June 2, 2023, we amended our Articles to extend the date by which we have to consummate an initial Business Combination from June 13, 2023 to September 13, 2023 and to allow the Company to elect to further extend the Termination Date on a monthly basis for up to six times by an additional one month each time after September 13, 2023, until March 13, 2024, unless the closing of an initial Business Combination shall have occurred prior thereto. In connection with such extension, we also amended the Trust Agreement to align the date on which Continental must commence liquidation of the Trust Account to the dates stipulated in our revised Articles. In connection with this extension, stockholders holding 16,994,128 shares of the Company’s Class A ordinary shares issued in the Company’s IPO exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $178,982,472 (approximately $10.53 per share) was removed from the Company’s Trust Account to pay such holders.
In addition, the Sponsor, its affiliates and designees agreed to deposit into the Trust Account as a loan (a “June 2023 EGM Contribution,” and the Sponsor, its affiliate or designee making such June 2023 EGM Contribution, a “Contributor”) (i) on June 14, 2023, with respect to the extension to September 13, 2023, an amount equal to the lesser of (x) $270,000 or (y) $0.084 per public share multiplied by the number of public shares outstanding, and (ii) one business day following the public announcement by the Company disclosing that the Company’s board of directors has determined to extend the date by which the Company must consummate an initial Business Combination for an additional month, with respect to the extension to each such additional month, an amount equal to the lesser of (x) $90,000 or (y) $0.028 per public share multiplied by the number of public shares outstanding, with the maximum aggregate amount of June 2023 EGM Contributions being $810,000. It was further agreed that the June 2023 EGM Contributions will be evidenced by the June 2023 EGM Contribution Note and will be repayable by the Company upon the Maturity Date.
Following the first amendment to the Company’s Articles, the Company’s board of directors, upon request of the Sponsor, elected to extend the Termination Date four times by an additional one month each time, from September 13, 2023 until January 13, 2024. In connection with these extensions, the Contributor deposited $90,000 into the Trust Account for each such monthly extension, each as a June 2023 EGM Contribution.
The June 2023 EGM Contribution Note may be converted into warrants of the post-business combination entity, which shall have terms identical to the Private Placement Warrants sold concurrently with the IPO, each exercisable for one Class A ordinary share at a purchase price of $11.50 per share, at a price of $1.50 per warrant at the option of the Contributor. The conversion feature included in the June 2023 EGM Contribution Note does not meet the definition of a derivative instrument.
On December 15, 2023, we amended our Articles once again to extend the date by which we have to consummate an initial Business Combination from January 13, 2024 to July 8, 2024 and to allow the Company to elect to further extend the Termination Date on a monthly basis for up to seven times by an additional one month each time after May 8, 2024, until December 8, 2024, unless the closing of an initial Business Combination shall have occurred prior thereto. In connection with such Second Extension, we entered into another amendment to the Trust Agreement to align the date on which Continental must commence liquidation of the Trust Account to the dates stipulated in our revised Articles. In connection with this extension, stockholders holding 561,310 shares of the Company’s Class A ordinary shares issued in the Company’s IPO exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account. As a result, $6,182,366 (approximately $11.01 per share) was removed from the Company’s Trust Account to pay such holders.
28
In connection with the Second Extension, the Contributor agreed to deposit into the Trust Account a December 2023 EGM Contribution (i) on or before January 13, 2024, with respect to the extension to May 8, 2024, an amount equal to $345,000, and (ii) one business day following the public announcement by the Company disclosing that the Company’s board of directors has determined to extend the date by which the Company must consummate an initial Business Combination for an additional month, with respect to the extension to each such Additional Articles Extension Date, an amount equal to $90,000, with the maximum aggregate amount of December 2023 EGM Contributions being $975,000. It was further agreed that the December 2023 EGM Contributions will be evidenced by a December 2023 EGM Contribution Note and will be repayable by the Company upon the completion of Business Combination. On January 11, 2024, in connection with the Second Extension, the Contributor deposited $345,000 into the Trust Account as a December 2023 EGM Contribution. Further $185,806 was deposited in the Trust Account through September 30, 2024.
The December 2023 EGM Contribution Note may be converted into warrants of the post-business combination entity, which shall have terms identical to the Private Placement Warrants sold concurrently with the IPO, each exercisable for one Class A ordinary share at a purchase price of $11.50 per share, at a price of $1.50 per warrant at the option of the Contributor. The conversion feature included in the December 2023 Contribution Note does not meet the definition of a derivative instrument.
On May 31, 2024, Shmuel Chafets informed the Company of his decision to resign as Chief Executive Officer (“CEO”) of the Company, effective immediately. Also on May 31, 2024, the board of directors of the Company appointed Mr. Michael Minnick as CEO of the Company, effective immediately.
Additionally, in connection with this appointment, Mr. Minnick entered into an indemnity agreement and an insider letter (the “Purchaser Insider Letter”) with the Company. CIIG III entered into an identical Purchaser Insider Letter. The indemnity agreement and Purchaser Insider Letter are similar to the indemnity agreements and insider letters that the directors and officers of the Company entered into at the time of the Company’s initial public offering provided however the Lock-Up period definition in the Purchaser Insider Letter was amended with the consent of the Company and the other parties in accordance with the terms of the insider letter.
On May 31, 2024, CIIG III entered into a Securities Assignment Agreement (the “Assignment Agreement”), by and between the Sponsor, the Company and CIIG III, whereby the Sponsor sold, transferred and assigned 3,533,191 Class A ordinary shares of the Company and 17,500 Class B ordinary shares of the Company. In connection with entry into the Assignment Agreement, CIIG III entered into a Purchaser Insider Letter and a joinder agreement to the Registration and Shareholder Rights Agreement, as amended, entered into by the Sponsor in connection with the Company’s initial public offering. In connection with the Purchaser Insider Letter, the Company, Sponsor and other parties to the IPO Insider Letter executed a waiver and amendment modifying section 9(a) of the Lockup Period definition and the Sponsor and each Insider agreed to vote any ordinary shares owned by them in favor of any amendment to modify or extend the time to complete a proposed Business Combination in favor of such related proposals recommended by the Board of Directors. Additionally, the Company and the Sponsor and other signatories thereto executed an amendment to the Registration and Shareholder Rights Agreement to amend the definition of “Founder Shares Lock-up Period” in the agreement.
On May 31, 2024, the Company entered into a non-binding Letter of Intent to consummate a Business Combination with a prospective target in the robotics industry utilizing artificial intelligence technology which the Company believes is a compelling investment opportunity. The Company is currently in negotiations with the Prospective Target and the execution of a business combination agreement is subject to several conditions, including the completion of due diligence and the negotiation and preparation of documentation.
On July 10, 2024, the Company amended the Articles once again to extend the date by which the Company must consummate an initial Business Combination from July 8, 2024 to December 9, 2024 (the “Articles Extension Date”) and to allow the Company, without another shareholder vote, to elect to further extend the Termination Date, if the Company has by the Articles Extension Date entered into a letter of intent or definitive binding agreement to consummate a Business Combination, on a monthly basis for up to six times by an additional one month each time after the Articles Extension Date, by resolution of the Company’s board of directors, and upon one calendar days’ advance notice prior to the applicable Termination Date, until June 9, 2025 unless the closing of an initial Business Combination shall have occurred prior thereto. In connection with such Third Extension, we entered into another amendment to the Trust Agreement to align the date on which Continental must commence liquidation of the Trust Account to the dates stipulated in our revised Articles.
In addition, in connection with such Third Extension, the holders of 2,153,204 Class A ordinary shares of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.43 per share. As a result, an amount of $24,603,697 was removed from the Trust Account to redeem such shares and 7,128,431 Class A ordinary shares of the Company remained outstanding after the redemption was effected. Upon payment of the redemptions, $20,350,872 remained in the Trust Account.
As of September 30, 2024 and December 31, 2023, the total June and December 2023 EGM Contributions into the Trust Account was $1,065,015 and $630,015, respectively.
If we have not consummated an initial Business Combination within the deadline prescribed in our Articles, we 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 us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate a Business Combination within the deadline prescribed in the Company’s Articles.
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Liquidity, Capital Resources and Going Concern
As of September 30, 2024, we had cash outside the Trust Account of $5,693, available for working capital needs, and working capital deficit of $3,544,876. Until consummation of our Business Combination, we will be using the funds held outside the Trust Account, and any additional Working Capital Loans from the initial shareholders, our officers and directors, or their respective affiliates, or other third parties, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
Our liquidity needs up to September 30, 2024, had been satisfied through a payment from the Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of up to $2,038,250. As of September 30, 2024 and December 31, 2023, the amounts under these notes were fully drawn and outstanding. In total our Sponsor deposited $1,065,015 and $630,015 into the Trust Account in connection with our Extension Notes as of September 30, 2024, and December 31, 2023.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, initial shareholders, officers, directors or their affiliates may, but are not obligated to, provide us Working Capital Loans. As of September 30, 2024, there were no amounts outstanding under any Working Capital Loans.
If we are unable to complete a business combination within the deadline prescribed in our Articles, we will redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, 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 us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and as further described in our registration statement, and then seek to dissolve and liquidate. In connection with the our assessment of going concern considerations in accordance with the authoritative guidance FASB Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”, our management has determined that potential liquidity and capital shortage as described above and a mandatory liquidation, and subsequent dissolution, should we be unable to complete a business combination, raise substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities that might be necessary if we are unable to continue as a going concern.
Risks and Uncertainties and Factors That May Adversely Affect our Results of Operations
Our management is currently evaluating the impact of the current global economic uncertainty including as a result of high inflation, rising interest rates, supply chain disruptions, the Israel-Hamas conflict, the Russia-Ukraine war (including the impact of any sanctions imposed in response thereto) and has concluded that while it is reasonably possible that any of these could have a negative effect on our financial position, results of operations and/or search for a target company, the specific impact is not readily determinable as of the date of this Quarterly Report. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.
Results of Operations
As of September 30, 2024, we had not commenced any operations. All activity for the period from February 2, 2021 (inception) through September 30, 2024 relates to our formation and the IPO. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after the completion of our initial Business Combination, at the earliest. We generate non-operating income in the form of interest income on investment held in Trust Account from the proceeds derived from the IPO. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2024, we had net loss of $4,173,995, which consisted of income from investments held in the Trust Account and operating account of $247,903 and recoveries of previously incurred costs of $32 (representing settlements of previously outstanding balances to some of the vendors, primarily Company’s legal counsel), offset by finance cost of $2,813,549 and general and administrative expenses of $1,608,381.
For the nine months ended September 30, 2024, we had net loss of $3,540,456, which consisted of income from investments held in the Trust Account and operating account of $1,204,492 and recoveries of previously incurred costs of $476,574 (representing settlements of previously outstanding balances to some of the vendors, primarily Company’s legal counsel), offset by finance cost of $2,813,549 general and administrative expenses of $2,407,973.
For the three months ended September 30, 2023, we had net income of $276,576, which consisted of income from investments held in the Trust Account and operating account of $625,818, offset by general and administrative expenses of $349,242.
For the nine months ended September 30, 2023, we had net income of $3,755,428, which consisted of income from investments held in the Trust Account and operating account of approximately $5,116,755, offset by general and administrative expenses of approximately $1,361,327.
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Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
Office Space, Secretarial and Administrative Services
Commencing on December 9, 2021, through the earlier of consummation our initial Business Combination and the liquidation, we agreed to pay the Sponsor a total of $10,000 per month for office space, utilities, secretarial and administrative support and to reimburse the Sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial Business Combination. The Company incurred $0 and $50,000 of administrative support fees for the three and nine months ended September 30, 2024. The Company incurred $30,000 and $90,000 of administrative support fees for the three and nine months ended September 30, 2023. According to the terms of the Assignment Agreement the administrative services agreement was terminated and the amount of the administrative fees previously incurred by the Company and outstanding was reduced to the amount of $247,419 which is included in the amount due to related party in the Company’s balance sheet as of September 30, 2024, and which is expected to be paid at the completion of Business Combination.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans and extension 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 and extension loans) are entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters had a 45-day option from the date of the IPO to purchase up to an additional 3,000,000 Units to cover over-allotments, if any. On December 29, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 1,489,658 Units issued for gross proceeds of $14,598,648.
The underwriters were paid underwriting commissions of $0.20 per unit, or $4,000,000 in aggregate, upon the closing of the IPO. Following the exercise of the underwriters’ over-allotment option on December 29, 2021, the underwriters earned an additional $297,932 for an aggregate of $4,297,932 in underwriting commissions related to the IPO and over-allotment.
In addition, $7,000,000 was payable to the underwriters for deferred underwriting commissions (including the portion of the deferred underwriting commissions subsequently waived by BofA on January 10, 2023). Following the exercise of the underwriters’ over-allotment option on December 29, 2021, the underwriters earned an additional $521,380 for an aggregate of $7,521,380 in deferred underwriting commissions related to the IPO and over-allotment (including the portion of the deferred underwriting commission subsequently waived by BofA). On January 10, 2023, BofA executed a waiver letter confirming BofA’s resignation and waiver of its entitlement to the payment of deferred underwriting commission in the amount of $3,760,690. On May 29, 2024, UBS executed a waiver letter confirming UBS’s resignation and waiver of its entitlement to the payment of deferred underwriting commission in the amount of $3,760,690.
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Critical Accounting Policies
Offering Costs Associated with IPO
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO. We comply with the requirements of the ASC 340-10-S99-1. Offering costs are allocated ratably with the redeemable and non-redeemable shares they are allocated to. Upon closing of the IPO on December 13, 2021, offering costs associated with warrant liabilities are expensed, and offering costs associated with the Class A ordinary shares are charged to temporary equity. We incurred offering costs amounting to $12,964,576 as a result of the IPO consisting of $4,297,932 of underwriting commissions, $7,521,380 of deferred underwriting commissions (which were waived by both underwriters), and $1,145,264 of other offering costs.
Ordinary Shares Subject to Possible Redemption
We account for ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ deficit. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, 1,781,016 and 3,934,220 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of our balance sheets as of September 30, 2024, and December 31, 2023.
We recognize changes in redemption value immediately as they occur and adjusts the carrying value of Class A ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid in capital and accumulated deficit.
Net (Loss) Income Per Ordinary Share
Net (loss) income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 750,000 ordinary shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. We did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in our earnings for the three and nine months ended September 30, 2024 and 2023. As a result, diluted income per ordinary share is the same as basic (loss) income per share for the period presented.
Recent Accounting Standards
Our management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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Emerging Growth Company Status
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have 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, us, 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 our unaudited condensed 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.
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.
Evaluation of Disclosure 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 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 company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as of September 30, 2024, our disclosure controls and procedures were not effective, considering the following material weaknesses that were identified at September 30, 2024:
Completeness of operating expenses and accruals, including legal fees, as well as completeness and accuracy of transactions with the related parties.
Changes in Internal Control over Financial Reporting
Other than described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) 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.
Members of our management team and board of directors have significant experience as board members, officers or executives of other companies. As a result, certain of those persons have been, may be, or may become, involved in proceedings, investigations and litigation relating to the business affairs of the companies with which they were, are, or may in the future be, affiliated. This may have an adverse effect on us, which may impede our ability to consummate an initial business combination.
During the course of their careers, members of our management team and board of directors have had significant experience as board members, officers or executives of other companies. As a result of their involvement and positions in these companies, certain persons were, are now, or may in the future become, involved in litigation, investigations or other proceedings relating to the business affairs of such companies or transactions entered into by such companies. Any such litigation, investigations or other proceedings may divert our management team’s and board’s attention and resources away from identifying and selecting a target business or businesses for our initial business combination and may negatively affect our reputation, which may impede our ability to complete an initial business combination.
The Insider Letters with our Sponsor, CIIG III, officers and directors may be amended without shareholder approval.
Our Insider Letters contain provisions relating to transfer restrictions of our founder shares and private placement warrants, indemnification of the trust account and waiver of redemption rights. The Insider Letters may be amended without shareholder approval, and any such amendments may have an adverse effect on the value of an investment in our securities.
We employ a mail forwarding service, which may delay or disrupt our ability to receive mail in a timely manner.
Mail addressed to the Company and received at its registered office will be forwarded unopened to the forwarding address supplied by us. None of the Company, its directors, officers, advisors or service providers (including the organization which provides registered office services in the Cayman Islands) will bear any responsibility for any delay howsoever caused in mail reaching the forwarding address, which may impair your ability to communicate with us.
Under the previous Nasdaq rules, a SPAC not in compliance with the Nasdaq Listing Rule IM-5101-2 (the “36-Month Rule”) could request a hearing before a Nasdaq Hearing Panel, which would have the effect of staying any potential delisting. However, in rules that became effective on October 7, 2024 (the “New Nasdaq Rules”), the stay relating to the 36-Month Rule has been removed.
Under the previous Nasdaq rules, a SPAC not in compliance with the 36-Month Rule could request a hearing before the Nasdaq Hearing Panel, which would have the effect of staying any potential delisting. However, in rules that became effective on October 7, 2024 (the “New Nasdaq Rules”), the stay relating to the 36-Month Rule has been removed. Under the New Nasdaq Rules, a SPAC’s Nasdaq-listed securities will be immediately suspended from trading through the pendency of the Nasdaq Hearing Panel’s review. In addition, the scope of the Nasdaq Hearing Panel’s review is limited, as the Nasdaq Hearing Panel may only reverse a delisting determination by the staff of the Listing Qualifications Department of Nasdaq (a “Staff Delisting Determination”) where it determines that the Staff Delisting Determination was made in error and that the SPAC never failed to satisfy the 36-Month Rule. In such cases, the Nasdaq Hearing Panel is no longer able to consider facts indicating that the SPAC had regained compliance since the date of the Staff Delisting Determination, nor may the Nasdaq Hearing Panel grant an exception allowing the SPAC additional time to regain compliance. If a SPAC completes a business combination after receiving a Staff Delisting Determination and/or demonstrates compliance with all applicable initial listing requirements, the combined company will apply to list its securities on Nasdaq pursuant to the normal application review process. The New Nasdaq Rules contained a list of deficiencies that would immediately result in a Staff Delisting Determination, which includes noncompliance with the 36-Month Rule.
If Nasdaq were to suspend our securities from trading and delist our securities, our securities could potentially be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| • | appearing to be less attractive to potential target companies than an exchange listed SPAC; |
| • | a limited availability of market quotations for our securities; |
| • | reduced liquidity for our securities; |
| • | a determination that our Class A ordinary shares is a “penny stock,” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| • | a limited amount of news and analyst coverage; and |
| • | a decreased ability to issue additional securities or obtain additional financing in the future. |
In addition, if our securities are delisted from Nasdaq, trading in our securities, and offers and sales of our securities by us, may be subject to state securities regulation and additional compliance costs.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
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Item 5. Other Information.
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TARGET GLOBAL ACQUISITION I CORP. | ||||||
| Date: December 3, 2024 | By: | /s/ Michael Minnick | ||||
| Name: | Michael Minnick | |||||
| Title: | Chief Executive Officer (Principal Executive Officer) | |||||
| Date: December 3, 2024 | By: | /s/ Heiko Dimmerling | ||||
| Name: | Heiko Dimmerling | |||||
| Title: | Chief Financial Officer (Principal Financial Officer) | |||||