Item 1. Condensed
Consolidated Financial Statements
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS
OPERATIONS AND ONGOING CONCERN
10X Capital Venture Acquisition Corp. III (the “Company”)
is a blank check company incorporated as a Cayman Islands exempted company on February 10, 2021. The Company was formed 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”).
As of March 31, 2023, the Company had not commenced
any operations. All activities through March 31, 2023 related to the Company’s formation and the initial public offering (“Initial
Public Offering”), which is described below, and, subsequent to the Initial Public Offering, the search for a Business Combination.
The Company 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 from the proceeds held in the Trust Account (as defined
below).
The Company’s Sponsor is 10X Capital SPAC Sponsor
III LLC, a Cayman Islands limited liability company (the “Sponsor”). The registration statement for the Company’s Initial
Public Offering was declared effective on January 11, 2022. On January 14, 2022, the Company consummated its Initial Public
Offering of 30,000,000 units (the “Units”), including the issuance of 3,900,000 Units as a result of the underwriter’s
partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $300.0 million, and incurring offering
costs of approximately $20.2 million, of which approximately $14.3 million was for deferred underwriting commissions (see Note 6). Each
Unit consists of one Class A ordinary share, par value $0.0001 per share, of the Company (the “Public Shares”) and one-half
of one redeemable warrant of the Company (each whole warrant, a “Public Warrant”).
Simultaneously with the closing of the Initial Public
Offering, the Company consummated the private placement (“Private Placement”) of 1,153,000 units (each, a “Private Placement
Unit” and collectively, the “Private Placement Units”) at a price of $10.00 per Private Placement Unit to the Sponsor
and Cantor Fitzgerald & Co. (“Cantor”), generating proceeds of approximately $11.5 million (see Note 4). Each Private
Placement Unit consists of one Class A ordinary share (the “Private Placement Shares”) and one-half of one redeemable warrant
(each whole warrant, a “Private Placement Warrant”).
Upon the closing of the Initial Public Offering and
the Private Placement, $304.5 million ($10.15 per Unit) of net proceeds, including the net proceeds of the Initial Public Offering and
certain of the proceeds of the Private Placement, was placed in a trust account (“Trust Account”) and invested only in U.S.
government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government
treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company
to pay its taxes, the proceeds from the Initial Public Offering and the sale of the Private Placement Units will not be released from
the Trust Account until the earliest of (i) the completion of the initial Business Combination, (ii) the redemption of the Public Shares
if the Company is unable to complete the initial Business Combination by July 14, 2023, or up to October 14, 2023 if approved by the Board
(the “Combination Period”), subject to applicable law, and (iii) the redemption of the Public Shares properly submitted in
connection with a shareholder vote to amend the Company’s second amended and restated memorandum and articles of association (the
“Amended and Restated Articles of Association”) to modify the substance or timing of its obligation to redeem 100% of the
Public Shares if the Company has not consummated the initial Business Combination within the Combination Period or 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 the Company’s creditors, if any, which could have priority over the claims
of the Public Shareholders (as defined below).
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the Private Placement, although substantially
all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).
The Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the
net balance in the Trust Account (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned
on the Trust Account) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete
a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide the holders of the Company’s
outstanding Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares
upon the completion of the Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination
or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of
a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders
are entitled to redeem their Public Shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned
on the funds held in the Trust Account (which interest shall be net of taxes payable), divided by the number of then outstanding Public
Shares, subject to the limitations and on the conditions described herein. The amount in the Trust Account was initially $10.15 per Public
Share.
All of the Public Shares contain a redemption feature
which allows for the redemption of such Public Shares in connection with the liquidation, if there is a shareholder vote or tender offer
in connection with the initial Business Combination and in connection with certain amendments to the Amended and Restated Memorandum and
Articles of Association. In accordance with U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable
equity instruments, which has been codified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards
Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”), paragraph 10-S99,
redemption provisions not solely within the control of a company require ordinary shares subject to redemption to be classified outside
of permanent equity. Accordingly, all of the Public Shares are presented as temporary equity, outside of the shareholders’ deficit
section of the Company’s consolidated balance sheets. Given that the Public Shares were issued with other freestanding instruments
(i.e., public warrants), the initial carrying value of Class A ordinary shares classified as temporary equity will be the allocated proceeds
determined in accordance with ASC 470-20. The Class A ordinary shares will be subject to ASC 480-10-S99. If it is probable that the equity
instrument will become redeemable, the Company has the option to either (i) 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 (ii) 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 elected to recognize the changes
in redemption value immediately. The changes in redemption value were recognized as a one-time charge against additional paid-in capital
(to the extent available) and accumulated deficit. While in no event will the Company redeem the Public Shares if such redemption would
cause the Company’s Class A ordinary shares to be considered “penny stock” (as such term is defined in Rule 3a51-1 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), the Public Shares are redeemable and will be classified
as redeemable on the consolidated balance sheets until such date that a redemption event takes place.
If the Company is unable to complete the 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 (which
interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive
further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the Company’s remaining shareholders and the board of directors, liquidate and dissolve, subject, in each case, to the Company’s
obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The holders of the Founder Shares (as defined in
Note 5) prior to the Initial Public Offering (the “Initial Shareholders”) agreed to (i) waive their redemption rights with
respect to any Founder Shares and Public Shares they hold in connection with the completion of the initial Business Combination, (ii)
waive their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with a shareholder vote to
approve an amendment to the Company’s Amended and Restated Memorandum and Articles of Association, and (iii) waive their rights
to liquidating distributions from the Trust Account with respect to any Founder Shares they hold if the Company fails to complete the
initial Business Combination within the Combination Period or any extended period of time that the Company may have to consummate the
initial Business Combination as a result of an amendment to the Company’s Amended and Restated Memorandum and Articles of Association
(although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the
Company fails to complete the initial Business Combination within the Combination Period).
The Company’s Sponsor agreed that it will be
liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective
target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business
Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per Public Share and (ii) the
actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.15 per
Public Share due to reductions in the value of the Trust assets, less taxes payable, provided that such liability will not apply to any
claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of
the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has not
asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has
sufficient funds to satisfy its indemnity obligations and the Company believes that the Sponsor’s only assets are securities of
the Company. Therefore, the Company cannot assure that the Sponsor would be able to satisfy those obligations.
Extraordinary General Meeting
On December 28, 2022, the Company held an extraordinary general meeting
of shareholders (the “Extraordinary General Meeting”), where the Company’s shareholders voted to approve, by special
resolution, the proposal to amend and restate the Company’s amended and restated memorandum and articles of association to extend
the date by which the Company must (1) consummate an initial business combination, (2) cease all operations except for the purpose of
winding up if we fail to complete such initial business combination, and (3) redeem all of the Class A ordinary shares included as part
of the Units sold in the Initial Public Offering from January 14, 2023 to July 14, 2023, and to allow the Company’s board of directors,
without another shareholder vote, to elect to further extend the date to consummate an initial business combination after the Extended
Date up to three times, by an additional month each time, upon two days’ advance notice prior to the applicable deadline, up to
October 14, 2023. In connection with the Extraordinary General Meeting, holders of 29,486,306 ordinary shares, comprised of the Company’s
Class A ordinary shares, par value $0.0001 per share (“Class A ordinary shares”), and the Company’s Class B ordinary
shares, par value $0.0001 per share (“Class B ordinary shares,” together with the Class A ordinary shares, the “ordinary
shares”), were present in person or by proxy, representing approximately 71.65% of the voting power of the 41,153,000 issued and
outstanding ordinary shares of the Company, comprised of 31,153,000 Class A ordinary shares and 10,000,000 Class B ordinary shares, entitled
to vote at the Extraordinary General Meeting at the close of business on November 21, 2022, which was the record date (the “Record
Date”) for the Extraordinary General Meeting. The Company’s shareholders of record as of the close of business on the Record
Date are referred to herein as “Shareholders.” In connection with the Extension (as defined below), a total of 186 Shareholders
elected to redeem an aggregate of 25,943,810 Class A ordinary shares, representing approximately 83.28% of the issued and outstanding
Class A ordinary shares. The payments for these redemptions took place on January 18, 2023.
Proposed Business Combination and Termination
On December 20, 2022, the Company entered into an
Agreement and Plan of Merger (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”) by
and among the Company, 10X Sparks Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”),
and Sparks Energy, Inc., a Delaware corporation (“Sparks”).
On February 2, 2023, the Company, Merger Sub, Sparks,
and Ottis Jarrada Sparks entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”), pursuant to
which the parties thereto (i) agreed to terminate the Merger Agreement and (ii) agreed to a mutual release of all claims related to the
Merger Agreement and the transactions contemplated thereby.
Liquidity and Going Concern
As of March 31, 2023, the Company had approximately $25,371 in its
operating bank account and a Working Surplus of approximately $0.2 million.
The Company’s liquidity needs prior to the
consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover certain expenses on
behalf of the Company in exchange for issuance of Founder Shares (as defined in Note 5) and loan proceeds from the Sponsor of approximately
$137,000 under the Note (as defined in Note 5). The Company fully repaid the Note (as defined in Note 5) on January 14, 2022. Subsequent
to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the
consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account, as well as proceeds from the
New Note (as defined in Note 2). In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor,
members of the Company’s founding team or any of their affiliates may provide the Company with Working Capital Loans (as defined
in Note 5) as may be required (of which up to $1.5 million may be converted at the lender’s option into private placement-equivalent
units at a price of $10.00 per unit).
Based upon the analysis above, management has determined that the Company
does not have sufficient liquidity to meet its anticipated obligations for at least twelve months after the unaudited condensed consolidated
financial statements are available to be issued, as such, the events and circumstances raise substantial doubt about the Company’s
ability to continue as a going concern.
In connection with the Company’s assessment
of going concern considerations in accordance with the ASC 205-40, the Company has until July 14, 2023, or up October 14, 2023 at the
option of the Board, to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination
by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution
of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combination not occur,
and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. The Company
intends to complete a Business Combination before the mandatory liquidation date.
Risks and Uncertainties
In addition to the risks noted above, management continues to evaluate
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military
action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic
sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy is
not determinable as of the date of these unaudited condensed consolidated financial statements, and the specific impact on the Company’s
financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed consolidated
financial statements.
NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X and pursuant to
the rules and regulations of the SEC. Accordingly, certain disclosures included in the annual financial statements have been condensed
or omitted from these financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of
the SEC. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include
only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results
for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected through December 31, 2023,
or any future period.
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the audited financial statements and notes thereto included in the Amended Annual Report on Form 10-K/A
filed by the Company with the SEC on May 22, 2023.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
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 auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that
have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange
Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth 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 unaudited 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 unaudited condensed consolidated financial statements
in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial
statements and the reported amounts of expenses during the reporting periods.
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 unaudited 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. Accordingly, the actual results could differ significantly from those estimates.
Cash
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of March 31,
2023 and December 31, 2022.
Investments Held in Trust Account
The Company’s portfolio of investments is comprised of U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments
in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination
thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are
classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds,
the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the consolidated
balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities
are included in income from investments held in the Trust Account in the accompanying unaudited condensed consolidated statements of operations.
The estimated fair values of investments held in the Trust Account are determined using available market information.
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
Deposit Insurance Corporation Coverage limit of $250,000. Any loss incurred or lack of access to such funds could have a significant adverse
impact on the Company’s financial condition, results from operations, and cash flows.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements,” approximates
the carrying amounts represented in the consolidated balance sheets, primarily due to their short-term nature.
Fair Value Measurements
Fair value is defined as the price that would be
received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | 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. |
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Promissory Note - Related Party
On November 14, 2022, the Company issued an unsecured promissory note
(as amended and restated on November 14, 2022 and as may be further amended from time to time, the “New Note”) to the Sponsor
for an aggregate principal amount of up to $250,000 for working capital purposes (“Working Capital Loan”). On May 17, 2023,
the Company amended and restated the New Note. The New Note is for an aggregate principal amount of up to $2,500,000 for working capital
purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of the Company’s initial
Business Combination and the day prior to the date the Company elects to liquidate and dissolve in accordance with the provisions of the
Amended and Restated Articles of Association (such earlier date, the “Maturity Date”). Up to $1,500,000 of the principal amount
of the New Note may also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option
of the holder of the New Note at any time on or prior to the Maturity Date. During the three months ended March 31, 2023, the Company
repaid the $250,000 outstanding under the New Note, bringing the total amount outstanding to $0.
Derivative Financial Instruments
The Company does not use derivative instruments to
hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments to determine if
such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB 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, is re-assessed at the end of each reporting period.
Each whole warrant of the Company, the “Public
Warrants,” and one-half of one redeemable warrant, the “Private Placement Warrants,” are classified in accordance with
ASC 480 and ASC 815, which provides that the warrants are not precluded from equity classification. Equity-classified contracts were initially
measured at fair value (or allocated value). Subsequent changes in fair value will not be recognized as long as the contracts continue
to be classified in equity in accordance with ASC 480 and ASC 815.
Offering Costs Associated with the Initial
Public Offering
The Company complies with the requirements of FASB
ASC 340-10-S99-1. Offering costs consisted of legal, accounting, and other costs incurred that were directly related to the Initial Public
Offering. Offering costs associated with the warrants were charged to shareholders’ equity upon the completion of the Initial Public
Offering. Offering costs associated with the Class A ordinary shares were charged against the carrying value of Class A ordinary shares
subject to possible redemption upon the completion of the Initial Public Offering.
Class A Ordinary Shares Subject to Possible
Redemption
Class A ordinary shares subject to mandatory redemption (if any) are
classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class
A 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 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 occurrence of uncertain future events. Accordingly, all outstanding
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 consolidated balance sheets. On December 28, 2022, 25,943,810 Class A ordinary shares were tendered
for redemption by shareholders for a total value of $266,701,252.
Under ASC 480, the Company has elected to recognize
changes in the redemption value immediately as they occur and adjust the carrying value of the security to equal the redemption value
at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for
the security. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value
to redemption amount value. The change in the carrying value of the redeemable Class A ordinary shares resulted in charges against additional
paid-in capital (to the extent available) and accumulated deficit.
Income Taxes
The Company complies with the accounting and reporting
requirements of FASB ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement
and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
FASB 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 only major tax jurisdiction. The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of March 31, 2023 and December 31, 2022. The Company is currently
not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company is 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.
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of
FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary
shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This presentation assumes
a business combination as the most likely outcome. Net income (loss) per ordinary share is calculated by dividing the net income (loss)
by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income (loss) per ordinary shares does
not consider the effect of the Public Warrants and the Private Placement Warrants to purchase an aggregate of 15,576,500 Class A ordinary
shares, because their exercise is contingent upon future events. As a result, diluted net income (loss) per share is the same as basic
net income (loss) per share for the three months ended March 31, 2023 and 2022. Accretion associated with the redeemable Class A ordinary
shares is excluded from earnings per share as the redemption value approximates fair value.
The Company has considered the effect of Class B ordinary shares that
were excluded from the weighted average number as they were contingent on the exercise of over-allotment option by the underwriter. Since
the contingency was satisfied, with respect to the portion of the over-allotment exercised by the underwriter, the Company included these
shares in the weighted average number as of the beginning of the reporting period to determine the dilutive impact of these shares.
The following table presents a reconciliation of the numerator and
denominator used to compute basic and diluted net income (loss) per share for each class of ordinary shares:
| |
Three Months Ended March 31, 2023 (Unaudited) | | |
Three Months Ended March 31, 2022 (Unaudited) | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted net income (loss) per ordinary share: | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income (loss) | |
| 1,395,167 | | |
| 1,380,030 | | |
| (253,897 | ) | |
| (93,471 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average ordinary shares outstanding | |
| 10,109,688 | | |
| 10,000,000 | | |
| 26,653,122 | | |
| 9,812,222 | |
Basic and diluted net income (loss) per ordinary share | |
$ | 0.14 | | |
$ | 0.14 | | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial
statements.
NOTE 3. INITIAL PUBLIC OFFERING
On January 14, 2022, the Company consummated
its Initial Public Offering of 30,000,000 Units, including the issuance of 3,900,000 Units as a result of the underwriter’s partial
exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $300.0 million, and incurring offering costs
of approximately $20.2 million, of which approximately $14.3 million was for deferred underwriting commissions.
Each Unit consists of one Class A ordinary share
and one-half of one redeemable warrant. Each whole warrant will entitle the holder to purchase one Class A ordinary share at a price of
$11.50 per share, subject to adjustment (see Note 5). Each warrant will become exercisable 30 days after the completion of the initial
Business Combination and will expire five years after the completion of the initial Business Combination, or earlier upon redemption or
liquidation.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public
Offering, the Company consummated the Private Placement of 1,153,000 Private Placement Units, at a price of $10.00 per Private Placement
Unit, to the Sponsor and Cantor, generating proceeds of approximately $11.5 million. Each Private Placement Unit is identical to the Units
sold in the Initial Public Offering, except as described below.
If the Company does not complete the initial Business
Combination within the Combination Period, the Private Placement Units will expire worthless. The Private Placement Units, private placement
shares underlying the Private Placement Units and private placement warrants included in the Private Placement Units are subject to the
transfer restrictions described below. The Private Placement Units have terms and provisions that are identical to those of the Units
sold in the Initial Public Offering.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In February 2021, the Company’s Sponsor paid
$25,000, or approximately $0.002 per share, to cover certain of the offering and formation costs in exchange for an aggregate of 11,672,500
Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”). Shares and the associated amounts have been retroactively
restated to reflect (i) the surrender of 2,089,167 Class B ordinary shares for no consideration on December 1, 2021; and (ii) the share
capitalization of 421,667 Class B ordinary shares on January 11, 2022; resulting in an aggregate of 10,005,000 Class B ordinary shares
outstanding. The Initial Shareholders agreed to forfeit up to 1,305,000 Founder Shares to the extent that the over-allotment option is
not exercised in full by the underwriter, so that the Founder Shares will represent 25% of the Company’s issued and outstanding
shares after the Initial Public Offering (not including the Class A ordinary shares underlying the Private Placement Units). On January
14, 2022, the underwriter partially exercised its over-allotment option to purchase additional 3,900,000 Units; thus, 5,000 Class B ordinary
shares were subsequently forfeited when the over-allotment option expired on February 25, 2022.
The Company’s Initial Shareholders agreed not
to transfer, assign or sell any of their Founder Shares until consummation of the initial Business Combination. Any permitted transferees
will be subject to the same restrictions and other agreements of the Initial Shareholders with respect to any Founder Shares (the “Lock-up”).
In December 2022, certain investors of the Company
(“10X III Investors”) entered into a non-redemption agreement with the Company and Sponsor (“Non-Redemption Agreements”).
Pursuant to the Non-Redemption Agreements, such 10X III Investors agreed, for the benefit of the Company, to vote certain ordinary shares
of the Company now owned or acquired (the “Investor Shares”), representing 4 million ordinary shares of the Company in the
aggregate, in favor of the proposal to amend the Company’s organizational documents to extend the time the Company is permitted
to close a business combination and not to redeem the Investor Shares in connection with such proposal. In connection with these commitments
from the 10X III Investors, Sponsor has agreed to transfer to each 10X III Investor an amount of its Class B Ordinary Shares on or promptly
after the closing of the Company’s initial business combination.
Due from Sponsor
During January 2023, the Company received a settlement as a result
of litigation in the amount of $4,000,000 related to its terminated Merger Agreement described in Note 1. This amount was held by the
Sponsor, using the amounts to settle any related party payables. As of March
31, 2023, the amount due from the Sponsor to the Company is $2,967,031. The Sponsor will deposit this amount, less any used for expenses of the Company, in May of 2023.
Promissory Note - Related Party
The Sponsor agreed to loan the Company up to $300,000
pursuant to a promissory note, dated February 18, 2021 (as amended on December 31, 2021, the “Note”), to be used for a portion
of the expenses of the Initial Public Offering. The Note was non-interest bearing, unsecured and due upon the closing of the Initial Public
Offering. The Company borrowed approximately $137,000 under the Note and fully repaid the Note balance on January 14, 2022. Subsequent
to the repayment, the facility was no longer available to the Company.
Related Party Loans
In order to finance transaction costs in connection with an intended
initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). If the Company completes
the initial Business Combination, the Company would repay the Working Capital Loans. In the event that the initial Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loans
may be convertible into units of the post Business Combination entity at a price of $10.00 per unit at the option of the lender. The units
would be identical to the Private Placement Units. On May 17, 2023, the Company amended and restated the New Note. The New Note, as amended
and restated on May 17, 2023, is for an aggregate principal amount of up to $2,500,000 for working capital purposes. The New Note bears
no interest and is repayable in full upon the earlier of the consummation of the Company’s initial Business Combination and the
Maturity Date (as defined in Note 2). Up to $1,500,000 of the principal amount of the New Note may also be converted into additional private
placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the New Note at any time on or prior to the
Maturity Date. During the three months ended March 31, 2023, the Company repaid the $250,000 outstanding under the New Note. As of March 31,
2023 and December 31, 2022, the Company had $0 and $250,000 of such Working Capital Loans outstanding, respectively.
Administrative Support Agreement
On January 11, 2022, the Company entered into an agreement with the
Sponsor, pursuant to which the Company agreed to pay the Sponsor a total of $37,500 per month for office space, secretarial, and administrative
services through the earlier of the Company’s consummation of a Business Combination and its liquidation. Upon consummation of a
Business Combination, any remaining monthly payments shall be accelerated and due. For the three months ended March 31, 2023 and 2022,
the Company incurred approximately $113,000 and $113,000 of administrative support expense, respectively. There was no outstanding amounts
as of March 31, 2023 and December 31, 2022.
The Sponsor, executive officers and directors, or any of their respective
affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such
as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee
will review on a quarterly basis all payments that were made by the Company to the Sponsor, officers, directors or their affiliates. For
the three months ended March 31, 2023 and 2022, the Company did not incur or reimburse any Business Combination costs to the Sponsor.
There was no outstanding amounts as of March 31, 2023 and December 31, 2022.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement
Units, private placement shares underlying the Private Placement Units, private placement warrants underlying the Private Placement Units,
the Class A ordinary shares underlying such private placement warrants, and units that may be issued upon conversion of the Working Capital
Loans will have registration rights which will require the Company to register a sale of any of the aforementioned securities of the Company
held by them pursuant to a registration rights agreement signed upon the effective date of the Initial Public Offering. 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 “piggyback” registration rights with respect to registration statements filed subsequent
to the completion of the initial Business Combination. Notwithstanding the foregoing, Cantor may not exercise its demand and “piggyback”
registration rights after five (5) and seven (7) years, respectively, after the effective date of the registration statement and may not
exercise its demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option
from the date of the Initial Public Offering to purchase up to an additional 3,915,000 Units to cover over-allotments, if any, at the
Initial Public Offering price less the underwriting discounts and commissions. On January 14, 2022, the underwriter partially exercised
the over-allotment option to purchase additional 3,900,000 Units. On February 25, 2022, the remaining over-allotment option expired unexercised.
The underwriter was entitled to a cash underwriting
discount of approximately $5.2 million in the aggregate paid upon the closing of the Initial Public Offering. An additional fee of approximately
$14.3 million in the aggregate will be payable to the underwriter for deferred underwriting commission. The deferred fee will become payable
to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination,
subject to the terms of the underwriting agreement for the Initial Public Offering.
NOTE 7. CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE
REDEMPTION
The Company’s Class A ordinary shares contain certain redemption
rights that are considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is
authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of Company’s Class A ordinary
shares are entitled to one vote for each share. As of March 31, 2023 and December 31, 2022, there were 5,209,190 and 31,153,000 shares
of Class A ordinary shares outstanding, of which 4,056,190, and 30,000,000 shares were subject to possible redemption and are classified
outside of permanent equity in the consolidated balance sheets, respectively. On December 28, 2022, a total of 186 shareholders elected
to redeem an aggregate of 25,943,810 Class A ordinary shares, representing approximately 83.28% of the issued and outstanding Class A
ordinary shares, and 4,056,190 Class A ordinary shares subject to possible redemption remained outstanding. The payment of these shares
took place on January 18, 2023.
The Class A ordinary shares subject to possible redemption
reflected on the accompanying consolidated balance sheets are reconciled in the following table:
Gross proceeds | |
$ | 300,000,000 | |
Less: | |
| | |
Proceeds allocated to Public Warrants | |
| (12,300,000 | ) |
Class A ordinary shares issuance costs | |
| (19,410,782 | ) |
Redemption of shares | |
| (266,701,252 | ) |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 36,210,782 | |
Increase in redemption value of Class A ordinary shares subject to possible redemption | |
| 4,061,515 | |
Class A ordinary shares subject to possible redemption at December 31, 2022 | |
$ | 41,860,263 | |
Plus: | |
| | |
Accretion of carrying value to redemption value | |
| 179,181 | |
Class A ordinary shares subject to possible redemption at March 31, 2023 | |
$ | 42,039,444 | |
NOTE 8. SHAREHOLDERS’ DEFICIT
Preference Shares - The Company is
authorized to issue a total of 1,000,000 preference shares at par value of $0.0001 each. As of March 31, 2023 and December 31,
2022, there were no preference shares issued or outstanding.
Class A Ordinary Shares - The
Company is authorized to issue a total of 500,000,000 Class A ordinary shares at par value of $0.0001 each. As of March 31, 2023,
there were 4,056,190 Class A redeemable ordinary shares issued and outstanding, which were subject to possible redemption and were classified
outside of permanent equity on the consolidated balance sheets and 1,153,000 non-redeemable Class A ordinary shares issued and outstanding.
On December 28, 2022, a total of 186 shareholders elected to redeem an aggregate of 25,943,810 Class A ordinary shares, representing
approximately 83.28% of the issued and outstanding Class A ordinary shares. The settlement of these shares took place on January 18,
2023 upon which, there were 4,056,190 Class A ordinary shares subject to possible redemption outstanding. As of December 31, 2022, there
were 30,000,000 Class A ordinary shares issued and outstanding.
Class B Ordinary Shares - The Company
is authorized to issue a total of 50,000,000 Class B ordinary shares at par value of $0.0001 each. As of March 31, 2023 and December 31,
2022, there were 10,000,000 Class B ordinary shares issued and outstanding (see Note 5).
The Founder Shares will automatically convert into
Class A ordinary shares concurrently with or immediately following the consummation of the initial Business Combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further
adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued
in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares
will equal, in the aggregate, on an as-converted basis, 25% of the total number of Class A ordinary shares outstanding after such conversion
(after giving effect to any redemptions of Class A ordinary shares by Public Shareholders and not including the Class A ordinary shares
underlying the Private Placement Units), including the total number of Class A ordinary shares issued, or deemed issued or issuable upon
conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation
to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities or rights exercisable
for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any Private
Placement Units issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of
Founder Shares will never occur on a less than one-for-one basis.
NOTE 9. WARRANTS
As of March 31, 2023 and December 31, 2022, the Company had 15,000,000 Public Warrants and 576,500 Private Placement Warrants outstanding.
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable 30 days after the completion of a Business Combination; provided that the Company has an effective
registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants and
a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities
laws of the state of residence of the holder (or the Company permit holders to exercise their warrants on a cashless basis under certain
circumstances). The Company agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial
Business Combination, the Company will use best efforts to file with the SEC a post-effective amendment to the registration statement
used in connection with the Initial Public Offering or a new registration statement covering the Class A ordinary shares issuable upon
exercise of the warrants and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are
redeemed, as specified in the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise
of the warrants is not effective by the 60th day after the closing of the initial Business Combination, warrant holders may, until such
time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or
another exemption. Notwithstanding the above, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on
a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the
Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless
basis” and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement,
and in the event the Company does not so elect, it will use commercially reasonable efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
The warrants have an exercise price of $11.50 per
share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or
liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising
purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20
per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors and,
in the case of any such issuance to the initial shareholders or their affiliates, without taking into account any Founder Shares held
by the initial shareholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for
the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the Class A ordinary shares during the 10 trading day period starting on the trading
day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is
below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices described under “Redemption of
warrants for cash” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price.
The Private Placement Warrants are identical to the
Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and 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 a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable
so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants
are held by someone other than the Initial Shareholders or their permitted transferees, the Private Placement Warrants will be redeemable
by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemption of warrants for cash: Once the warrants
become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement
Warrants):
| ● | in whole and not in part; |
| ● | at a price of $0.01 per warrant; |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the last reported sale price of Class A ordinary shares equals or exceeds $18.00 per share
(as adjusted) 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. |
The Company will not redeem the warrants as described
above unless a registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants
is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period.
In no event will the Company be required to net cash
settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly,
the warrants may expire worthless.
NOTE 10. FAIR VALUE MEASUREMENTS
The following table presents information about the
Company’s financial assets that are measured at fair value on a recurring basis as of March 31, 2023 and December 31,
2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | |
Amount at
Fair
Value | | |
Level
1 | | |
Level
2 | | |
Level
3 | |
March 31, 2023 (Unaudited) | |
| | |
| | |
| | |
| |
Assets | |
| | |
| | |
| | |
| |
Investments held in Trust Account: | |
| | |
| | |
| | |
| |
U.S. Treasury Securities | |
$ | 42,139,444 | | |
$ | 42,139,444 | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
December 31, 2022 | |
| | | |
| | | |
| | | |
| | |
Assets | |
| | | |
| | | |
| | | |
| | |
Investments held in Trust Account: | |
| | | |
| | | |
| | | |
| | |
Money Market investments | |
$ | 308,661,515 | | |
$ | 308,661,515 | | |
$ | — | | |
$ | — | |
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred
up to the date unaudited condensed consolidated financial statements were available to be issued. Based upon this review, the Company
determined that there have been no events that have occurred that would require adjustments to the disclosures in the unaudited condensed
consolidated financial statements.
On May 17, 2023, the Company amended
and restated the New Note. The New Note, as amended and restated on May 17, 2023, is for an aggregate principal amount of up to $2,500,000
for working capital purposes. The New Note bears no interest and is repayable in full upon the earlier of the consummation of the Company’s
initial Business Combination and the Maturity Date (as defined in Note 2). Up to $1,500,000 of the principal amount of the New Note may
also be converted into additional private placement-equivalent units, at a price of $10.00 per unit, at the option of the holder of the
New Note at any time on or prior to the Maturity Date.