UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2023

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to  

 

Commission File No. 001-41172

 

Spree Acquisition Corp. 1 Limited
(Exact name of registrant as specified in its charter)

 

Cayman Islands   N/A
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)

 

94 Yigal Alon, Building B, 31st floor,
Tel Aviv, 6789139, Israel
(Address of Principal Executive Offices, including zip code)

 

+972-50-731-0810
(Registrant’s telephone number, including area code)

 

N/A
(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which
registered
Class A ordinary shares, par value $0.0001 per share   SHAP   New York Stock Exchange
         
Redeemable warrants, each warrant exercisable for one Class A ordinary share at an exercise price of $11.50   SHAPW   New York Stock Exchange
         
Units, each consisting of one Class A ordinary share, $0.0001 par value, and one-half of a redeemable warrant   SHAPU   New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

☐ Large accelerated filer   ☐ Accelerated filer
☒ Non-accelerated filer   ☒ Smaller reporting company
    ☒  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No ☐

 

As of May 15, 2023, 20,945,715 Class A ordinary shares, par value $0.0001 per share, and 5,000,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding.

 

 

 

 

 

 

 

SPREE ACQUISITION CORP. 1 LIMITED

QUARTERLY REPORT ON FORM 10-Q

 

TABLE OF CONTENTS

 

    Page
     
CERTAIN TERMS ii
   
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS iv
   
PART 1 - FINANCIAL INFORMATION  
     
Item 1. Financial Statements 1
     
  Condensed Balance Sheets F-2
     
  Condensed Statement of Operations F-3
     
  Condensed Statement of Changes in Capital Deficiency F-4
     
  Condensed Statement of Cash Flows F-5
     
  Notes to Condensed Financial Statements (unaudited) F-6 – F-14
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 2
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 7
     
Item 4. Control and Procedures 7
     
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 8
     
Item 1A. Risk Factors 8
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 8
     
Item 3. Defaults Upon Senior Securities 8
     
Item 4. Mine Safety Disclosures 8
     
Item 5. Other Information 8
     
Item 6. Exhibits 8
     
SIGNATURES 9

 

i

 

 

CERTAIN TERMS

 

Unless otherwise stated in this Quarterly Report on Form 10-Q (this “Quarterly Report” or “Form 10-Q”), references to:

 

  ● “we,” “us,” “our,” “the company” or “our company” are to Spree Acquisition Corp. 1 Limited, a Cayman Islands exempted company;

 

  ● “amended and restated memorandum and articles of association” are to our amended and restated memorandum and articles of association, which went into effect upon the completion of our IPO;

 

  ● “Class A ordinary shares” are to our Class A ordinary shares, par value $0.0001 per share;

 

  ● “Class B ordinary shares” are to our Class B ordinary shares, par value $0.0001 per share;

 

  ● “Companies Act” are to the Companies Act (As Revised) of the Cayman Islands as the same may be amended from time to time;

 

  ● “equity-linked securities” are to any securities of our company that are convertible into or exchangeable or exercisable for, Class A ordinary shares of our company;

 

  ● “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
     
  ● “extension meeting” are to the extraordinary general meeting of Spree that we expect to hold on June 12, 2023 in order to approve the extension, by three months (until September 20, 2023), of the deadline for completion of our initial business combination transaction under the amended and restated memorandum and articles of association;
     
  ● “extension period” are to (a) an additional three-month period, until 18 months following our IPO, during which we may complete our initial business combination due to our having filed a Form 8-K that included a definitive merger or acquisition agreement, but without having completed the initial business combination, within the initial 15-month period following our IPO; (b) up to two instances of an additional three months per instance, for a total of up to 18 months or 21 months, respectively, following the IPO, during which we may complete our initial business combination by depositing into the trust account for each three month extension an amount equal to $0.10 per unit; or (c) an additional period during which we may complete our initial business combination as a result of a shareholder vote to extend the deadline for an initial business combination under our amended and restated memorandum and articles of association. 
     
  ● “founders shares” are to our 5,000,000 Class B ordinary shares, in the aggregate, initially purchased in a private placement, and not surrendered, by our sponsor and the Class A ordinary shares that will be issued upon the automatic conversion of those Class B ordinary shares at the time of our initial business combination (for the avoidance of doubt, such Class A ordinary shares will not be “public shares”);

 

  ● “initial shareholders” are to our sponsor’s wholly-owned subsidiary, Spree Operandi U.S. LP, a Delaware limited partnership, and other holders (if any) of our founders shares prior to our IPO;

 

  ● “IPO” or “initial public offering” refers to the initial public offering of our Class A ordinary shares, which was consummated on December 20, 2021;

 

  ● “letter agreement” refers to the letter agreement entered into between us and our initial shareholders, directors and officers, on our prior to our IPO, the form of which was filed as an exhibit to the registration statement for our IPO;

 

  ● “NYSE” are to the New York Stock Exchange;

 

ii

 

 

  ● “ordinary shares” are to Class A ordinary shares and/or Class B ordinary shares;

 

  ● “private shares” are to the Class A ordinary shares included in the private units that were issued and sold to our sponsor in a private placement simultaneously with the closing of the initial public offering;

 

  ● “private units” are to the 945,715 units (consisting of 945,715 private shares and 472,858 private warrants) that were issued and sold to our sponsor in a private placement simultaneously with the closing of the initial public offering;

 

  ● “private warrants” are to the warrants to purchase one Class A ordinary share at an exercise price of $11.50 per share contained within the private units that were issued and sold to our sponsor in a private placement simultaneously with the closing of the initial public offering, as well as any warrants that may be issued upon conversion of working capital loans;

 

  ● “public shareholders” are to the holders of our public shares, including our sponsor, officers and directors to the extent our sponsor, officers or directors purchase public shares, provided their status as a “public shareholder” shall only exist with respect to such public shares;

  

  ● “public shares” are to our Class A ordinary shares sold as part of the public units in our initial public offering (whether they were purchased in our IPO or thereafter in the open market);

 

  ● “public units” are to the units (consisting of public shares and warrants) sold in our initial public offering;

 

  ● “public warrants” are to the warrants to purchase one Class A ordinary share at an exercise price of $11.50 per share sold as part of the public units in our initial public offering;

 

  ● “Registration Statement” are to the registration statement on Form S-4 (SEC File No. 333-269751) in respect of the WHC Business Combination, which we filed with the SEC on February 14, 2023;

 

  ● “SEC” are to the U.S. Securities and Exchange Commission;

 

  ● “sponsor” are to Spree Operandi, LP, a Cayman Islands exempted limited partnership, including, where applicable, its affiliates (including our initial shareholder, Spree Operandi U.S. LP, a Delaware limited partnership, which is a wholly-owned subsidiary of our sponsor);

 

  ● “Spree extraordinary general meeting” are to the extraordinary general meeting of Spree that we expect to hold in order to present the WHC Business Combination Agreement, and the transactions contemplated thereby, to our shareholders for approval;

 

  ● “Stifel” are to Stifel, Nicolaus & Company, Incorporated, the representative of the underwriters for our initial public offering;

 

  ● “trust account” are to the U.S.-based trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee, in to which a total of $204,000,000 from the proceeds of the initial public offering and the sale of the private units were deposited;

 

  ● “warrants” are to our redeemable warrants sold as part of the public units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market) and the private warrants;

 

  ● “WHC” are to WHC Worldwide, LLC, a Missouri limited liability company doing business as zTrip®;

 

  ● “WHC Business Combination” are to the potential business combination between Spree and WHC that is contemplated under the WHC Business Combination Agreement;

 

  ● “WHC Business Combination Agreement” are to the Business Combination Agreement, dated October 29, 2022, as amended by Amendment No. 1 thereto, by and between Spree and WHC;
     
  ●  “2022 Annual Report” are to our annual report on Form 10-K for the year ended December 31, 2022, which we filed with the SEC on March 30, 2023.

 

iii

 

 

Special Note Regarding Forward-Looking Statements

 

Some statements contained in this Quarterly Report are forward-looking in nature. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:

 

  ● our ability to complete the WHC Business Combination, including the satisfaction of the closing conditions to the WHC Business Combination Agreement and the timing of the completion of such business combination;

 

  ● our expectations with respect to future performance of WHC’s business and anticipated financial impacts of the WHC Business Combination;

 

  ● the occurrence of any event, change or other circumstance that could give rise to the termination of the WHC Business Combination Agreement or could otherwise cause the transactions contemplated therein to fail to close;

 

  ● our ability to maintain sufficient funding outside of our trust account to enable us to complete the WHC Business Combination;

 

  ● our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

 

  ● our public securities’ liquidity and trading;

 

  ● the market for our securities and the traded securities of New WHC following the potential New WHC Business Combination; or

 

  ● the trust account not being subject to claims of third parties.

 

The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to “Part I— Item 1A. Risk Factors” in the 2022 Annual Report. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.report. Except as expressly required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

iv

 

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

AS OF MARCH 31, 2023, AND FOR THE THREE MONTHS ENDED ON THAT DATE

 

1

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

AS OF MARCH 31, 2023, AND FOR THE THREE MONTHS ENDED ON THAT DATE

 

INDEX

 

    Page
     
Condensed Balance Sheets   F-2
     
Condensed Statements of Operations   F-3
     
Condensed Statements of Changes in Capital Deficiency   F-4
     
Condensed Statements of Cash Flows   F-5
     
Notes to the Condensed Financial Statements   F-6 – F-14

 

F-1

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED BALANCE SHEETS

 

   March 31,   December 31, 
   2023   2022 
   U.S. Dollars in thousands 
A s s e t s        
CURRENT ASSETS:        
Cash and cash equivalents   *    7 
Related party receivable   15    15 
Prepaid expenses   260    351 
TOTAL CURRENT ASSETS   275    373 
           
Cash and cash equivalents held in Trust Account   208,921    206,826 
TOTAL ASSETS   209,196    207,199 
           
Liabilities and shares subject to possible redemption net of capital deficiency          
CURRENT LIABILITIES:          
Accrued expenses   2,113    1,823 
TOTAL CURRENT LIABILITIES   2,113    1,823 
           
NON-CURRENT LIABILITY:          
Deferred underwriting compensation   9,000    9,000 
TOTAL LIABILITIES   11,113    10,823 
           
COMMITMENTS AND CONTINGENCIES (Note 6)   
 
    
 
 
           
CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION: 20,000,000 shares at March 31, 2023 and December 31, 2022, respectively, at a redemption value of $10.45 per share   208,921    206,826 
           
CAPITAL DEFICIENCY:          
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized, 945,715 shares issued and outstanding (excluding 20,000,000 shares subject to possible redemption) at March 31, 2023 and December 31, 2022, respectively   *    * 
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized, 5,000,000 issued and outstanding at March 31, 2023 and December 31, 2022, respectively   *    * 
Preference Shares, $0.0001 par value; 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023   
-
    
-
 
Additional paid-in capital   
-
    
-
 
Accumulated deficit   (10,838)   (10,450)
TOTAL CAPITAL DEFICIENCY   (10,838)   (10,450)
TOTAL LIABILITIES AND SHARES SUBJECT TO POSSIBLE REDEMPTION NET OF CAPITAL DEFICIENCY   209,196    207,199 

 

(*)Represents an amount less than 1 thousand US Dollars.

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

F-2

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

 

   Three months ended
March 31,		 
   2023   2022 
  

U.S. Dollars in thousands

except per share data

 
INTEREST EARNED ON MARKETABLE SECURITIES HELD IN TRUST ACCOUNT   2,095    13 
OPERATING EXPENSES   (388)   (303)
NET INCOME (LOSS) FOR THE PERIOD   1,707    (290)
           
WEIGHTED AVERAGE OF CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION   20,000,000    20,000,000 
BASIC AND DILUTED EARNING (LOSS) PER CLASS A ORDINARY SHARE SUBJECT TO POSSIBLE REDEMPTION, see Note 4
   0.09    (0.01)
           
WEIGHTED AVERAGE OF NON-REDEEMABLE CLASS A AND CLASS B ORDINARY SHARES   5,945,715    5,945,715 
BASIC AND DILUTED LOSS PER NON-REDEEMABLE CLASS A AND CLASS B ORDINARY SHARES, see Note 4
   (0.01)   (0.01)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

F-3

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY

 

   Class A ordinary shares   Class B ordinary shares   Additional         
   Number of
shares		   Par value   Number of
shares		   Par value   paid-in
capital		   Accumulated
deficit		   Total 
   U.S. dollars in thousands (except share data) 
BALANCE AT DECEMBER 31, 2022   945,715    *    5,000,000              *    
           -
    (10,450)   (10,450)
Accretion of Class A ordinary shares subject to redemption to redemption amount   -    
-
    -    
-
    
-
    (2,095)   (2,095)
Net income for the period   -    
-
    -    
-
    
-
    1,707    1,707 
BALANCE AT MARCH 31, 2023   945,715    

*

    5,000,000    

*

    
-
    (10,838)   (10,838)
                                    
BALANCE AT DECEMBER 31, 2021   945,715    *    5,031,250    *    
-
    (7,352)   (7,352)
forfeiture of Class B ordinary shares (note 3)   -    
-
    (31,250)   
-
    
-
    
-
    
-
 
Net loss for the period   -    
-
    -    
-
    
-
    (290)   (290)
BALANCE AT MARCH 31, 2022   945,715    

*

    5,000,000    

*

    
-
    (7,642)   (7,642)

 

(*)Represents an amount less than 1 thousand US Dollars.

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

F-4

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

 

   Three months ended
March 31,		 
   2023   2022 
   U.S. Dollars in thousands 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) for the period   1,707    (290)
Changes in operating assets and liabilities:          
Prepaid expenses   91    77 
Accrued expenses   290    18 
    381    95 
Net cash provided by (used in) operating activities   2,088    (195)
           
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS HELD IN TRUST ACCOUNT   2,088    (195)
CASH, CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS HELD IN TRUST ACCOUNT AT BEGINNING OF THE PERIOD   206,833    205,011 
CASH, CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS HELD IN TRUST ACCOUNT AT END OF THE PERIOD   208,921    204,816 
           
RECONCILIATION OF CASH, CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS HELD IN TRUST ACCOUNT:          
Cash and cash equivalents   *    803 
Cash and cash equivalents held in trust account   208,921    204,013 
CASH, CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS HELD IN TRUST ACCOUNT AT END OF THE PERIOD   208,921    204,816 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

F-5

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS:

 

a.Organization and General

 

SPREE ACQUISITION CORP. 1 LIMITED (hereafter – the Company) is a blank check company, incorporated on August 6, 2021 as a Cayman Islands exempted company, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination (hereafter – the Business Combination).

 

Although the Company is not limited to a particular industry or geographic region for the purpose of consummating a Business Combination, the Company intends to focus its search on mobility-related technology businesses.

 

The Company is an early stage and an emerging growth company, and as such, the Company is subject to all of its risks associated with early stage and emerging growth companies.

 

All activity for the represented periods relates to identifying and evaluating prospective acquisition targets for an Initial Business Combination. The Company generates income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering and the Private Placement (as defined below in Note 1(b)).

The Company has selected December 31 as its fiscal year end.

 

b.Sponsor and Financing

 

The Company’s sponsor is Spree Operandi, LP, a Cayman Islands exempted limited partnership, which formed a wholly owned subsidiary, Spree Operandi U.S. LP, a Delaware limited partnership, for purposes of holding securities of the Company (collectively, the parent company and subsidiary, the “Sponsor”).

 

The registration statement relating to the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on December 15, 2021. The initial stage of the Company’s Public Offering— the sale of 20,000,000 Units at a price of $10 per Unit or $200 million in the aggregate — closed on December 20, 2021. In addition, the Sponsor purchased in a private placement that closed concurrently with the Public Offering (the “Private Placement”) an aggregate of 945,715 private Units (see also note 3) (the “Private Units”) at a price of $10 per Private Unit, or $9,457,150 in the aggregate. Upon those closings, $204 million was placed in a trust account (the “Trust Account”) (see also note 1(c) below). Out of the $204 million placed in the trust account, $200 million was derived from the gross proceeds of the Public Offering, inclusive of the partial exercise of the over-allotment option by the underwriter, and an additional $4 million was derived from the proceeds invested by the Company’s Sponsor in the Private Placement, for the benefit of the public. The Company intends to finance its initial Business Combination with the net proceeds from the Public Offering and the Private Placement.

 

c.The Trust Account

 

The proceeds held in the Trust Account are invested only in specified U.S. government treasury bills or in specified money market funds registered under the Investment Company Act and compliant with Rule 2a-7. Unless and until the Company completes the Business Combination, it may pay its expenses only from the net proceeds of the Private Placement held outside of the Trust Account.

 

F-6

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (cont.):

 

d.Initial Business Combination

 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an initial Business Combination. The initial Business Combination must occur with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding taxes payable on the income accrued in the Trust Account). There is no assurance that the Company will be able to successfully consummate an initial Business Combination.

 

The Company, after signing a definitive agreement for an initial Business Combination, will provide its public shareholders the opportunity to redeem all or a portion of their shares upon the completion of the initial Business Combination, either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5 million following such redemptions. In such case, the Company would not proceed with the redemption of its public shares and the related initial Business Combination, and instead may search for an alternate initial Business Combination.

 

If the Company holds a shareholder vote or there is a tender offer for shares in connection with an initial Business Combination, a public shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account, calculated as of two days prior to the general meeting or commencement of the Company’s tender offer, including interest but less taxes payable. As a result, the Company’s Class A ordinary shares are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”

 

Pursuant to the Company’s memorandum and articles of association, if the Company is unable to complete the initial Business Combination within a 15-month period (such 15-month period extended (a) to 18 months if the Company has filed (i) a Form 8-K including a definitive merger or acquisition agreement or (ii) a proxy statement, registration statement or similar filing for an initial business combination but has not completed the initial business combination within such 15-month period or (b) two instances by an additional nine months each instance for a total of up to 18 months or 21 months, respectively, by depositing into the trust account for each nine month extension an amount equal to $0.10 per unit) or during any shareholder-approved extension period, (hereafter — the Combination Period), following the closing of the Public Offering, 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 (which interest shall be net of taxes payable, and less up to $100 thousand of interest to pay dissolution expenses), divided by the number of then issued and 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 Company’s 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.

 

F-7

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (cont.):

 

The Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any Class B ordinary shares (as described in note 3) held by them if the Company fails to complete the initial Business Combination within 15 months or during any extension period following the closing of the Public Offering. However, if the Sponsor or any of the Company’s directors or officers acquire any Class A ordinary shares, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Business Combination within the prescribed time period.

 

In the event of a liquidation, dissolution or winding up of the Company after an initial Business Combination, the Company’s shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the ordinary shares. The Company’s shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that the Company will provide its shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, under the circumstances, and, subject to the limitations, described herein.

 

In October 2022, the Company entered into a business combination agreement with WHC Worldwide, LLC, a Missouri limited liability company doing business as zTrip. This proposed Business Combination was unanimously approved by the board of directors of Spree and also approved by the sole managing member, and the requisite holders of the issued and outstanding units, of WHC LLC. The proposed Business Combination is expected to close in the first half of 2023. However, there can be no assurance that the Company will be able to consummate the Business Combination.

 

The Company intend to effectuate this initial business combination using (i) cash from the proceeds of the initial public offering and the private placement of the private units, (ii) cash from a new PIPE financing involving the sale of shares and/or other equity, (iii) cash from one or more debt financings, and/or (iv) issuance of shares to target company shareholders.

 

e.Substantial Doubt about the Company’s Ability to continue as a Going Concern

 

As of March 31, 2023, the Company had no cash and an accumulated deficit of $10,838 thousand. In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standard Codification 205-40, “Going Concern”, the Company will need to obtain additional funds in order to satisfy its liquidity needs in its search for an Initial Business Combination. Since its inception date and through the issuance date of these financial statements, the Company’s liquidity needs were satisfied through an initial capital injection from the Sponsor, followed by net Private Placement proceeds, as well as several borrowings of funds under promissory notes issued by the Company to the Sponsor (which borrowings were repaid upon the closing of the Company’s Public Offering). Management has determined that it will need to rely and is significantly dependent on amounts to be made available under future promissory notes or other forms of financial support to be provided by the Sponsor (which the Sponsor is not obligated to provide).

 

F-8

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 1 - DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (cont.):

 

Moreover, the Company has until June 20, 2023 (which reflects an Extension Period due to the Company’s announcement of entry into the Business Combination Agreement, see d. Initial Business Combination above) to consummate the initial Business Combination. If a business combination is not consummated by this date (unless extended, see also Note 7 about proposal to approve extension), there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the need to obtain additional funds in order to satisfy its liquidity needs, as well as the 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 the Initial Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any business combination ahead of June 20, 2023, nor that it will be able to raise sufficient funds to complete an Initial Business Combination.

 

No adjustments have been made to the carrying amounts and classification of assets or liabilities should the Company fail to obtain financial support in its search for an Initial Business Combination, nor if it is required to liquidate after June 20, 2023.

 

f.Emerging Growth Company

 

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

 

This may make a comparison of the Company’s financial statement 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.

 

F-9

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

 

The financial statement has been prepared in accordance with accounting principles generally accepted in the United States of America (hereafter – U.S. GAAP) and the regulations of the Securities Exchange Commission (hereafter – SEC). The significant accounting policies used in the preparation of the financial statement are as follows:

 

a.Basis of Presentation

 

The Company’s unaudited condensed financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial information and the instructions to Form 10-Q.

 

Certain disclosures included in the financial statements as of December 31, 2022, 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. These unaudited condensed financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year.

 

The unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements.

 

b.Use of estimates in the preparation of financial statement

 

The preparation of the financial statement in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates and such differences may have a material impact on the Company’s financial statement.

 

c.Earnings (loss) per share

 

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, Earnings Per Share. Basic earnings per share is computed by dividing net loss attributable to holders of ordinary shares of the Company, by the weighted average number of ordinary shares outstanding for the reporting period.

 

In computing the Company’s diluted earnings per share, the denominator for diluted earnings per share is a computation of the weighted-average number of ordinary shares and the potential dilutive ordinary shares outstanding during the period.

 

d.Fair value measurement

 

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into nine broad levels, which are described as follows:

 

  Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
  Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.
  Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

F-10

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (cont.):

 

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

 

e.Income tax

 

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (hereafter – ASC 740). ASC 740 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that a portion or all of the deferred tax assets will not be realized, based on the weight of available positive and negative evidence.

 

Deferred tax liabilities and assets are classified as non-current in accordance with ASC 740. The Company accounts for uncertain tax positions (“UTPs”) in accordance with ASC 740-10. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement. The Company accrues interest and penalties related to unrecognized tax benefits under taxes on income (tax benefit).

 

f.Recent accounting pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

 

NOTE 3 - CAPITAL DEFICIENCY:

 

a.Ordinary Shares

 

Class A ordinary shares

 

The Company is authorized to issue up to 500,000,000 Class A ordinary shares of $0.0001 par value each. Pursuant to the Public Offering, as of March 31, 2023, the Company issued and sold an aggregate of 20,000,000 Class A ordinary shares as part of the Units sold in the transaction. The Units (which also included 10,000,000 public warrants – the “Public Warrants”) were sold at a price of $10 per Unit, for aggregate consideration of $200 million in the Public Offering. The Sponsor purchased an aggregate of 945,715 private shares as part of the Private Units (which also included 472,858 private warrants – the “Private Warrants”) sold in the Private Placement at a price of $10 per Private Unit, or $9,457,150 in the aggregate.

 

The Private and Public Warrants (together – the “Warrants”) are exercisable to purchase one Class A share at a price per share of $11.50. Each Warrant will become exercisable 30 days after the completion of the Company’s Business Combination and will expire at 5:00 p.m., New York City time, five years after the completion of the Business Combination or earlier upon redemption (only in the case of the Public Warrants, see below for redemption of the Private Warrants) or liquidation. The Warrants may only be gross physically settled, as there are no cashless exercise provisions.

 

F-11

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3 - CAPITAL DEFICIENCY (cont.):

 

Once the Public Warrants become exercisable, the Company may redeem them 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, if and only if the last reported sale price of the Company’s 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. During such notice period, the warrants remain exercisable.

 

The Private Warrants are identical to the Public Warrants except that: (1) they (including the ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the sponsor until 30 days after the completion of the initial business combination; (2) they (including the ordinary shares issuable upon exercise of these warrants) are not registered but are entitled to registration rights; and (3) prior to being sold in the open market or transferred into “street name”, they are not redeemable by the Company.

 

Class B ordinary shares

 

The Company is authorized to issue up to 50,000,000 Class B ordinary shares of $0.0001 par value each. On August 23, 2021 the Company issued 5,750,000 Class B ordinary shares of $0.0001 par value each for a total consideration of $25,000 to the Sponsor. On November 23, 2021, the Sponsor surrendered to the Company for cancellation and for nil consideration 718,750 Class B ordinary shares of par value $0.0001 each. On January 29, 2022, the underwriter’s over-allotment option to buy up to an aggregate of 125,000 additional Units expired unexercised. As a result, 31,250 of the original 5,031,250 Class B ordinary shares issued to the sponsor, which were subject to forfeiture to the extent the underwriter’s over-allotment option was not fully exercised, were cancelled, leaving the sponsor with 5,000,000 Class B ordinary shares.

 

Class B ordinary shares are convertible into Class A ordinary shares, on a one-to-one basis, at any time and from time to time at the option of the holder, or automatically on the day of the Business Combination. Class B ordinary shares also possess the sole right to vote for the election or removal of directors, until the consummation of an initial Business Combination.

 

b.Preference shares

 

The Company is authorized to issue up to 5,000,000 preference shares of $0.0001 par value each. As of March 31, 2023, the Company has no preference shares issued and outstanding.

 

F-12

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 4 - EARNING (LOSS) PER SHARE:

 

a.Basic

 

As of March 31, 2023, the Company had two classes of ordinary shares, Class A ordinary shares subject to possible redemption and non-redeemable Class A ordinary shares and Class B ordinary shares.

 

Earnings or losses are shared pro rata (excluding the interest earned on marketable securities held in trust account) between the two classes of ordinary shares, based on the weighted average number of shares issued outstanding for the period ended March 31, 2023. Then, the interest earned on marketable securities held in trust account (being the accretion to redemption value of the Class A ordinary shares subject to possible redemption) is fully allocated to the Class A ordinary shares subject to redemption.

 

The calculation is as follows:

 

   Three months ended
March 31,		 
   2023   2022 
   U.S. dollars in thousands
(Except share data)		 
         
Net income (loss) for the period   1,707    (290)
Less- interest earned on marketable securities held in trust account   (2,095)   
-
 
Net loss excluding interest   (388)   (290)
           
Class A ordinary shares subject to possible redemption:          
Numerator:          
Net loss excluding interest   (299)   (220)
Accretion on Class A ordinary shares subject to possible redemption to redemption amount (“Accretion”)   2,095    
-
 
    1,796    (220)
Denominator:          
Weighted average number of shares   20,000,000    20,000,000 
           
Basic and diluted earnings (loss) per Class A ordinary share subject to possible redemption   0.09    (0.01)
           
Non-redeemable Class A and Class B ordinary shares:          
Numerator:          
Net loss excluding interest   (89)   (70)
    (89)   (70)
Denominator:          
Weighted average number of shares   5,945,715    5,945,715 
           
Basic and diluted loss per non-redeemable Class A and Class B ordinary shares   (0.01)   (0.01)

 

F-13

 

 

SPREE ACQUISITION CORP. 1 LIMITED

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 4 - EARNING (LOSS) PER SHARE (cont.):

 

b.Diluted

 

The Company had outstanding warrants to purchase up to 10,472,858 class A shares. The weighted average of such shares was excluded from diluted net loss per share calculation since the exercise of the warrants is contingent on the occurrence of future events.

 

As of March 31, 2023, the Company did not have any dilutive securities or any other contracts which could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company.

 

NOTE 5 - RELATED PARTY TRANSACTIONS:

 

On August 22, 2021, the Company signed an agreement with the Sponsor, under which the Company shall pay the Sponsor a fixed $10 thousand per month for office space, utilities and other administrative expenses. The monthly payments under this administrative services agreement commenced on the effective date of the registration statement for the Public Offering and will continue until the earlier of (i) the consummation of the Company’s Business Combination, or (ii) the Company’s liquidation.

 

NOTE 6 - COMMITMENTS AND CONTINGENCIES:

 

Underwriter’s Deferred Compensation

 

Under the Underwriting Agreement, the Company shall pay an additional fee (the “Deferred Underwriting Compensation”) of 4.5% ($9 million) of the gross proceeds of the Public Offering, payable upon the Company’s completion of the Business Combination. The Deferred Underwriting Compensation will become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes the Business Combination.

 

The Deferred Underwriting Compensation has been recorded as a deferred liability on the balance sheet as of March 31, 2023, as management has deemed the consummation of a Business Combination to be probable.

 

NOTE 7 - SUBSEQUENT EVENT:

 

On May 15, 2023, the Company filed with the SEC, and soon thereafter it intends to distribute to its shareholders, a notice and proxy statement in respect of extension meeting for the purpose of considering and voting on, among other proposals a proposal to approve the extension by three months ( from June 20, 2023 to September 20, 2023 or such earlier date as may be determined by the Company’s board of directors in its sole discretion) of the deadline by which the Company needs to consummate an initial business combination.

 

F-14

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report, and our audited financial statements and related notes thereto as of, and for the year ended, December 31, 2022, included in our 2022 Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our initial business combination, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Part I, Item 1A. Risk Factors” in our 2022 Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

 

Overview

 

We are a blank check company incorporated as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We completed our initial public offering in December 2021, and since that time, we have engaged in discussions with, and due diligence with respect to, potential business combination target companies and, in October 2022, entered into the WHC Business Combination Agreement with WHC Worldwide, LLC, a Missouri limited liability company doing business as zTrip®. We intend to effectuate our initial business combination using (i) cash from the proceeds of our initial public offering and the private placement of the private units, (ii) cash from a new PIPE financing involving the sale of our shares and/or other equity, (iii) cash from one or more debt financings, if necessary, and/or (iv) issuance of shares to WHC members (or, if applicable, the equity holders of an alternative target company).

 

The issuance of additional ordinary shares in the WHC Business Combination or any other business combination:

 

  ● may significantly dilute the equity interest of investors in our initial public offering, which dilution would increase if the anti-dilution provisions of the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares (although our sponsor, as the sole holder of the Class B ordinary shares, has waived its anti-dilution rights in respect of the WHC Business Combination);

 

  ● could cause a change of control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any;

 

  ● may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and

 

  ● may adversely affect prevailing market prices for our Class A ordinary shares and/or warrants.

 

Similarly, if we issue debt securities or otherwise incur significant indebtedness, that could result in:

 

  ● default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

 

2

 

 

  ● acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

  ● our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

  ● our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is issued and outstanding;

 

  ● our inability to pay dividends on our Class A ordinary shares;

 

  ● using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

 

  ● limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

 

  ● increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

 

  ● limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

 

As indicated in the accompanying financial statements, at March 31, 2023 and December 31, 2022, we had $0 and approximately $7,000, respectively, of cash, and approximately ($1,838,000) and ($1,450,000), respectively, of working capital. Further, we expect to continue to incur significant costs in the pursuit of the WHC Business Combination. We cannot assure you that our plans to complete the WHC Business Combination (or any other initial business combination) or a related capital-raise will be successful.

 

Recent Developments

 

Extension Meeting for Extension of Deadline to Consummate Our Initial Business Combination

 

On May 15, 2023, we filed with the SEC, and soon thereafter we intend to distribute to our shareholders, a notice and proxy statement in respect of the extension meeting for the purpose of considering and voting on, among other proposals: (i) a proposal to approve, by way of special resolution, an amendment to our amended and restated memorandum and articles of association to extend, by three months— from June 20, 2023 to September 20, 2023 (or such earlier date as may be determined by our board of directors in its sole discretion)— the deadline by which we need to consummate an initial business combination (the “Articles Extension Proposal”); (ii) a proposal to amend the Investment Management Trust Agreement, dated as of December 15, 2021, to which we are party with Continental Stock Transfer & Trust Company, to extend the term of that agreement for a period of three months that corresponds with the extension period under the Articles Extension Proposal; (iii) a proposal to approve, by way of special resolution, an amendment to our amended and restated memorandum and articles of association that will provide that the existing restriction that prevents the issuance of additional shares that would vote together with the public shares on a proposal to approve our initial business combination, will not apply to the issuance of Class A ordinary shares upon conversion of the Class B ordinary shares where the holders of the converted shares waive their rights to proceeds from the trust account; and (iv) a proposal to approve, by way of ordinary resolution of the holders of the Class B ordinary shares, the re-appointment of each of Eran (Rani) Plaut, Joachim Drees, Steven Greenfield, David Riemenschneider, and Philipp von Hagen as directors serving on our board of directors until the second succeeding annual general meeting of our company and until their successors are elected and qualified. Each such proposal is described in more detail in the definitive proxy statement related to the extension meeting, as filed with the SEC.

 

3

 

 

Registration Statement for WHC Business Combination

 

On February 14, 2023, we filed with the SEC a registration statement on Form S-4 that contains a proxy statement/ prospectus in respect of the securities to be issued in connection with the WHC Business Combination and the Spree extraordinary general meeting for approval of the WHC Business Combination, as required under the WHC Business Combination Agreement. On April 18, 2023, we filed with the SEC Amendment No. 1 to that registration statement. For the avoidance of doubt, such registration statement, and the amendment thereto, is not incorporated by reference herein.

 

Unless specifically stated, this Quarterly Report does not give effect to the prospective WHC Business Combination and does not contain a description of the risks associated with the prospective WHC Business Combination. Such risks and effects relating to the prospective WHC Business Combination are described in the foregoing registration statement on Form S-4. The foregoing registration statement also contains a description of the business, operations, financial condition, management, governance, capitalization and other materials terms related to the companies that will survive the WHC Business Combination, as well as information regarding the redemption process and the Spree extraordinary general meeting at which the WHC Business Combination will be brought for approval.

 

Results of Operations and Known Trends or Future Events

 

We have not engaged in any revenue-generating operations to date. Our only activities since inception have been organizational activities and preparations for our initial public offering and, subsequent to our initial public offering, searching for, and due diligence related to, potential target companies with which to consummate a business combination transaction, our entry into the WHC Business Combination Agreement and certain related agreements, and activities related to the prospective WHC Business Combination and accompanying financing arrangements. We have not and we will not generate any operating revenues until after completion of our initial business combination. We generate income in the form of interest income on funds held in our trust account after our initial public offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the March 31, 2023 date of our financial statements contained in this Quarterly Report. After our initial public offering, which was consummated in December 2021, we have been incurring 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 related to our search for a target company and activities related to the prospective WHC Business Combination.

 

Liquidity and Capital Resources

 

We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Our management expects that the proceeds of our initial public offering, together with proceeds from additional loans from our sponsor, if necessary (as described below), will suffice to cover our working capital needs until the WHC Business Combination (or an alternative initial business combination). We cannot assure you that our plans to consummate, or to finance our preparations for, the WHC Business Combination (or any other business combination) will be successful.

 

Prior to the completion of our initial public offering, our liquidity needs were satisfied from the availability of up to $300,000 in loans from our sponsor under an unsecured promissory note under which we had initially borrowed $199,598 prior to the consummation of our initial public offering. The total balance owed under the note was repaid in full upon the consummation of our initial public offering, and as of March 31, 2023, no amounts remained outstanding under that note.

 

Subsequent to our initial public offering, our working capital needs have been initially satisfied primarily by the approximately $1,100,000 available to us originally outside our trust account (from the private placement of private units consummated simultaneously with our initial public offering).

 

4

 

 

The net proceeds from (i) the sale of the units in our initial public offering, after deducting offering expenses of approximately $600,000, directors and officers liability insurance premiums of approximately $750,000 and underwriting commissions of $4,000,000 (but excluding a deferred underwriting fee of $9,000,000 that will be payable to the representative of the underwriters as a deferred underwriting fee at the time of (and subject to the consummation of) our initial business combination transaction), and after adding back $1,000,000 paid to us by the underwriter to reimburse certain of our expenses, and (ii) the sale of the private units for a purchase price of $9,457,150 in the aggregate, was $205,100,000. Of this amount, $204,000,000 (including $9,000,000 in potential deferred underwriting fees to be payable to the representative of the underwriters at the time of our initial business combination transaction) was deposited into a non-interest bearing trust account. The funds in the trust account are invested only in specified U.S. government treasury bills or in specified money market funds. As of March 31, 2023, we had approximately $208,921,000 of marketable securities held in that trust account. We may withdraw interest from the trust to pay taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. The remaining amount of approximately $1,100,000 from our initial public offering and private units financing was not transferred to the trust account and was deposited in our bank account. As of March 31, 2023, we had no remaining cash deposited in that bank account. As of March 31, 2023, we had an accumulated deficit of approximately $10,838,000.

 

We intend to use substantially all of the investments held in the trust account (after reduction for payments to redeeming shareholders) including any amounts representing interest earned on the trust account (which interest shall be net of taxes payable, if any, and excluding potential fees to be payable to the underwriters for advisory services in connection with our prospective initial business combination transaction), to fund our post-business combination company. We may withdraw from the trust interest to pay taxes, if any. Our annual income tax obligations depend on the amount of interest and other income earned on the amounts held in the trust account. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our initial business combination (which would be the case in the prospective WHC Business Combination), or if we are acquired as part of our initial business combination, the remaining proceeds held in the trust account (less any amounts paid out to redeeming shareholders, plus any amounts raised in a PIPE or other equity financing) will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

 

Since our initial public offering, we have used the proceeds held outside of the trust account (of which no cash remained as of March 31, 2023) primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure and negotiate a business combination, pay for administrative and support services, and pay taxes to the extent the interest earned on the trust account is not sufficient to pay our taxes. We have used funds held outside of the trust towards performance of all of the foregoing activities with respect to WHC and in connection with our entry into the WHC Business Combination Agreement and the related agreements, and, subsequent to that time, for activities related to the prospective WHC Business Combination.

 

In order to fund working capital deficiencies or finance transaction costs in connection with the prospective WHC Business Combination, our sponsor may, but is not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside of the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. In lieu of cash repayment, upon the closing of our initial business combination, up to $1,500,000 of such loans may instead be converted into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private warrants (that are part of the private units) issued to our sponsor. The terms of such loans by our sponsor or an affiliate of our sponsor, if any, have not been determined, and no written agreements exist with respect to such loans. As of March 31, 2023 and as of the date of this Quarterly Report, there are no amounts outstanding under any such loans from our sponsor or its affiliates. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor, as we do not believe third parties are willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

 

5

 

 

We believe that we will need to request the foregoing loans from our sponsor in order to satisfy our liquidity needs in our pursuit of an initial business combination, given the timing that we anticipate for the consummation of the prospective WHC Business Combination. The costs of consummating the WHC Business Combination (or another business combination) may be greater than what we currently estimate would be needed to do so. Consequently, if our sponsor does not provide us with additional funding, we may have insufficient funds available to operate our business prior to our initial business combination. If we are unable to complete the WHC Business Combination or an alternative initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.

 

We will likely need to obtain additional financing (either by issuing additional securities or incurring debt) to operate the combined company in connection with the consummation of the prospective WHC Business Combination or an alternative initial business combination, in part because we may become obligated to redeem a significant number of our public shares in connection with the completion such a business combination and will need the additional funds in order to meet the WHC Minimum Cash Condition (or cash condition under an alternative business combination) and finance the combined company’s operations. Therefore, we will likely need to issue additional securities in a PIPE or other equity financing, or incur debt. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of the prospective WHC Business Combination or an alternative business combination. We cannot assure you that our plans for that financing will be successful.

 

If we are unable to complete our prospective WHC Business Combination or an alternative business combination, our required liquidation date (June 20, 2023, which reflects an Extension Period due to our announcement of our entry into the WHC Business Combination Agreement ) would be less than 12 months after the date of this Quarterly Report (subject to any further Extension Period that we may obtain). In addition to that impending required liquidation date, we are dependent upon additional funding from our sponsor or its affiliates during the period prior to our prospective WHC Business Combination (to be evidenced by promissory note(s) that we may issue). Those factors, among others, raise substantial doubt about our ability to continue as a going concern. Please see the explanatory paragraph under the heading “Substantial Doubt about the Company’s Ability to Continue as a Going Concern” in the opinion of our independent auditor on our audited financial statements, which appears in Item 15 of our 2022 Annual Report.

 

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

 

As of March 31, 2023, we did not have any off-balance sheet arrangements as described in Item 303 of the SEC’s Regulation S-K and did not have any commitments for capital expenditures or contractual obligations. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

 

Contractual Obligations

 

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor a monthly fee of $10,000 for office space, and administrative and support services, that it provides to our company. We will continue to incur those monthly fees until the earlier of the completion of a business combination and our company’s liquidation. Because we lack working capital currently to make payments under that agreement, we are accruing monthly amounts owed to the sponsor under the agreement, and will satisfy all such obligations upon the completion of our initial business combination. We are also obligated to pay Stifel, Nicolaus & Company, Incorporated, the representative of the underwriters in our IPO, a deferred underwriting fee of $9.0 million, which represents 4.5% of the gross proceeds of our IPO, which is payable upon, and subject to, the consummation of our initial business combination transaction.

 

6

 

 

Critical Accounting Estimates

 

None.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The net proceeds from our initial public offering and the sale of the private units held in the trust account are invested in U.S. government treasury bills 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, which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management evaluated, with the participation of our chief executive officer and chief financial officer, whom we refer to as our “Certifying Officers”, the effectiveness of our disclosure controls and procedures as of March 31, 2023, pursuant to Rule 13a-15(b) or Rule 15d-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2023 our disclosure controls and procedures were effective.

 

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Changes in Internal Control over Financial Reporting

 

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.

 

7

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

None.

 

ITEM 1A. RISK FACTORS.

 

Factors that could cause our actual results to differ materially from our expectations, as described in this Quarterly Report, include the risk factors described in Part I, Item 1A, of our 2022 Annual Report. As of the date of this Quarterly Report, there have been no material changes to those risk factors.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

  

On December 15, 2021, the Registration Statement on Form S-1 (File No. 333-261367) relating to our IPO was declared effective by the SEC. For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Liquidity and Capital Resources” of this Form 10-Q. The use of net proceeds from our IPO described herein does not reflect a material change in the expected use of such proceeds as described in our final prospectus for the IPO.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report:

 

No.   Description of Exhibit
31.1*   Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*   Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**   Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**   Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*   Inline XBRL Instance Document.
101.SCH*   Inline XBRL Taxonomy Extension Schema Document.
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*Filed herewith.

 

**Furnished.

 

8

 

 

SIGNATURES

 

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Spree Acquisition Corp. 1 Limited
     
Date: May 15, 2023 /s/ Eran (Rani) Plaut
  Name: Eran (Rani) Plaut
  Title: Chief Executive Officer and Director
    (Principal Executive Officer)
     
Date: May 15, 2023 /s/ Shay Kronfeld
  Name: Shay Kronfeld
  Title: Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 

9

 

 

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