Emerging Markets Horizon Corp. - Quarter Report: 2022 June (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2022

 

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

 

EMERGING MARKETS HORIZON CORP.

(Exact name of registrant as specified in its charter)

 

Registrant’s telephone number, including area code: +44 20 7647 9100
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

 

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, 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.

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 October 21, 2022, 28,750,000 Class A ordinary shares, par value $0.0001 per share, and 7,187,500 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.

 

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EMERGING MARKETS HORIZON CORP.

Form 10-Q

For the Quarter Ended June 30, 2022

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.

CONDENSED FINANCIAL STATEMENTS

 

EMERGING MARKETS HORIZON CORP.

CONDENSED BALANCE SHEETS

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

		Three Months ended June 30,				Six Months ended June 30,				Period from May 6, 2021 (inception) through June 30,
		2022				2022				2021
Formation and operating costs		$	637,931			$	1,248,069			$	3,471
Loss from operations			(637,931	)			(1,248,069	)			(3,471	)
Other income:
Change in fair value of warrant liabilities			1,168,750				11,310,000				—
Income earned on investments held in Trust Account			406,242				432,913				—
Total other income, net			1,574,992				11,742,913				—
Net Income (Loss)		$	937,061			$	10,494,844			$	(3,471	)
Weighted average Class A redeemable shares outstanding, basic and diluted			28,750,000				28,750,000				—
Basic and diluted net income per Class A redeemable share outstanding		$	0.03			$	0.29			$	—
Weighted average Class B non-redeemable shares outstanding, basic and diluted			7,187,500				7,187,500				6,250,000
Basic and diluted net income (loss) per Class B non-redeemable share outstanding		$	0.03			$	0.29			$	(0.00	)

EMERGING MARKETS HORIZON CORP.

		Six Months ended June 30, 2022				Period from May 6, 2021 (inception) through June 30, 2021
Cash flows from Operating Activities:
Net income (loss)		$	10,494,844			$	(3,471	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in fair value of warrant liabilities			(11,310,000	)			—
Income earned on investments held in Trust Account			(432,913	)			—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			255,351				—
Deferred financing costs			—				(43,625	)
Accounts payable and accrued expenses			504,870				3,471
Due to related party			30,000				—
Net cash used in operating activities			(457,848	)			(43,625	)
Cash flows from Financing Activities:
Proceeds from issuance of promissory note to related party			—				122,000
Net cash provided by financing activities			—				122,000
Net Change in Cash		$	(457,848	)		$	78,375
Cash – Beginning of period			503,187				—
Cash – End of period		$	45,339			$	78,375
Supplemental Disclosures of Noncash Financing Activities
Remeasurement adjustment on Class A ordinary shares subject to possible redemption		$	432,913			$	—
Deferred offering costs included in accrued offering costs		$	—			$	140,116
Payment of deferred offering costs by the Sponsor in exchange for the issuance of Class B common stock to the Sponsor		$	—			$	25,000

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

EMERGING MARKETS HORIZON CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

 

Emerging Markets Horizon Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on May 6, 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 (a “business combination”). The information contained within this quarterly report on Form 10-Q (this “Report”) should be read in conjunction with the Company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on September 12, 2022 (the “Annual Report”).

 

On May 11, 2021, EM Horizon Investments (the “Prior Sponsor”) purchased 7,187,500 Class B ordinary shares of the Company in a private placement. On December 8, 2021, the Prior Sponsor transferred 12,500 Class B ordinary shares to each of the Company’s independent directors and, on June 8, 2022, it transferred its remaining 7,150,000 Class B ordinary shares to our current sponsor, New Emerging Markets Horizon (the “Sponsor”).

 

The Sponsor is controlled by FPP Capital Advisers (“FPP”), an affiliate of FPP Asset Management LLP (“FPP AM”). Prior to June 8, 2022, the Company’s sponsor was the Prior Sponsor, which at its inception was controlled by FPP, Riccardo Orcel and Nevsky Properties Limited (“Nevsky Properties”), which is in turn controlled by VTB. Following the imposition of sanctions relating to Russia by the United States and other jurisdictions, including blocking sanctions against VTB as well as entities owned 50 percent or more, directly or indirectly, by VTB, we and the Prior Sponsor implemented certain remedial measures. On March 23, 2022, Nevsky Properties relinquished, irrevocably and in perpetuity, its interest in the Sponsor to the fullest extent permitted by law and such interest was blocked by the Sponsor such that it no longer conferred under any circumstances any economic or voting rights upon Nevsky Properties. In addition, following certain other changes in management effective on the same date, neither the Company nor its Prior Sponsor employed, had on its board of directors or received any services from any employees, representatives or affiliates of VTB. The Prior Sponsor was controlled solely by FPP as of April 21, 2022, when Mr. Orcel agreed to suspend indefinitely his voting and management rights in the Prior Sponsor, though he remained a non-voting member and Nevsky Properties formally remained on the Prior Sponsor’s register of members due to certain restrictions under applicable Cayman Islands law.

 

On June 8, 2022, the Company’s Prior Sponsor and Sponsor entered into a novation agreement, whereby the Prior Sponsor transferred all of its rights and obligations under each of the contracts to which it was a party to the Sponsor, and a securities transfer agreement, whereby the Company’s Prior Sponsor transferred all of its founder shares and private placement warrants to the Sponsor. While the Company’s Sponsor remains controlled solely by FPP and Mr. Orcel remains a non-voting member, Nevsky Properties is not on its register of members.

 

The Company intends to pursue a business combination with a target company in any stage of its corporate evolution. The Company intends to focus on identifying high growth technology and consumer-exposed businesses in Western Europe, Central & Eastern Europe (“CEE”), the Commonwealth of Independent States (the “CIS”) (excluding Russia and Belarus) or Latin America. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

 

As of June 30, 2022, the Company had not commenced any operations. All activity for the period from May 6, 2021 (inception) through June 30, 2022 relates to the Company’s formation, its initial public offering (the “Initial Public Offering” or “IPO”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of investment income from the proceeds derived from the Initial Public Offering.

 

The registration statement for the Company’s Initial Public Offering was declared effective on December 8, 2021. On December 13, 2021, the Company consummated the Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit, which includes the full exercise of the underwriters’ over-allotment option (see Note 3), and the sale of 9,000,000 warrants (the “Private Placement Warrants”), which includes the full exercise of the underwriters’ over-allotment option, at a price of $1.50 per Private Placement Warrant in a private placement to the Prior Sponsor that closed simultaneously with the Initial Public Offering (see Note 3). The Prior Sponsor transferred its 9,000,000 Private Placement Warrants to the Sponsor on June 8, 2022.

 

Transaction costs amounted to $16,662,992 consisting of $5,750,000 of underwriting fees, $10,062,500 of deferred underwriting fees payable (which are included in the balance held in a trust account with Continental Stock Transfer and Trust Company acting as trustee (the “Trust Account”)), and $850,492 of other offering costs.

 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Nasdaq rules provide that 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 balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. 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 of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Initial Public Offering on December 13, 2021, an amount of $293,250,000 ($10.20 per Unit), using the net proceeds from the sale of Units and the Private Placement Warrants, was placed in the Trust Account. The funds in the Trust Account are invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

 

The Company will provide its holders of the outstanding public shares (the “public shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The public shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.20 per share), calculated as of two business days prior to the completion of a Business Combination, including interest. The per-share amount to be distributed to the Public Shareholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares have been recorded at redemption value and classified as temporary equity, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”

 

The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or don’t vote at all.

 

Notwithstanding the above, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

 

The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by March 13, 2023 (or June 13, 2023 if the Company has executed a letter of intent, agreement in principle or definitive agreement for the Business Combination within 15 months from the closing of Initial Public Offering but have not completed the Business Combination within such 15-month period), and (c) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

 

The Company will have until March 13, 2023 (or June 13, 2023, as applicable), as such period may be extended pursuant to the Company’s Amended and Restated Memorandum and Articles of Association, to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less 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 Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Island law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

 

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

 

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to 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 discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.20 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

 

Liquidity and Going Concern

 

The Company assesses going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” As of June 30, 2022, the Company had cash held outside of the Trust Account of $45,339 and a working capital deficit of $164,411. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company will be using the funds in its operating account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, paying general operating and administrative expenses, and structuring, negotiating and consummating the Business Combination. Although the Company believes that it will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing, there is a risk that the Company’s liquidity may not be sufficient. Additionally, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company with Working Capital Loans, as defined below (see Note 5). As of June 30, 2022, there were no amounts outstanding under any Working Capital Loans; however, as of the date these financial statements were issued, there was $561,996 outstanding under a Working Capital Loan in the form of a promissory note (see Note 5 and Note 10).

 

The Company is focused on identifying high-growth technology and consumer-exposed businesses in Western Europe, CEE, the CIS (excluding Russia and Belarus) or Latin America. The recent actions by Russia against Ukraine and subsequent sanctions against Russia, Belarus and related individuals and entities have created global security concerns that could have a lasting impact on regional and global economies (see additional information below). In response to the imposition of such sanctions, the Company has adjusted its target region to exclude Russia and Belarus.

 

In addition, the end of the Combination Period will occur prior to one year after the issuance of these financial statements. There is no assurance that the Company’s plans to consummate a Business Combination will be successful during the Combination Period. As outlined in the Company’s certificate of incorporation, if the Company does not complete, have an agreement in principle or a definitive agreement for a business combination by the end of the Combination Period, the Company will cease operations and redeem its public shares. Although the Company is continuing its pursuit of potential targets for an initial business combination, the end of the Combination Period occurring prior to one year after the issuance of these financial statements creates substantial doubt regarding the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Risks and Uncertainties

 

COVID-19

 

Management is currently evaluating the impact of the COVID-19 pandemic on the target industries 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 the financial statements. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Conflict in Ukraine

 

In February 2022, the Russian Federation and Belarus commenced military action with the country of Ukraine.  As a result of this action, various nations have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements, and the Company is evaluating their specific impacts on the Company’s ability to pursue a Business Combination within Western Europe, CEE, the CIS (excluding Russia and Belarus) or Latin America.

 

Changes in Management

 

On March 23, 2022, the Board of Directors appointed Jonathan Neill as our Chief Financial Officer (“CFO”) and a director, effective March 23, 2022. On March 23, 2022, the Board of Directors accepted the resignation of Bernard Abdelmalak as CFO and a director, effective March 23, 2022. There were no disagreements, no arguments, no conflicts and no disputes with our officers, directors, auditors and other professional service providers in connection with Mr. Abdelmalak’s decision to step down as CFO and director.

 

On April 21, 2022, the Board of Directors accepted the resignation of Riccardo Orcel as our Chief Executive Officer (“CEO”) and director, effective April 21, 2022. On April 21, 2022, the Board of Directors appointed Jonathan Neill as our interim CEO, effective April 21, 2022. Concurrently with his appointment as interim CEO, Mr. Neill resigned from his position as CFO but remained a director. On April 21, 2022, the Board of Directors appointed Christopher Edwards as our interim CFO and director, effective April 21, 2022. There were no disagreements, no arguments, no conflicts and no disputes with our officers, directors, auditors and other professional service providers in connection with Mr. Orcel’s decision to step down as CEO and director.

 

Class A ordinary shares subject to possible redemption at May 6, 2021 (inception)		$	—
Gross proceeds from the sale of Class A ordinary shares in IPO			287,500,000
Less:
Fair value of Public Warrants at issuance			(17,968,750	)
Issuance costs on Class A ordinary shares			(15,591,299	)
Plus:
Remeasurement adjustment on Class A ordinary shares subject to possible redemption to redemption value			39,311,420
Class A ordinary shares subject to possible redemption at December 31, 2021			293,251,371
Remeasurement adjustment on Class A ordinary shares subject to possible redemption to redemption value			432,913
Class A ordinary shares subject to possible redemption at June 30, 2022		$	293,684,284

•

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.

		Three Months ended June 30, 2022				Six Months ended June 30, 2022				Period from May 6, 2021 (inception) through June 30, 2021
Common shares subject to possible redemption
Numerator: Net income allocable to common shares subject to possible redemption		$	749,649			$	8,395,875			$	—
Denominator: Weighted average Class A redeemable common shares
Weighted average Class A redeemable common shares outstanding, basic and diluted			28,750,000				28,750,000				—
Basic and diluted net income per share, Class A redeemable common stock		$	0.03			$	0.29			$	—
Non-redeemable common stock
Numerator: Net income (loss) minus redeemable net income
Net income (loss)		$	937,061			$	10,494,844			$	(3,471	)
Less: redeemable net income			(749,649	)			(8,395,875	)			—
Non-redeemable net income (loss)		$	187,412			$	2,098,969			$	(3,471	)
Denominator: Weighted average Class B non-redeemable common shares
Weighted average Class B non-redeemable common shares outstanding, basic			7,187,500				7,187,500				6,250,000
Basic and diluted net income (loss) per share, Class B non-redeemable common stock		$	0.03			$	0.29			$	(0.00	)

NOTE 3 — INITIAL PUBLIC OFFERING

 

Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including 3,750,000 Units issued pursuant to the full exercise by the underwriters of their over-allotment option at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share of the Company and one-half of one redeemable warrant (“Public Warrant”). Each Public Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share, subject to adjustment (see Note 7).

 

NOTE 4 — PRIVATE PLACEMENT

 

Upon the closing of the Initial Public Offering, the underwriters fully exercised their over-allotment option.  The Sponsor and underwriters purchased 9,000,000 warrants (including 1,000,000 warrants issued pursuant to the full exercise by the underwriters of their over-allotment), at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $13,500,000. Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 8).

 

A portion of the gross proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account, while the remaining proceeds were used for working capital purposes. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

 

Subject to certain limitations, the Sponsor, officers, directors and underwriters have agreed to not transfer, assign or sell the Private Placement Warrants until 30 days after the completion of the Company’s Initial Public Offering.

 

NOTE 5 — RELATED PARTY TRANSACTIONS

 

Founder Shares

 

On May 11, 2021, the Prior Sponsor purchased 7,187,500 Class B ordinary shares of the Company (the “Founder Shares”), including an aggregate of up to 937,500 shares subject to forfeiture to the extent that the underwriters’ overallotment was not exercised in full or in part, for an aggregate purchase price of $25,000, which covered deferred offering costs paid directly by the Prior Sponsor. Upon the completion of the Initial Public Offering on December 13, 2021, the underwriters fully exercised their over-allotment option and therefore 937,500 Founder Shares are no longer subject to forfeiture. On December 8, 2021, the Prior Sponsor transferred 12,500 Class B ordinary shares to each of the Company’s independent directors and, on June 8, 2022, it transferred its remaining 7,150,000 Class B ordinary shares to the Sponsor.

The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination, and (ii) subsequent to the Business Combination, (A) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.

 

Administrative Services Agreement

 

The Company is party to an agreement to pay the Sponsor a total of up to $5,000 per month for business and administrative support services. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees, to the extent they have been incurred. For the three and six months ended June 30, 2022, the Company incurred $15,000 and $30,000 in administrative support services, respectively, resulting in $30,000 due to related party as of June 30, 2022.

 Promissory Note —Related Party

On May 13, 2021, the Prior Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and payable on the earlier of December 31, 2021 or the completion of the Initial Public Offering. The Company borrowed a total of $275,000 under the Note during 2021, of which $122,000 was borrowed during the period from May 6, 2021 (inception) through June 30, 2021, and, on December 13, 2021, the Company repaid $275,000 using proceeds from the Initial Public Offering to pay off the borrowings outstanding under the Note.

Related Party Loans

 

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may enter into agreements to loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would be repaid upon consummation of a Business Combination, without interest. As of June 30, 2022, no Working Capital Loans were outstanding.

 

On September 9, 2022, the Company entered into a Working Capital Loan with the Sponsor in the form of a promissory note (the “2022 Note”). Pursuant to the 2022 Note, we may borrow from the Sponsor, from time to time, up to an aggregate of $1,500,000. Borrowings under the 2022 Note will not bear interest. The 2022 Note will mature on the earlier to occur of (i) the effective date of our Business Combination or (ii) the date that the winding up of the Company becomes effective. The 2022 Note contains customary events of default, including those relating to our failure to repay the principal amount due upon maturity of the 2022 Note and certain bankruptcy events. $561,996 has been drawn and is outstanding under the 2022 Note as of the date these financial statements were issued (see Note 10 for additional information).

 

NOTE 6 — COMMITMENTS

 

Registration Rights

 

The holders of the Founder Shares and the Private Placement Warrants (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to the Class A ordinary shares). The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement will provide that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements. A contingent obligation would be recognized once a demand is received, as the amount of the contingency could then be reasonably estimated. As of June 30, 2022, the Company has not recorded a registration right contingent obligation, as no demands have come forth.

 

Underwriting Agreement

 

The Company granted the underwriters a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions.  The underwriters fully exercised their over-allotment option upon the closing of the Initial Public Offering.

 

The underwriters were paid a cash underwriting discount of $0.20 per Unit, or $5,750,000 in the aggregate, upon the closing of the Initial Public Offering. The underwriters are also entitled to a deferred fee of $0.35 per Unit, or $10,062,500. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

 

In addition to the underwriting discount, the Company has agreed to pay for the FINRA-related fees and expenses of the underwriters’ legal counsel and certain diligence and other fees. The Company will also reimburse the underwriters for background checks on our directors, director nominees and executive officers.

 

NOTE 7 — SHAREHOLDERS’ DEFICIT

 

Preference Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2022, there were no shares of preferred stock issued or outstanding.

 

Class A Ordinary Shares — The Company is authorized to issue up to 300,000,000 Class A ordinary shares, par value $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote per share. At June 30, 2022, there were 28,750,000 Class A ordinary shares issued and outstanding. The Company’s Class A ordinary shares are considered conditionally redeemable shares and are classified as temporary equity in accordance with guidance under ASC 480.

 

Class B Ordinary Shares — The Company is authorized to issue up to 30,000,000 Class B ordinary shares, par value $0.0001 per share. Holders of the Company’s Class B ordinary shares are entitled to one vote per share. At June 30, 2022, there were 7,187,500 Class B ordinary shares issued and outstanding.

 

Upon the consummation of the IPO, the Prior Sponsor transferred 12,500 Class B shares to each of the Company’s three independent directors (the “Transferred Shares”). The Transferred Shares were evaluated under ASC 718, “Stock Compensation” (“ASC 718”) for potential recording of stock-based compensation. The Company determined that the Transferred Shares are equity-classified awards that would only be recognized when it is probable that a Business Combination will occur. At the grant date of December 8, 2021, the 37,500 Transferred Shares had a fair value of $6.50 per share, with total estimated fair value of $243,750.

 

Prior to the consummation of a Business Combination, only holders of Class B ordinary shares have the right to vote on the election of directors. Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of shareholders, except as required by law.

 

The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of a Business Combination, or earlier at the option of the holder, at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all ordinary shares outstanding upon completion of the Initial Public Offering plus all 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 a Business Combination (excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in a Business Combination). In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.

 

NOTE 8 — WARRANT LIABILITY

 

Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.

 

The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any Class A ordinary shares upon exercise of a warrant unless the Class A ordinary shares issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

 

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement covering the issuance, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If any such registration statement has not been declared effective by the 60th business day following the closing of a Business Combination, holders of the warrants will have the right, during the period beginning on the 61st business day after the closing of a Business Combination and ending upon such registration statement being declared effective by the SEC, and during any other period when the company fails to have maintained an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants, to exercise such warrants on a “cashless basis.” 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” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

 

Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):

 

 

 

 

 

Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00: Once the warrants become exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):

 

 

 

 

 

During the 30-day redemption period, each warrant holder may elect to exercise their warrants on a cashless basis and receive a number of ordinary shares as defined in the warrant agreement, based on the redemption date and the volume weighted average price of the Ordinary Shares for the ten (10) trading days immediately following the date on which notice of redemption is sent to the warrant holders.

 

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

 

The exercise price and number of Class A ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

 

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 its 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 Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor 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 Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 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, 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 price described above 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 Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers 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.

 

The Company accounts for the 23,375,000 warrants issued in connection with the Initial Public Offering (consisting of 14,375,000 Public Warrants and 9,000,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

 

NOTE 9 — FAIR VALUE MEASUREMENTS

 

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period-end, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

 

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date.  In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

 

The following tables present information about the Company’s assets and liabilities that are measured at fair value at June 30, 2022 and December 31, 2021, and indicate the level in the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

 

 

At June 30, 2022 and December 31, 2021, the entire balance in the Trust Account of $293.7 million and $293.3 million, respectively, was held in cash and marketable securities.

 

 

The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company has classified both the Public Warrants and Private Placement Warrants as liabilities at their fair value, as determined by the valuation techniques noted below. These liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

 

The estimated fair value of the Public Warrants at June 30, 2022 was based upon Level 1 inputs as such warrants were actively traded on an exchange. The estimated fair value of the Public Warrants at December 31, 2021 and Private Placement Warrants at June 30, 2022 and December 31, 2021 was determined using Level 3 inputs. Inherent in a Monte Carlo simulation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies’ common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates will remain at zero.

 

The following table provides quantitative information regarding Level 3 fair value measurements as of June 30, 2022:

The following table provides quantitative information regarding Level 3 fair value measurements as of December 31, 2021:

The change in fair value of the warrant liabilities classified as Level 3 during the six months ended June 30, 2022 is summarized as follows:

NOTE 10 — SUBSEQUENT EVENTS

 

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through October 21, 2022, the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than those disclosed below.

 

Related Party Loans

 

On September 1, 2022, the Company received a Working Capital Loan from the Sponsor in the amount of $561,996 pursuant to the 2022 Note, the proceeds of which were used to settle outstanding invoices from various service providers. Borrowings under the 2022 Note will not bear interest. The 2022 Note will mature on the earlier to occur of (i) the effective date of our Business Combination or (ii) the date that the winding up of the Company becomes effective.

 

 

References to the “company,” “our,” “us” or “we” refer to Emerging Markets Horizon Corp. The following discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q for the period ended June 30, 2022 (the “Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

 

Cautionary Note Regarding Forward-Looking Statements

This Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), including the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”). Except as expressly required by applicable securities law, 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.

 

Overview

We are a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Report as our initial business combination (the “Business Combination”). We intend to effectuate our Business Combination using cash derived from the proceeds of our initial public offering (the “Initial Public Offering”) and the sale of the private placement warrants, our shares, debt or a combination of cash, shares and debt.

 

Our sponsor, New Emerging Markets Horizon, is controlled by FPP Capital Advisers (“FPP”), an affiliate of FPP Asset Management LLP (“FPP AM”). Prior to June 8, 2022, our sponsor was EM Horizon Investments (our “prior sponsor”), which at its inception was controlled by FPP, Riccardo Orcel and Nevsky Properties Limited (“Nevsky Properties”), which is in turn controlled by VTB Bank (PJSC) (“VTB”). Following the imposition of sanctions relating to Russia by the United States and other jurisdictions, including blocking sanctions against VTB as well as entities owned 50 percent or more, directly or indirectly, by VTB, we and our prior sponsor implemented certain remedial measures. On March 23, 2022, Nevsky Properties relinquished, irrevocably and in perpetuity, its interest in our sponsor to the fullest extent permitted by law and such interest was blocked by our sponsor such that it no longer conferred under any circumstances any economic or voting rights upon Nevsky Properties. In addition, following certain other changes in management effective on the same date, neither we nor our prior sponsor employed, had on its board of directors or received any services from any employees, representatives or affiliates of VTB. Our prior sponsor was controlled solely by FPP as of April 21, 2022, when Mr. Orcel agreed to suspend indefinitely his voting and management rights in our prior sponsor, though he remained a non-voting member and Nevsky Properties formally remained on our prior sponsor’s register of members due to certain restrictions under applicable Cayman Islands law.

 

On June 8, 2022, our prior sponsor and our sponsor entered into a novation agreement, whereby our prior sponsor transferred all of its rights and obligations under each of the contracts to which it was a party to our sponsor, and a securities transfer agreement, whereby our prior sponsor transferred all of its founder shares and private placement warrants to our sponsor. While our sponsor remains controlled solely by FPP and Mr. Orcel remains a non-voting member, Nevsky Properties is not on its register of members.

 

The registration statement for our Initial Public Offering was declared effective on December 8, 2021.  On December 13, 2021, we consummated the Initial Public Offering of 28,750,000 units, including the issuance of 3,750,000 units as a result of the underwriters’ exercise in full of their over-allotment option, at $10.00 per unit and the sale of 9,000,000 private placement warrants at a price of $1.50 per warrant in a private placement to our prior sponsor that closed simultaneously with our Initial Public Offering.

Upon the closing of our Initial Public Offering, a total of $293,250,000, consisting of proceeds from the Initial Public Offering and the sale of the private placement warrants, was placed in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The funds in the Trust Account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act until the earlier of: (i) the completion of a business combination and (ii) the distribution of the funds in the Trust Account to our shareholders.

 

While we may pursue an initial business combination with a target at any stage of its corporate evolution or in any industry or sector, we intend to focus on identifying high-growth technology and consumer-exposed businesses with an enterprise value of at least $700 million in Western Europe, Central and Eastern Europe (“CEE”), the Commonwealth of Independent States (the “CIS”) (excluding Russia and Belarus) or Latin America. We will seek to acquire businesses led by world-class management teams, with validated technologies, proven business models and attractive unit economics, strong corporate governance compliant with Environmental, Social and Governance (“ESG”) principles and that are well positioned for continual growth and market leadership over the long term.

 

We expect to continue to incur significant costs in the pursuit of a Business Combination. We cannot assure you that our plans to complete a Business Combination will be successful.

 

Results of Operations

 

We have neither engaged in any operations nor generated any revenues through June 30, 2022. All activities for the period from January 1, 2022 through June 30, 2022 were organizational activities and those necessary to identify a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of a Business Combination. We generate non-operating income in the form of investment income on balances held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

 

For the three months ended June 30, 2022 and the period from May 6, 2021 (inception) through June 30, 2021, we had net income of $937,061 and net loss of $3,471, respectively, an increase of $940,532. The period-over-period change consisted of a gain on warrant liabilities of $1,168,750 and income earned on investments held in the Trust Account of $406,242, partially offset by an increase in formation and operating costs of $634,460.

 

For the six months ended June 30, 2022 and the period from May 6, 2021 (inception) through June 30, 2021, we had net income of $10,494,844 and net loss of $3,471, respectively, an increase of $10,498,315.  The period-over-period change consisted of a gain on warrant liabilities of $11,310,000 and income earned on investments held in the Trust Account of $432,913, partially offset by an increase in formation and operating costs of $1,244,598.

 

Liquidity and Capital Resources

 

On December 13, 2021, we consummated our Initial Public Offering of 28,750,000 units, at a price of $10.00 per unit, generating gross proceeds of $287,500,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 9,000,000 private placement warrants to our prior sponsor, at a price of $1.50 per private placement warrant generating gross proceeds of $13,500,000.

Following the Initial Public Offering, the full exercise of the over-allotment option and the sale of the private placement warrants, a total of $293,250,000 of the proceeds thereof was placed in the Trust Account. We incurred $850,492 in other offering costs related to the Initial Public Offering, in addition to $5,750,000 in underwriting fees and $10,062,500 of deferred underwriting fees. Of these total amounts, $1,071,693 was allocated to the warrant liabilities and included in non-operating expense.

 

For the six months ended June 30, 2022 and the period from May 6, 2021 (inception) through June 30, 2021, net cash used in operating activities was $457,848 and $43,625, respectively, consisting primarily of payments made for formation, operating and deferred offering costs.

 

For the period from May 6, 2021 (inception) through June 30, 2021, net cash provided by financing activities was $122,000, consisting of proceeds received under a promissory note with the Prior Sponsor, which was subsequently repaid upon the closing of the Initial Public Offering.

 

As of June 30, 2022, we had cash and marketable securities held in the Trust Account of $293,684,284. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing investment income earned on the Trust Account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete a Business Combination. We may withdraw the investment income from the Trust Account to pay taxes, if any, or up to $100,000 of dissolution expenses in the event of liquidation. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and/or pursue our growth strategies.

 

As of June 30, 2022, we had cash of $45,339 held outside of the Trust Account and a working capital deficit of $164,411. We intend to use the funds held outside the Trust Account 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 and structure, negotiate and/or complete a Business Combination.

 

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds held in the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment.

 

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to a Business Combination. Moreover, we may need to obtain additional financing either to complete a Business Combination or because we become obligated to redeem a significant number of the public shares upon consummation of a Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

 

Going Concern Consideration

 

We assess going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” As of June 30, 2022, we had cash held outside of the Trust Account of $45,339 and a working capital deficit of $164,411.  We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. We will be using the funds in our operating account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, paying general and administrative expenses, and structuring, negotiating and consummating the Business Combination. Although we believe that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing, there is a risk that our liquidity may not be sufficient. Additionally, in order to finance transaction costs in connection with a Business Combination, our sponsor, or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, provide us with working capital loans (“Working Capital Loans”). As of June 30, 2022, there were no amounts outstanding under any such Working Capital Loans; however, as of the date these financial statements were issued, there was $561,996 outstanding under a Working Capital Loan in the form of a promissory note.

 

We are focused on identifying high-growth technology and consumer-exposed businesses in Western Europe, CEE, the CIS (excluding Russia and Belarus) or Latin America. The recent actions by Russia against Ukraine and subsequent sanctions against Russia, Belarus and related individuals and entities have created global security concerns that could have a lasting impact on regional and global economies. In response to the imposition of such sanctions, we have adjusted our target region to exclude Russia and Belarus.

 

We will have until March 13, 2023 (or June 13, 2023, as applicable), as such period may be extended pursuant to our amended and restated memorandum and articles of association, to complete a Business Combination (the “Combination Period”). The end of the Combination Period will occur prior to one year after the issuance of these financial statements. There is no assurance that our plans to consummate a Business Combination will be successful during the Combination Period. As outlined in our amended and restated memorandum and article of association, if we do not complete, or have an agreement in principle or a definitive agreement for, a business combination by the end of the Combination Period, we will cease operations and redeem our public shares. Although we are continuing our pursuit of potential targets for an initial business combination, the end of the Combination Period occurring prior to one year after the issuance of these financial statements creates substantial doubt regarding our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

 

As of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. 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.

 

 

 

Recent Accounting Pronouncements

 

Our management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on our financial statements.

 

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

 

 

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 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 principal executive officer and principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2022, 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 of 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.

 

PART II – OTHER INFORMATION

 

 

To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.

 

 

As of the date of this Report, there have been no material changes to the risk factors disclosed in our Annual Report, except for the below risk factor. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

 

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our Business Combination, and results of operations.

 

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our Business Combination, and results of operations.

 

On March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving special purpose acquisition companies (“SPACs”) and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively eliminating the safe harbor relating to the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.

 

 

None.

 

 

None.

 

 

Not applicable.

 

 

None.

 

 

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SIGNATURES

 

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

 

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