UNITED STATES

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 quarter ended June 30, 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 number: 001-41104

PROOF ACQUISITION CORP I

(Exact Name of Registrant as Specified in Its Charter)

Delaware		86-2707040
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11911 Freedom Drive, Suite 1080 Reston, VA		20190
(Address of principal executive offices)		(Zip Code)

(571) 310-4949

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant	PACI.U	The New York Stock Exchange
Class A common stock, par value $0.0001 per share (included as part of the Units)	PACI	The New York Stock Exchange
Redeemable Warrants (included as part of the Units)	PACI.WS	The New York Stock Exchange

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 (1) submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 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 (check one).

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 August 14, 2023, the Registrant had 6,443,098 shares of its Class A common stock, $0.0001 par value per share, and 6,900,000 shares of its Class B common stock, $0.0001 par value per share, outstanding.

PROOF ACQUISITION CORP I

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

		Page
PART 1 - FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements	1

	Condensed Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022 (audited)	1

	Unaudited Condensed Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	2

	Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022	3

	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	4

	Notes to Unaudited Condensed Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION		21

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	22

SIGNATURES		24

	June 30, 2023 (unaudited)			December 31, 2022 (audited)

ASSETS
Current assets:
Cash	$	2,029,532		$	1,342,435
Prepaid expenses		263,271			467,021
Total current assets		2,292,803			1,809,456
Investments held in Trust		68,615,845			285,581,779
Total Assets	$	70,908,648		$	287,391,235

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accrued expenses		357,328			132,417
Excise tax payable		2,209,958			-
Income tax payable		1,852,353			455,833
Total current liabilities		4,419,639			588,250
Deferred income taxes		59,640			317,426
Total Liabilities		4,479,279			905,676

Commitments and contingencies (Note 5)

Temporary Equity:
Class A common stock subject to possible redemption; $0.0001 par value; 6,443,098 and 27,600,000 shares at redemption value of $10.59 and $10.31 at June 30, 2023 and December 31, 2022, respectively		68,217,016			284,449,019

Stockholders’ Equity (Deficit):
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		-			-
Class A common stock, $0.0001 par value; 70,000,000 shares authorized; none issued and outstanding (excluding 6,443,098 and 27,600,000 at June 30, 2023 and December 31, 2022, respectively, shares subject to possible redemption)		-			-
Class B common stock, $0.0001 par value; 12,500,000 shares authorized; 6,900,000 shares issued and outstanding		690			690
(Accumulated Deficit) Retained earnings		(1,788,337	)		2,035,850
Total Stockholders’ (Deficit) Equity		(1,787,647	)		2,036,540
Total Liabilities, Temporary Equity and Stockholders’ (Deficit) Equity	$	70,908,648		$	287,391,235

	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022

Formation and operating expenses	$	698,927		$	619,518
Operating loss		(698,927	)		(619,518	)

Interest income - investments held in Trust Account		2,482,403			373,148
Other income		2,482,403			373,148

Income (loss) before income tax		1,783,476			(246,370	)
Income tax expense		(513,156	)		(29,860	)
Net income (loss)	$	1,270,320		$	(276,230	)

Class A common stock - weighted average shares outstanding, basic and diluted		17,835,276			27,600,000
Class A common stock - basic and diluted net income (loss) per share	$	0.05		$	(0.01	)
Class B common stock - weighted average shares outstanding, basic and diluted		6,900,000			6,900,000
Class B common stock - basic and diluted net income (loss) per share	$	0.05		$	(0.01	)

	For the Six Months Ended June 30, 2023			For the Six Months Ended June 30, 2022

Formation and operating expenses	$	1,223,029		$	1,275,111
Operating loss		(1,223,029	)		(1,275,111	)

Interest income - investments held in Trust Account		5,511,344			399,913
Other income		5,511,344			399,913

Income (loss) before income tax		4,288,315			(875,197	)
Income tax expense		(1,138,734	)		(29,860	)
Net income (loss)	$	3,149,581		$	(905,058	)
Class A common stock - weighted average shares outstanding, basic and diluted		22,690,664			27,600,000
Class A common stock - basic and diluted net income (loss) per share	$	0.11		$	(0.03	)
Class B common stock - weighted average shares outstanding, basic and diluted		6,900,000			6,900,000
Class B common stock - basic and diluted net income (loss) per share	$	0.11		$	(0.03	)

	Class B Common Stock				Additional Paid-in		Retained Earnings (Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit)			Equity (Deficit)
Balance, December 31, 2022		6,900,000	$	690	$	-	$	2,035,850		$	2,036,540
Remeasurement of Class A Common Stock to redemption value		-		-		-		(2,353,363	)		(2,353,363	)
Net income		-		-		-		1,879,261			1,879,261
Balance, March 31, 2023		6,900,000		690		-		1,561,748			1,562,438
Excise tax on Class A Common Stock redemptions		-		-		-		(2,209,958	)		(2,209,958	)
Remeasurement of Class A Common Stock to redemption value		-		-		-		(2,410,447	)		(2,410,447	)
Net income		-		-		-		1,270,320			1,270,320
Balance, June 30, 2023		6,900,000	$	690	$	-	$	(1,788,337	)	$	(1,787,647	)

	Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Deficit
Balance, December 31, 2021		6,900,000	$	690	$	-	$	(6,245,863	)	$	(6,245,173	)
Net loss		-		-		-		(628,828	)		(628,828	)
Balance, March 31, 2022		6,900,000		690		-		(6,874,691	)		(6,874,001	)
Remeasurement of Class A Common Stock to redemption value		-		-		-		(141,596	)		(141,596	)
Net loss		-		-		-		(276,230	)		(276,230	)
Balance, June 30, 2022		6,900,000	$	690	$	-	$	(7,292,517	)	$	(7,291,827	)

	For the Six Months Ended June 30, 2023			For the Six Months Ended June 30, 2022

Cash flows from operating activities:
Net income (loss)	$	3,149,581		$	(905,058	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Income earned on Trust assets		(5,511,344	)		(399,913	)
Changes in operating assets and liabilities:
Prepaid expenses		203,750			534,070
Income taxes payable		1,254,447			-
Deferred income taxes		(115,713	)		-
Accrued expenses		224,911			55,953
Net cash used in operating activities		(794,368	)		(714,948	)

Cash flows from investing activities:
Deposit into Trust Account for extension		(480,000	)		-
Withdrawal from Trust Account for redemptions		220,995,813			-
Withdrawal from Trust Account for working capital and tax		1,961,465			-
Net cash provided by investing activities		222,477,278			-

Cash flows from financing activities:
Trust redemptions		(220,995,813	)		-
Net cash used in financing activities		(220,995,813	)		-


Net change in cash		687,097			(714,948	)
Cash at beginning of period		1,342,435			2,579,658
Cash at end of period	$	2,029,532		$	1,864,710

Non-cash financing activities:
Excise tax on redemption of Class A common stock subject to possible redemption	$	2,209,958		$	-
Remeasurement of Class A common stock subject to possible redemption	$	4,763,810		$	141,596

	For the Three Months				For the Three Months
	Ended June 30, 2023				Ended June 30, 2022
	Class A		Class B		Class A			Class B
Basic and diluted net income per share
Numerator:
Allocation of net income (loss)	$	915,959	$	354,361	$	(220,984	)	$	(55,246	)
Denominator:
Basic and diluted weighted average shares outstanding		17,835,276		6,900,000		27,600,000			6,900,000

Basic and diluted net income (loss) per share	$	0.05	$	0.05	$	(0.01	)	$	(0.01	)

	For the Six Months				For the Six Months
	Ended June 30, 2023				Ended June 30, 2022
	Class A		Class B		Class A			Class B
Basic and diluted net income per share
Numerator:
Allocation of net income (loss)	$	2,415,156	$	734,425	$	(724,046	)	$	(181,012	)
Denominator:
Basic and diluted weighted average shares outstanding		22,690,664		6,900,000		27,600,000			6,900,000

Basic and diluted net income (loss) per share	$	0.11	$	0.11	$	(0.03	)	$	(0.03	)

Class A common stock subject to possible redemption at December 31, 2022	$	284,449,019
Re-measurement of carrying value to redemption value		2,353,363
Class A common stock subject to possible redemption at March 31, 2023		286,802,382
Re-measurement of carrying value to redemption value		2,410,447
Extension deposit		480,000
Redemption		(220,995,813	)
Class A common stock subject to possible redemption at June 30, 2023	$	68,217,016

Description	Level		June 30, 2023		December 31, 2022
Assets:
Marketable securities held in the Trust Account		1	$	68,615,845	$	285,581,779

No.	Description of Exhibit
2.1	Business Combination Agreement, dated as of August 1, 2023, by and among PROOF Acquisition Corp I, PACI Merger Corp, Inc., and Volato, Inc. (incorporated by reference to Exhibit 2.1 to PROOF Acquisition Corp I’s Current Report on Form 8-K (File No. 001-41104) filed with the SEC on August 2, 2023).
3.1	Amended and Restated Certificate of Incorporation (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
3.2	Amended and Restated Bylaws (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
4.1	Specimen Unit Certificate (Incorporated by reference to the corresponding exhibit the Company’s Registration Statement on Form S-l (File No. 333-261015), filed with the SEC on November 12, 2021).
4.2	Specimen Class A common stock Certificate (Incorporated by reference to the corresponding exhibit the Company’s Registration Statement on Form S-l (File No. 333-261015), filed with the SEC on November 12, 2021).
4.3	Specimen Warrant Certificate (Incorporated by reference to the corresponding exhibit the Company’s Registration Statement on Form S-l (File No. 333-261015), filed with the SEC on November 12, 2021).
4.4	Warrant Agreement between the Company and Continental Stock Transfer & Trust Company, dated as of November 30, 2021 (Incorporated by reference to exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.1	Private Placement Warrants Purchase Agreement, dated November 30, 2021, by and among the Company and PROOF Acquisition Sponsor I, LLC (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.2	Investment Management Trust Agreement, dated November 30, 2021, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.3	Registration Rights Agreement, dated November 30, 2021, by and among the Company, PROOF Acquisition Sponsor I, LLC, and the other holders party thereto (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.4	Letter Agreement, dated November 30, 2021, by and among the Company, PROOF Acquisition Sponsor I, LLC and Officers and Directors of the Company (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.5	Administrative Services Agreement between PROOF Acquisition Sponsor I, LLC and the Company, dated November 30, 2021. (Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K (File No. 001-41104), filed with the SEC on December 6, 2021).
10.6	Sponsor Support and Non-Redemption Agreement, dated as of August 1, 2023, by and among PROOF Acquisition Sponsor I, LLC, PROOF Acquisition Corp I, and Volato, Inc. (incorporated by reference to Exhibit 10.1 to PROOF Acquisition Corp I’s Current Report on Form 8-K (File No. 001-41104) filed with the SEC on August 2, 2023).
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 (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Labels 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)

	PROOF ACQUISITION CORP I

August 14, 2023	By:	/s/ John C. Backus, Jr.
		Name:	John C. Backus, Jr.
		Title:	Chief Executive Officer
			(Principal Executive Officer)

August 14, 2023	By:	/s/ Steven P. Mullins
		Name:	Steven P. Mullins
		Title:	Chief Financial Officer
			(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by PROOF Acquisition Corp I