UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
(Exact name of registrant as specified in its charter)
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| | ||
| (Address Of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including
area code
Not Applicable
(Former name or former address, if changed since report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The | ||||
| The | ||||
| The |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-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.
| Large accelerated filer | ☐ | 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
As of May 15, 2024,
SLAM CORP.
Form 10-Q
For the Quarter Ended March 31, 2024
Table of Contents
i
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
SLAM CORP.
CONDENSED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Cash held in Trust Account | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Backstop agreement liability | ||||||||
| Total current liabilities | ||||||||
| Promissory Notes—related party | ||||||||
| Working Capital Loans—related party | ||||||||
| Derivative warrant liabilities | ||||||||
| Deferred underwriting commissions | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Class A ordinary shares subject to possible redemption, $ | ||||||||
| Shareholders’ Deficit: | ||||||||
| Preference shares, $ | ||||||||
| Class A ordinary shares, $ | ||||||||
| Class B ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
SLAM CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| General and administrative expenses | $ | $ | ||||||
| General and administrative expenses—related party | ||||||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Change in fair value of derivative warrant liabilities | ( | ) | ||||||
| Change in fair value of backstop agreement | ( | ) | ||||||
| Issuance of backstop agreement | ( | ) | ||||||
| Income from investments held in Trust Account | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| $ | ( | ) | $ | ( | ) | |||
| $ | ( | ) | $ | ( | ) | |||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
SLAM CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024
| Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Increase in redemption value of Class A ordinary shares subject to possible redemption | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – March 31, 2024 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
FOR THE THREE MONTHS ENDED MARCH 31, 2023
| Ordinary Shares | Additional | Total | ||||||||||||||||||||||||||
| Class A | Class B | Paid-In | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance—December 31, 2022 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Increase in redemption value of Class A ordinary shares subject to possible redemption | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance—March 31, 2023 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
SLAM CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in fair value of derivative warrant liabilities | ( | ) | ||||||
| Change in fair value of Backstop agreement | ||||||||
| Issuance of Backstop agreement | ||||||||
| Income from investments held in Trust Account | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash deposited in Trust Account | ( | ) | ( | ) | ||||
| Cash withdrawn for redemptions | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds received from promissory note - related party | ||||||||
| Redemption of Public Shares | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash—beginning of the period | ||||||||
| Cash—end of the period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1—Description of Organization and Business Operations
Slam Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on December 18, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “initial business combination”).
As of March 31, 2024, the Company had not yet commenced operations. All activity for the period from December 18, 2020 (inception) through March 31, 2024 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below, and after the Initial Public Offering, the search for an initial business combination. The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The Company’s sponsor is Slam Sponsor,
LLC, a Cayman Islands limited liability company (the “Sponsor”). The registration statement for the Company’s Initial
Public Offering was declared effective on February 22, 2021. On February 25, 2021, the Company consummated its Initial Public Offering
of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private placement (the “Private Placement”) of
Upon the closing of the Initial Public Offering
and the Private Placement, $
The Company’s management team (“Management”)
has broad discretion with respect to the specific application of the net proceeds of its 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 an initial
business combination. The Company’s initial business combination must be with one or more operating businesses or assets with a
fair market value equal to at least
5
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Company will provide its holders of the Public
Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion
of an initial business combination either (i) in connection with a general meeting called to approve the initial business combination
or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of
an initial business combination or conduct a tender offer will be made by the Company. The Public Shareholders will be entitled to redeem
their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $
Notwithstanding the foregoing, the Company’s
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
The Company’s Sponsor, officers, directors
and special advisor agreed not to propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association
(A) to modify the substance or timing of the Company’s obligation to allow the redemption of its Public Shares in connection with
an initial business combination or to redeem
On February 2, 2023, Barbara Byrne notified the Company of her decision to resign as a member of the board of directors of the Company (the “Board”), effective as of February 2, 2023. Ms. Byrne’s resignation was not the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations, policies or practices. Also on February 2, 2023, the Company announced the appointment of Alex Zyngier as a new director of the Company. Mr. Zyngier has been appointed to serve on the audit committee of the Company, with such appointment effective upon his becoming a director of the Company.
On April 25, 2023, Ann Berry notified the Company of her decision to resign as a member of the Board, effective as of April 25, 2023. Ms. Berry’s resignation was not the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations, policies or practices. Also on April 25, 2023, the Company announced the appointment of Lisa Harrington as a new director of the Company. Ms. Harrington has been appointed to serve on the compensation committee and audit committee of the Company, with such appointment effective upon her becoming a director of the Company.
On September 30, 2023, Joseph Taeid notified the Company of his decision to resign as Chief Financial Officer of the Company, effective as of September 30, 2023. Mr. Taeid’s resignation was not the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations, policies or practices. On October 4, 2023, the Company appointed Ryan Bright as the new Chief Financial Officer of the Company. The appointment was effective October 4, 2023.
6
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
If the Company is unable to complete an initial
business combination by December 25, 2024 (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 (which interest
shall be net of taxes payable and up to $
On February 21, 2023, the Company held an extraordinary
general meeting of shareholders (the “Extension Meeting”) to (i) amend the Company’s Amended and Restated Memorandum
and Articles of Association (the “Articles Amendment”) to extend the date by which the Company has to consummate an initial
business combination from February 25, 2023 to May 25, 2023 (such proposal, the “Extension Amendment Proposal”) and (ii) remove
the limitation that the Company may not redeem public shares to the extent that such redemption would result in the Company having net
tangible assets (as determined in accordance with Rule 3a51-1(g) (1) the Exchange Act of less than $
Accordingly, on February 21, 2023, the Company
issued an unsecured promissory note in the total principal amount of up to $
In connection with the vote to approve the
Extension Amendment Proposal, the holders of
In connection with the redemption of the
Company’s outstanding Public Shares for a portion of the funds held in the Trust Account, each holder will receive a full pro rata
portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not previously
released to the Company to pay the Company’s taxes (less taxes payable and up to $
On November 9, 2023, Desiree Gruber notified the Company of her decision to resign as a member of the Board, effective as of November 9, 2023. Ms. Gruber’s decision to resign was not the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations, policies or practices. Ms. Gruber was an independent member of the audit committee, compensation committee and the nominating committee of the Board.
Additionally, on November 20, 2023, in order for the Company to maintain a majority of independent directors as required by the rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”), Chetan Bansal voluntarily resigned as a director of the Company. Mr. Bansal’s decision to resign was not the result of any dispute or disagreement with the Company or any matter relating to the Company’s operations, policies or practices, and Mr. Bansal will continue in his role of Chief Development Officer of the Company. Mr. Bansal was not a member of any Board committee.
On December 4, 2023, the Company appointed Julian Nemirovsky as a new director of the Company. Mr. Nemirovsky has been appointed to serve on the audit committee and nominating committee of the Company, with such appointment effective upon his becoming a director of the Company.
On December 18, 2023, the Company and Lynk
Global, Inc., a Delaware corporation (“Lynk”), issued a joint press release announcing a non-binding letter of intent (“LOI”)
for a potential business combination. Under the terms of the LOI, the Company and Lynk would become a combined entity, with Lynk’s
existing equity holders rolling
7
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On December 22, 2023, the Company held an Extraordinary General Meeting of Shareholders (the “Shareholder Meeting”) to amend the Company’s amended and restated memorandum and articles of association (the “Articles”) to extend the date (the “Termination Date”) by which the Company has to consummate an initial business combination (the “Articles Extension”) from December 25, 2023 (the “Amended Termination Date”) to January 25, 2024 (the “Articles Extension Date”) and to allow the Company, without another shareholder vote, to elect to extend the Termination Date to consummate an initial business combination on a monthly basis for up to eleven times by an additional one month each time after the Articles Extension Date, by resolution of the Company’s Board if requested by Slam Sponsor, LLC, and upon five days’ advance notice prior to the applicable Termination Date, until December 25, 2024, or a total of up to twelve months after the Amended Termination Date, unless the closing of an initial business combination shall have occurred prior to such date (the “Extension Amendment Proposal”). The shareholders of the Company approved the Extension Amendment Proposal at the Shareholder Meeting and on December 27, 2023, the Company filed the Second Amendment to the Amended and Restated Memorandum and Articles of Association (the “Articles Amendment”) with the Registrar of Companies of the Cayman Islands, effective December 22, 2023.
In connection with the vote to approve the
Extension Amendment Proposal, the holders of
On January 22, 2024, February 21, 2024 and March 20, 2024, respectively,
the Board approved a draw of an aggregate of $
The Initial Shareholders agreed to waive their
liquidation rights with respect to the Founder Shares if the Company fails to complete an initial business combination within the Combination
Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled
to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete an initial business
combination within the Combination Period. The underwriters agreed to waive their rights to their deferred underwriting commission (see
Note 5) held in the Trust Account in the event the Company does not complete an initial business combination within the Combination Period,
and in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption
of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets
remaining available for distribution in the Trust Account will be less than the $
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. In October 2023, Israel and Hamas began an armed conflict in the Gaza Strip and surrounding areas. The impact of these ongoing conflicts, and related sanctions, on the world economy is not determinable as of the date of these unaudited condensed financial statements, and the specific impact on the Company’s financial position, results of its operations, and/or search for a target company is also not determinable as of the date of these unaudited condensed financial statements.
8
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Liquidity and Going Concern Considerations
As of March 31, 2024, the Company had $
The Company’s liquidity needs through March
31, 2024 were satisfied through a contribution of $
On February 21, 2023, the Company issued an unsecured
promissory note in the total principal amount of up to $
On May 26, 2023, the Company issued an unsecured
promissory note in the principal amount of $
On August 18, 2023, the Company issued an unsecured
promissory note in the principal amount of $
In connection with the Company’s assessment
of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of
Uncertainties about an Entity’s Ability to Continue as a Going Concern,” Management has determined that the liquidity condition,
the date of mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate
after
Note 2—Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of Management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected through December 31, 2024, or any future period.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 1, 2024, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2023, is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024.
9
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements. Actual results could differ from those estimates and the reported amounts of income and expenses during the reporting period. Making estimates requires Management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which Management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $
10
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had cash equivalents as of March 31, 2024 and December 31, 2023.
Cash and Investments Held in the Trust Account
On February 17, 2023, the Company liquidated the
U.S. government treasury obligations and money market funds held in the Trust Account. The funds in the Trust Account will be maintained
in cash in an interest-bearing demand deposit account at a bank until the earlier of consummation of the Company’s initial business
combination or liquidation. Prior to February 17, 2023, the Company’s portfolio of investments held in the Trust Account were comprised
of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheets, except for the derivative warrant liabilities (see Note 9).
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; | |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and | |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
11
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 and FASB ASC Topic 815, “Derivatives and Hedging.” The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Public Warrants and the Private Placement Warrants are recognized as derivative liabilities in accordance with FASB ASC Topic 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s unaudited condensed statements of operations. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available, and accordingly, the actual results could differ significantly. The estimated fair value of the Public Warrants, at issuance, was measured at fair value using a Black-Scholes option pricing model and is subsequently valued using the observable listed prices for such warrants. As the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant. The fair value of the Warrants as of March 31, 2024 and December 31, 2023, is based on observable listed prices for such warrants.
Backstop Agreement
The Company evaluated the backstop agreement under
ASC 815 in which it was concluded that the settlement terms listed within the Backstop Agreement are not considered an input into a fixed-for-fixed
contract as required under step 2 of ASC 815-40-15 because they are neither specifically mentioned in ASC 815-40-15 nor is it an input
into a fixed-for-fixed contract. As a result, the Backstop Agreement is required to be classified as a liability and measured at fair
value with subsequent changes in fair value recorded in earnings. Accordingly, the Company recognized the Backstop Agreement as a liability
at its fair value and adjust the instrument to its fair value at each reporting period. The liability will be subject to re-measurement
at each balance sheet date until exercised. The fair value of the Backstop Agreement assumes Antara will fund the maximum number of shares
and considers the probability of the backstop commitment consisting only of an amount equal to the difference between (x) the Minimum
Cash Condition and (y) the sum of the Private Placement Net Financing Amount (as defined in the Backstop Agreement) and the Trust Amount
(as defined in the Backstop Agreement), in no event will the backstop commitment exceed $
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the unaudited condensed statements of operations. Offering costs associated with the Class A ordinary shares issued were charged against the carrying value of the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary
shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480, “Distinguishing Liabilities from Equity.”
Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.
Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within
the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity (deficit).
The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2024 and December 31, 2023,
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A ordinary shares subject to possible redemption to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
12
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Income Taxes
The Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes.” FASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. Management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2024 and December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
There is currently taxation imposed on income by the government of the Cayman Islands. In accordance with Cayman Islands federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s unaudited condensed financial statements. Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Loss per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This presentation assumes an initial business combination as the most likely outcome. Net loss per ordinary share is calculated by dividing the net loss by the weighted average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net loss does not consider
the effect of the warrants underlying the Units sold in the Initial Public Offering (including the consummation of the over-allotment)
and the Private Placement Warrants to purchase an aggregate of
| For the Three Months Ended March 31, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Basic and diluted net loss per ordinary share: | ||||||||||||||||
| Numerator: | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Denominator: | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
13
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023 and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of this pronouncement did not have a material impact on the condensed financial statements.
The Company’s Management does not believe that any other recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying unaudited condensed financial statements.
Note 3—Initial Public Offering
On February 25, 2021, the Company consummated
its Initial Public Offering of
Note 4—Related Party Transactions
Founder Shares
On December 31, 2020, the Sponsor paid an
aggregate of $
The Initial Shareholders agreed not to transfer,
assign or sell any of their Founder Shares until the earlier to occur of (A)
On February 2, 2023,
the Sponsor repurchased
14
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On April 25, 2023, the
Sponsor repurchased
The sale of Founder Shares to an independent director, as described above, is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, share-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founder Shares were effectively transferred subject to a performance condition (i.e., the occurrence of an initial business combination). Compensation expense related to the Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. An initial business combination is not probable until it is completed. Share-based compensation would be recognized at the date an initial business combination is considered probable in an amount equal to the number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the price initially received for the purchase of the Founder Shares. As of March 31, 2024, the Company determined that an initial business combination is not considered probable, and, therefore, no share-based compensation expense has been recognized.
Private Placement Warrants
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the Private Placement of
Each whole Private Placement Warrant is exercisable
for
The Sponsor, subject to limited exceptions, has
agreed not to transfer, assign or sell any of their Private Placement Warrants until
Promissory Notes
On December 31, 2020, the Sponsor agreed
to loan the Company up to $
On February 21, 2023, the Company issued the New
Note in the total principal amount of up to $
15
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On May 26, 2023, the Company issued the May 2023
Note in the principal amount of $
On August 18, 2023, the Company issued an unsecured
promissory note in the principal amount of $
Working Capital Loans
In addition, in order to fund working capital
deficiencies or finance transaction costs in connection with an initial business combination, the Sponsor or an affiliate of the Sponsor,
or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes an initial business combination, the Company may repay the Working Capital Loans out of
the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside
the Trust Account. In the event that an initial business combination does not close, the Company may use a portion of the 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. The Working Capital Loans would either be repaid upon consummation of an initial business combination, without interest,
or, at the lenders’ discretion, up to $
On November 30, 2021, April 6, 2022, May
31, 2022, August 31, 2022, and December 28, 2022, the Sponsor agreed to loan the Company $
Administrative Support Agreement
Commencing on the date that the Company’s
securities were first listed on Nasdaq through the earlier of the Company’s consummation of an initial business combination and
its liquidation, the Company agreed to pay the Sponsor or an affiliate of the Sponsor $
In addition, the Sponsor, officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will review on a quarterly basis all payments that were made by the Company to the Sponsor, officers or directors, or the Company’s or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the Trust Account.
Due to Related Party
As of March 31, 2024 and December 31, 2023, the
Sponsor paid $
16
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5—Commitments and Contingencies
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities were entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggyback” registration rights with respect to registration statements filed subsequent to the completion of the initial business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
The underwriters were entitled to an underwriting
discount of $
Business Combination Agreement
On February 4, 2024, the Company (“Slam”), Lynk Global, Inc., a Delaware corporation (“Lynk”), the Sponsor, Lynk Global Holdings, Inc., a Delaware corporation (“Topco”), Lynk Merger Sub 1, LLC, a Delaware limited liability company and wholly owned subsidiary of Topco (“Merger Sub 1”), and Lynk Merger Sub 2, LLC, a Delaware limited liability and wholly owned subsidiary of Topco (“Merger Sub 2” and, together with the Company, and Lynk, collectively, the “Parties” and each a “Party”), entered into a business combination agreement (the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”).
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, the Sponsor, Reginald Hudlin (“Hudlin”), Alexandre Zyngier (“Zyngier”), Lisa Harrington (“Harrington”) and Julian Nemirovsky (“Nemirovsky” together with Hudlin, Zyngier and Harrington, the “Independent Directors”) and Alex Rodriguez (“Rodriguez”), Chetan Bansal (“Bansal”), Himanshu Gulati (“Gulati”), Kelly Laferriere (“Laferriere”), Marc Lore (“Lore”), Desiree Gruber (“Gruber”), Ann Berry (“Berry”) and Ryan Bright (“Bright”, and together with Rodriguez, Bansal, Gulati, Laferriere, Lore, Gruber and Berry, the “Other Class B Shareholders” and together with Sponsor and the Independent Directors, the “Slam Parties” and each, a “Slam Party”), Slam, Lynk, Topco, Merger Sub 1 and Merger Sub 2 entered into a Sponsor Letter Agreement (the “Sponsor Letter Agreement”), pursuant to which the Slam Parties have agreed to take, or not take, certain actions during the period between the execution of the Sponsor Letter Agreement and the consummation of the Merger, including (i) to vote any ordinary shares of Slam owned by such Slam Party (all such shares, the “Covered Shares”) in favor of the Merger and other related proposals at Slam’s shareholder meeting, and any other special meeting of Slam’s shareholders called for the purpose of soliciting shareholder approval in connection with the consummation of the Merger, (ii) to vote any warrants of Slam owned by such Slam Party (all such warrants, the “Covered Warrants”) in favor of the Warrant Conversion and other related proposals at Slam’s warrant holder meeting, and any other special meeting of Slam’s warrant holders called for the purpose of soliciting warrant holder approval in connection with the consummation of the Warrant Conversion, (iii) to waive the anti-dilution rights or similar protections with respect to Slam Class B Shares owned by such party as set forth in the governing documents of Slam, or otherwise, and (iv) not to redeem any Covered Shares owned by such Slam Party.
17
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Registration Rights Agreement
At the closing of the Business Combination, Topco, the Slam Parties, Antara Capital Master Fund LP, a Cayman Islands exempted limited partnership (“Antara”), A-Rod Slam LLC, a Delaware limited liability company (“A-Rod”), and the other parties thereto will enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will agree to undertake certain shelf registration obligations in accordance with the Securities Act, and certain subsequent related transactions and obligations, including, among other things, undertaking certain registration obligations and the preparation and filing of required documents.
Lock-Up Agreements
Prior to the closing
of the Business Combination, Topco will enter into a customary lock-up agreement (the “Lock-up Agreement”), with Antara,
A-Rod, the Slam Parties, the Lynk Holders party thereto (each, a “Lynk Holder”) and the Lynk Series B Preferred Holders
party thereto (each “Lynk Series B Preferred Holder”), pursuant to which, among other things, certain Topco Shares, held
by such shareholders will be locked-up and subject to certain transfer restrictions, subject to certain exceptions. Pursuant to the
Lock-up Agreement,
Backstop Agreement
Concurrently with the
parties entering into the Business Combination Agreement, Slam and Topco entered into a Backstop Agreement (the “Backstop
Agreement”) with Antara (in such capacity, the “Investor”) pursuant to which, in the event that the Minimum Cash
Condition (as defined in the Backstop Agreement) is not met, the Investor has agreed, subject to the other terms and conditions
included therein, concurrently with the closing of the Business Combination (the “Closing”), to offset any redemptions
made by holders of Slam’s Class A ordinary shares, par value $
Nasdaq Notice
On February 26, 2024, the Company received a notice from the staff of the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requested a hearing (the “Hearing”) before the Nasdaq Hearings Panel (the “Panel”), trading of the Company’s securities on The Nasdaq Capital Market would be suspended at the opening of business on March 6, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its initial public offering registration statement (“IPO Registration Statement”). The Company timely requested the Hearing before the Panel to request sufficient time to complete the Company’s previously disclosed proposed Business Combination with Lynk. The hearing request will result in a stay of any suspension or delisting action pending the outcome of the Hearing.
18
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Hearing occurred on April 25, 2024. As of the date of this filing, the Panel has not yet issued a determination.
There can be no assurance that the Company will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with Nasdaq IM-5101-2, and/or maintain compliance with other Nasdaq listing requirements.
Note 6—Class A Ordinary Shares Subject to Possible Redemption
The Company’s Class A ordinary shares feature
certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of future events.
The Company is authorized to issue
| Class A ordinary shares subject to possible redemption at December 31, 2023 | $ | |||
| Deposit in connection with Extension Amendment Proposal | ||||
| Increase in redemption value of Class A ordinary shares subject to possible redemption | ||||
| Class A ordinary shares subject to possible redemption at March 31, 2024 | $ |
Note 7—Shareholders’ Deficit
Preference Shares-The Company
is authorized to issue
Class A Ordinary Shares-The
Company is authorized to issue
Class B Ordinary
Shares-The Company is authorized to issue
19
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Class B ordinary shares will automatically
convert into Class A ordinary shares at the time of the consummation of the initial business combination on a one-for-one basis, subject
to adjustment for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment.
In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with the initial
business combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate,
on an as-converted basis,
Note 8—Derivative Warrant Liabilities
As of March 31, 2024 and December 31, 2023,
the Company had
Public Warrants may only be exercised for a whole
number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.
The Public Warrants will become exercisable on the later of (a)
The warrants have an exercise price of $
20
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except (i) that the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of an initial business combination, subject to certain limited exceptions, (ii) except as described below, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees and (iii) the Sponsor or its permitted transferees will have the option to exercise the Private Placement Warrants on a cashless basis and have certain registration rights. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.
Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00:
Once the warrants become exercisable, the Company may call the outstanding warrants for redemption (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and | |
| ● | if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ |
The Company will not redeem the warrants
as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares
issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available
throughout the
Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00:
Once the warrants become exercisable, the Company may call the outstanding warrants for redemption (except as described herein with respect to the Private Placement Warrants):
| ● | in whole and not in part; | |
| ● | at $ | |
| ● | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ | |
| ● | if the closing price of the Class A ordinary shares for any |
The “fair market value” of Class A
ordinary shares for the above purpose shall mean the volume weighted average price of Class A ordinary shares during the
If the Company is unable to complete an initial business combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
21
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 9—Fair Value Measurements
At March 31, 2024, assets held in the Trust
Account were comprised of $
| March 31, 2024 | ||||||||||||
| Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
| Liabilities: | ||||||||||||
| Derivative warrant liabilities-Public warrants | $ | $ | $ | |||||||||
| Derivative warrant liabilities-Private placement warrants | $ | $ | $ | |||||||||
| Backstop agreement liability | $ | $ | $ | |||||||||
| December 31, 2023 | ||||||||||||
| Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
| Liabilities: | ||||||||||||
| Derivative warrant liabilities-Public warrants | $ | $ | $ | |||||||||
| Derivative warrant liabilities-Private placement warrants | $ | $ | $ | |||||||||
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. The estimated fair value of Public Warrants was transferred from a Level 3 fair value measurement to a Level 1 measurement when the Public Warrants were separately listed and traded in April 2021. Accordingly, the estimated fair value of the Private Placement Warrants was transferred from a Level 3 measurement to a Level 2 because Private Placement Warrants are economically equivalent to the Public Warrants, based on the terms of the Private Warrant agreement, and as such their value is principally derived by the value of the Public Warrants.
Level 1 assets include investments in mutual funds invested in U.S. government securities, and Level 1 liabilities include derivative warrant liabilities-Public Warrants. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
For periods where no observable traded price is available, the fair value of the Public and Private Placement Warrants has been estimated using a Black-Scholes option pricing model. For periods subsequent to the detachment of the Public Warrants from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants. The fair value of the Public Warrants as of March 31, 2024 and December 31, 2023, is based on observable listed prices for such warrants. The estimated fair value of the Private Placement Warrants is equivalent to Public Warrants due to Private Placement Warrants having substantially the same terms as the Public Warrants.
22
SLAM CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
For the three months ended March 31, 2024 and
2023, the Company recognized a gain and loss of approximately $
Note 10—Subsequent Events
The Company has evaluated subsequent events and transactions that occurred up to the date the unaudited condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events, other than described below, that would have required adjustment or disclosure in the unaudited condensed financial statements.
On February 26, 2024, the Company received a notice from the staff of the Listing Qualifications Department of Nasdaq indicating that, unless the Company timely requested the Hearing before the Panel, trading of the Company’s securities on The Nasdaq Capital Market would be suspended at the opening of business on March 6, 2024, due to the Company’s non-compliance with Nasdaq IM-5101-2, which requires that a special purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its IPO Registration Statement. The Company timely requested the Hearing before the Panel to request sufficient time to complete the Company’s previously disclosed proposed Business Combination with Lynk. The hearing request will result in a stay of any suspension or delisting action pending the outcome of the Hearing.
The Hearing occurred on April 25, 2024. As of the date of this filing, the Panel has not yet issued a determination.
There can be no assurance that the Company will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with Nasdaq IM-5101-2, and/or maintain compliance with other Nasdaq listing requirements.
On April 22, 2024, the Board approved a draw of $
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “Slam Corp.,” “Slam,” “our,” “us” or “we” refer to Slam Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this 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 Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Overview
We are a blank check company incorporated on December 18, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We intend to effectuate our initial business combination using cash from the proceeds of our Initial Public Offering (the “IPO”) and the placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to any forward purchase agreements or backstop agreements we may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing or other sources.
The issuance of additional shares in an initial business combination:
| ● | may significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares; |
| ● | may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares; |
| ● | could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; |
| ● | may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and |
| ● | may not result in adjustment to the exercise price of our warrants. |
Similarly, if we issue debt or otherwise incur significant debt, it could result in:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
24
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
| ● | our inability to pay dividends on our Class A ordinary shares; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
As indicated in the accompanying unaudited condensed financial statements, as of March 31, 2024, we had approximately $93,000 in our operating bank account. Further, we expect to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for our IPO. Following the IPO, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after our IPO. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After our IPO, we have incurred increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2024, we had net loss of approximately $947,000, which consisted of approximately $1.8 million in general and administrative expenses and approximately $284,000 in issuance of Backstop Agreement and approximately $45,000 in non-operating loss resulting from the change in fair value of backstop agreement liability, offset by approximately $933,000 of income from investments and approximately $257,000 in non-operating gain resulting from the change in fair value of derivative warrant liabilities.
For the three months ended March 31, 2023, we had net loss of approximately $713,000, which consisted of and approximately $1.4 million in general and administrative expenses and $3.6 million non-operating loss resulting from the change in fair value of derivative warrant liabilities, offset by approximately $4.2 million of income from investments and cash held in Trust Account.
25
Liquidity and Going Concern Considerations
As of March 31, 2024, we had approximately $93,000 in our operating bank account and a working capital deficit of approximately $4.6 million.
The Company’s liquidity needs through March 31, 2024 were satisfied through a contribution of $25,000 from the Sponsor to purchase Founder Shares (as defined in Note 4), the loan of approximately $196,000 from the Sponsor under the Note (as defined in Note 4), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid the Note in full on February 25, 2021. In addition, in order to finance transaction costs in connection with an initial business combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 4). As of March 31, 2024 and December 31, 2023, there was $1,474,000 outstanding under the Working Capital Loans.
On February 21, 2023, the Company issued an unsecured promissory note in the total principal amount of up to $10,447,000 (the “New Note”) to the Sponsor. The Sponsor funded the initial principal amount of $3,247,000 on February 23, 2023. The Sponsor funded an additional amount of $800,000 on May 23, 2023, June 22, 2023, July 21, 2023, August 22, 2023, September 21, 2023, October 21, 2023 and November 21, 2023. Additionally, the Sponsor funded an additional amount of $335,000 for working capital. The New Note does not bear interest and matures upon closing of the Company’s initial business combination. As of March 31, 2024 and December 31, 2023, there were amounts of $9,619,000 and $9,182,000, respectively, outstanding under the New Note.
On May 26, 2023, the Company issued an unsecured promissory note in the principal amount of $700,000 (the “May 2023 Note”). The May 2023 Note does not bear interest and is repayable in full upon consummation of the Company’s initial business combination. As of March 31, 2024 and December 31, 2023, there were amounts of $700,000 and $700,000, respectively, outstanding under the May 2023 Note.
On August 18, 2023, the Company issued an unsecured promissory note in the principal amount of $800,000 (the “August 2023 Note”). The August 2023 Note does not bear interest and is repayable in full upon consummation of the Company’s initial business combination. As of March 31, 2024 and December 31, 2023, there were amounts of $800,000 and $800,000, respectively, outstanding under the August 2023 Note.
In connection with our assessment of going concern considerations in accordance with FASB ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the liquidity condition, the date for mandatory liquidation and dissolution raise substantial doubt about our ability to continue as a going concern through December 25, 2024, our scheduled liquidation date if we do not complete the initial business combination prior to such date. We intend to complete an initial business combination by December 25, 2024, but cannot guarantee such event. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after December 25, 2024.
Off-balance Sheet Arrangements
As of March 31, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
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Critical Accounting Estimates
The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of income and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. As of March 31, 2024, we have identified the Backstop Agreement as a critical accounting estimate. As of December 31, 2023, we did not have any critical accounting estimates to be disclosed.
Backstop Agreement
The Company evaluated the backstop agreement under ASC 815 in which it was concluded that the settlement terms listed within the Backstop Agreement are not considered an input into a fixed-for-fixed contract as required under step 2 of ASC 815-40-15 because they are neither specifically mentioned in ASC 815-40-15 nor is it an input into a fixed-for-fixed contract. As a result, the Backstop Agreement is required to be classified as a liability and measured at fair value with subsequent changes in fair value recorded in earnings. Accordingly, the Company recognized the Backstop Agreement as a liability at its fair value and adjust the instrument to its fair value at each reporting period. The liability will be subject to re-measurement at each balance sheet date until exercised.
The fair value of the Backstop Agreement assumes Antara will fund the maximum number of shares and considers the probability of the backstop commitment consisting only of an amount equal to the difference between (x) the Minimum Cash Condition and (y) the sum of the Private Placement Net Financing Amount (as defined in the Backstop Agreement) and the Trust Amount (as defined in the Backstop Agreement), in no event will the backstop commitment exceed $25,000,000, and Antara will not be obligated to make the backstop commitment if the Minimum Cash Condition is satisfied.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the unaudited condensed financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the principal executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer has concluded that during the period covered by this report, our disclosure controls and procedures were effective as of March 31, 2024.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2024 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on April 1, 2024. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits.
| * | Filed herewith. |
| ** | Furnished herewith. |
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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.
| Dated: May 16, 2024 | SLAM CORP. | |
| By: | /s/ Alex Rodriguez | |
| Name: | Alex Rodriguez | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| By: | /s/ Ryan Bright | |
| Name: | Ryan Bright | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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