10-K 1 d783696d10k.htm 10-K 10-K
Table of Contents
false0001838513FY--12-31 0001838513 2023-01-01 2023-12-31 0001838513 2022-01-01 2022-12-31 0001838513 2022-12-31 0001838513 2023-12-31 0001838513 2021-10-05 2021-10-05 0001838513 2021-10-05 0001838513 2023-06-28 2023-06-28 0001838513 2023-06-30 0001838513 2023-12-21 0001838513 2023-08-08 2023-08-08 0001838513 2023-08-08 0001838513 2023-03-31 0001838513 2023-08-11 2023-08-11 0001838513 2023-12-19 0001838513 2023-12-19 2023-12-19 0001838513 2021-12-31 0001838513 us-gaap:CommonClassBMember 2023-12-31 0001838513 us-gaap:CommonClassAMember 2023-12-31 0001838513 gate:PrivatePlacementWarrantsMember 2023-12-31 0001838513 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2023-12-31 0001838513 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2023-12-31 0001838513 gate:SponsorAndCantorMember gate:PrivatePlacementUnitsMember us-gaap:PrivatePlacementMember 2023-12-31 0001838513 us-gaap:CommonClassAMember us-gaap:WarrantMember us-gaap:PrivatePlacementMember 2023-12-31 0001838513 us-gaap:WarrantMember us-gaap:PrivatePlacementMember 2023-12-31 0001838513 srt:MinimumMember 2023-12-31 0001838513 srt:MinimumMember gate:PostTransactionTargetEntityMember 2023-12-31 0001838513 gate:AnchorInvestorsMember 2023-12-31 0001838513 gate:PerShareValueLessThanFifteenUsdMember 2023-12-31 0001838513 gate:SharepricelessthantenpointfiveMember us-gaap:CommonClassAMember 2023-12-31 0001838513 us-gaap:CommonClassBMember us-gaap:OverAllotmentOptionMember 2023-12-31 0001838513 gate:SponsorMember us-gaap:CommonClassAMember 2023-12-31 0001838513 gate:PublicWarrantsMember 2023-12-31 0001838513 gate:PublicWarrantsMember gate:SharePriceMoreThanOrEqualsToUsdEighteenMember 2023-12-31 0001838513 gate:PublicWarrantsMember gate:SharePriceLessThanEighteenUsdMember 2023-12-31 0001838513 gate:BusinessAcquisitionMember gate:SharePriceBelowNinePointTwoUsdMember us-gaap:CommonClassAMember 2023-12-31 0001838513 gate:AnchorInvestorMember gate:SponsorMember 2023-12-31 0001838513 gate:AdministrativeAndSupportServicesAgreementMember gate:SponsorMember 2023-12-31 0001838513 gate:UnsecuredPromissoryNoteMember us-gaap:RelatedPartyMember 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:SponsorMember 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJulyTwoThousandAndTwentyThreeNoteMember gate:SponsorMember 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember us-gaap:CommonClassAMember 2023-12-31 0001838513 gate:TwoThousandTwentyTwoNoteMember gate:WorkingCapitalLoansMember gate:SponsorMember 2023-12-31 0001838513 gate:TwoThousandTwentyThreeNoteMember gate:WorkingCapitalLoansMember gate:SponsorMember 2023-12-31 0001838513 gate:DecemberTwoThousandAndTwentyThreeNoteMember gate:SponsorMember 2023-12-31 0001838513 us-gaap:DomesticCountryMember 2023-12-31 0001838513 us-gaap:StateAndLocalJurisdictionMember 2023-12-31 0001838513 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001838513 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001838513 us-gaap:FairValueInputsLevel3Member 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember 2023-12-31 0001838513 gate:WorkingCapitalLoansMember us-gaap:RelatedPartyMember 2023-12-31 0001838513 us-gaap:CommonClassAMember 2022-12-31 0001838513 us-gaap:CommonClassBMember 2022-12-31 0001838513 gate:PrivatePlacementWarrantsMember 2022-12-31 0001838513 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-12-31 0001838513 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-12-31 0001838513 gate:TwoThousandTwentyTwoNoteMember gate:WorkingCapitalLoansMember gate:SponsorMember 2022-12-31 0001838513 us-gaap:DomesticCountryMember 2022-12-31 0001838513 us-gaap:StateAndLocalJurisdictionMember 2022-12-31 0001838513 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001838513 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001838513 us-gaap:FairValueInputsLevel3Member 2022-12-31 0001838513 gate:WorkingCapitalLoansMember us-gaap:RelatedPartyMember 2022-12-31 0001838513 us-gaap:RetainedEarningsMember 2022-01-01 2022-12-31 0001838513 gate:NonredeemableClassAAndBMember 2022-01-01 2022-12-31 0001838513 gate:ClassARedeemableCommonStockMember 2022-01-01 2022-12-31 0001838513 us-gaap:FairValueInputsLevel3Member 2022-01-01 2022-12-31 0001838513 us-gaap:WarrantMember us-gaap:FairValueInputsLevel3Member 2022-01-01 2022-12-31 0001838513 gate:AdministrativeServicesAgreementMember gate:SponsorMember 2022-01-01 2022-12-31 0001838513 us-gaap:CommonClassAMember 2022-01-01 2022-12-31 0001838513 gate:CommonClassBAndNonRedeemableClassACommonStockMember 2022-01-01 2022-12-31 0001838513 us-gaap:CapitalUnitsMember 2023-01-01 2023-12-31 0001838513 us-gaap:CommonClassAMember 2023-01-01 2023-12-31 0001838513 us-gaap:WarrantMember 2023-01-01 2023-12-31 0001838513 us-gaap:RetainedEarningsMember 2023-01-01 2023-12-31 0001838513 gate:SponsorAndCantorMember gate:PrivatePlacementUnitsMember us-gaap:PrivatePlacementMember 2023-01-01 2023-12-31 0001838513 us-gaap:PrivatePlacementMember 2023-01-01 2023-12-31 0001838513 us-gaap:IPOMember 2023-01-01 2023-12-31 0001838513 srt:MaximumMember us-gaap:CommonClassAMember us-gaap:IPOMember 2023-01-01 2023-12-31 0001838513 gate:SponsorMember us-gaap:CommonClassBMember 2023-01-01 2023-12-31 0001838513 us-gaap:CommonClassBMember 2023-01-01 2023-12-31 0001838513 gate:SponsorMember us-gaap:CommonClassAMember 2023-01-01 2023-12-31 0001838513 gate:PublicWarrantsMember srt:MaximumMember 2023-01-01 2023-12-31 0001838513 gate:PublicWarrantsMember 2023-01-01 2023-12-31 0001838513 gate:PublicWarrantsMember gate:SharePriceMoreThanOrEqualsToUsdEighteenMember 2023-01-01 2023-12-31 0001838513 gate:PublicWarrantsMember srt:MaximumMember gate:SharePriceLessThanEighteenUsdMember 2023-01-01 2023-12-31 0001838513 gate:PublicWarrantsMember srt:MinimumMember 2023-01-01 2023-12-31 0001838513 gate:AnchorInvestorMember gate:SponsorMember 2023-01-01 2023-12-31 0001838513 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2023-01-01 2023-12-31 0001838513 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2023-01-01 2023-12-31 0001838513 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-12-31 0001838513 gate:ClassARedeemableCommonStockMember 2023-01-01 2023-12-31 0001838513 gate:NonredeemableClassAAndBMember 2023-01-01 2023-12-31 0001838513 us-gaap:FairValueInputsLevel3Member 2023-01-01 2023-12-31 0001838513 us-gaap:WarrantMember us-gaap:FairValueInputsLevel3Member 2023-01-01 2023-12-31 0001838513 gate:PrivatePlacementWarrantsMember 2023-01-01 2023-12-31 0001838513 gate:AdministrativeServicesAgreementMember gate:SponsorMember 2023-01-01 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJulyTwoThousandAndTwentyThreeNoteMember gate:SponsorMember 2023-01-01 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember 2023-01-01 2023-12-31 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember us-gaap:CommonClassAMember 2023-01-01 2023-12-31 0001838513 gate:CommonClassBAndNonRedeemableClassACommonStockMember 2023-01-01 2023-12-31 0001838513 us-gaap:CommonClassAMember us-gaap:IPOMember 2021-10-05 2021-10-05 0001838513 gate:SponsorAndCantorMember gate:PrivatePlacementUnitsMember us-gaap:PrivatePlacementMember 2021-10-05 2021-10-05 0001838513 gate:SponsorMember gate:FounderSharesMember 2021-10-05 2021-10-05 0001838513 gate:SponsorMember gate:FounderSharesMember gate:DirectorsMember 2021-10-05 2021-10-05 0001838513 gate:FounderSharesMember 2021-10-05 2021-10-05 0001838513 us-gaap:CommonClassAMember us-gaap:IPOMember 2021-10-05 0001838513 gate:PublicWarrantMember us-gaap:CommonClassAMember us-gaap:IPOMember 2021-10-05 0001838513 gate:PublicWarrantMember us-gaap:IPOMember 2021-10-05 0001838513 gate:SponsorAndCantorMember gate:PrivatePlacementUnitsMember us-gaap:PrivatePlacementMember 2021-10-05 0001838513 gate:FounderSharesMember 2021-10-05 0001838513 gate:SponsorMember gate:DirectorsMember 2021-10-05 0001838513 us-gaap:CommonClassAMember 2021-12-31 0001838513 gate:ConversionOfClassBToClassACommonStockMember gate:SponsorMember 2023-06-28 2023-06-28 0001838513 gate:SponsorMember 2023-06-28 2023-06-28 0001838513 gate:NasdaqStockMarketMember 2023-07-19 2023-07-19 0001838513 gate:NasdaqStockMarketMember 2023-07-19 0001838513 us-gaap:CommonClassAMember 2023-08-02 0001838513 gate:NasdaqStockMarketMember 2023-08-08 2023-08-08 0001838513 gate:NasdaqStockMarketMember 2023-08-08 0001838513 gate:InflationReductionAct2022Member 2022-08-16 0001838513 gate:PromissoryNoteMember gate:MemberOfTheSponsorMember 2023-02-13 0001838513 gate:MemberOfTheSponsorMember gate:ConversionSharesMember 2023-02-13 0001838513 gate:PromissoryNoteMember 2023-02-13 0001838513 gate:July2023NoteMember gate:SponsorMember 2023-07-20 0001838513 gate:July2023NoteMember 2023-07-20 0001838513 us-gaap:CommonClassAMember 2022-12-02 0001838513 gate:SponsorMember us-gaap:CommonClassAMember 2022-12-02 0001838513 gate:SponsorMember us-gaap:CommonClassAMember 2023-06-27 2023-06-27 0001838513 gate:SponsorMember us-gaap:CommonClassAMember 2023-06-27 0001838513 gate:SponsorMember us-gaap:CommonClassBMember 2021-01-15 2021-01-15 0001838513 gate:SponsorMember us-gaap:CommonClassBMember gate:FounderSharesMember 2021-01-15 0001838513 gate:UnsecuredPromissoryNoteMember gate:SponsorMember 2021-01-15 0001838513 gate:SponsorMember 2022-03-27 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember 2022-06-30 0001838513 gate:WorkingCapitalLoansMember gate:WorkingCapitalLoanJuneTwoThousandAndTwentyTwoMember gate:MemberOfTheSponsorMember 2022-07-01 2022-07-31 0001838513 us-gaap:CommonClassAMember 2023-12-19 0001838513 gate:DecemberTwoThousandAndTwentyThreeNoteMember gate:SponsorMember 2023-12-21 0001838513 gate:SponsorMember us-gaap:CommonClassBMember 2023-06-28 0001838513 us-gaap:CommonClassAMember 2024-04-01 0001838513 us-gaap:CommonClassBMember 2024-04-01 0001838513 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-12-31 0001838513 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-12-31 0001838513 us-gaap:RetainedEarningsMember 2021-12-31 0001838513 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001838513 us-gaap:WarrantMember us-gaap:FairValueInputsLevel3Member 2021-12-31 0001838513 us-gaap:WarrantMember us-gaap:FairValueInputsLevel3Member 2022-12-31 0001838513 us-gaap:RetainedEarningsMember 2022-12-31 0001838513 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001838513 us-gaap:WarrantMember us-gaap:FairValueInputsLevel3Member 2023-12-31 0001838513 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001838513 us-gaap:RetainedEarningsMember 2023-12-31 iso4217:USD xbrli:shares utr:Day xbrli:pure utr:Month utr:Year iso4217:USD xbrli:shares
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-K
 
 
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
 
☐
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: 001-40862
 
 
MARBLEGATE ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
  
85-4249135
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
411 Theodore Fremd Avenue,
Suite 206S,
Rye, New York
  
10580
(Address of principal executive offices)
  
(Zip Code)
Registrant’s telephone number, including area code: (914) 415-4081
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
W
arr
ant
  
GATEU
  
The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share
  
GATE
  
The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Class A common stock at a price of $11.50 per
share
  
GATEW
  
The Nasdaq Stock Market LLC
 
 
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   ☐    Accelerated filer   ☐
Non-accelerated filer   ☒    Smaller reporting company   ☒
     Emerging growth company   ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☒ No ☐
The aggregate market value of the outstanding shares of the registrant’s Class A common stock, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the Class A common stock on June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, as reported on The Nasdaq Stock Market LLC was approximately $7,982,387.
As of April 1, 2024, there were 5,547,605 shares of Class A
common
stock, par value $0.0001 per share, and 6,303,333 shares of Class B common stock, par value $0.0001 per share, of the registrant issued and outstanding.
 
 
 

Table of Contents

TABLE OF CONTENTS

 

     PAGE  
PART I      5  
Item 1.   Business      5  
Item 1A.   Risk Factors      19  
Item 1B.   Unresolved Staff Comments      20  
Item 1C.   Cybersecurity      20  
Item 2.   Properties      21  
Item 3.   Legal Proceedings      21  
Item 4.   Mine Safety Disclosures      21  
PART II      22  
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities      22  
Item 6.   [Reserved]      23  
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations      23  
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk      27  
Item 8.   Financial Statements and Supplementary Data      27  
Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure      27  
Item 9A.   Controls and Procedures      27  
Item 9B.   Other Information      28  
Item 9C.   Disclosure Regarding Foreign Jurisdictions that Prevent Inspections      28  
PART III      29  
Item 10.   Directors, Executive Officers and Corporate Governance      29  
Item 11.   Executive Compensation      32  
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters      33  
Item 13.   Certain Relationships and Related Transactions, and Director Independence      34  
Item 14.   Principal Accountant Fees and Services      36  
PART IV      37  
Item 15.   Exhibit and Financial Statement Schedules      37  
Item 16.   Form 10-K Summary      37  

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report (as defined below), including, without limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act (as defined below) and Section 21E of the Exchange Act (as defined below). These forward-looking statements can be identified by the use of forward- looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination (as defined below) and any other statements that are not statements of current or historical facts. These statements are based on management’s (as defined below) current expectations, but actual results may differ materially due to various factors, including, but not limited to:

 

  •  

our ability to complete our initial business combination, including the DePalma Business Combination (as defined below);

 

  •  

our success in retaining or recruiting, or changes required in, our officers, key employees or directors (as defined below) following our initial business combination;

 

  •  

our expectations around the performance of the prospective target business or businesses, such as DePalma (as defined below);

 

  •  

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements;

 

  •  

the potential incentive to consummate an initial business combination with an acquisition target that subsequently declines in value or is unprofitable for public investors due to the low initial price for the founder shares (as defined below) paid by our initial stockholders (as defined below);

 

  •  

our potential ability to obtain additional financing to complete our initial business combination, including the Depalma Business Combination;

 

  •  

the ability of our officers and directors to generate additional potential acquisition opportunities, if needed;

 

  •  

our pool of prospective target businesses;

 

  •  

our public securities’ potential liquidity and trading;

 

  •  

the lack of a market for our securities;

 

  •  

the use of proceeds not held in the trust account (as defined below) or available to us from interest income on the trust account balance;

 

  •  

the impact on the amount held in the trust account, our capitalization, principal stockholders and other impacts on our Company (as defined below) or management team should we seek to further extend the Combination Period (as defined below) consistent with applicable laws, regulations and stock exchange rules;

 

  •  

our financial performance; or

 

  •  

the other risks and uncertainties discussed in “Item 1A. Risk Factors” below.

Additionally, on January 24, 2024, the SEC (as defined below) adopted the 2024 SPAC Rules (as defined below), which will become effective on July 1, 2024, that will affect SPAC (as defined below) business combination transactions. The 2024 SPAC Rules require, among other matters, (i) additional disclosures relating to SPAC business combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and business combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed business combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for Business Combination registration statements. In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act (as defined below), including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals. The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Unless otherwise stated in this Report, or the context otherwise requires, references to:

 

  •  

“2022 Promissory Note” are to the unsecured promissory note we issued to Marblegate SOMF (as defined below) on June 30, 2022, pursuant to which we may borrow up to an aggregate maximum amount of $600,000 for Working Capital Loans (as defined below);

 

  •  

“2024 SPAC Rules” are to the new rules and regulations for SPACs adopted by the SEC on January 24, 2024, which will become effective on July 1, 2024;

 

  •  

“Affiliated Joint Acquisition” are to a business combination opportunity jointly with one or more entities affiliated with Marblegate (as defined below) and/or one or more investors in funds or accounts managed by Marblegate;

 

  •  

“Aggregate New MAC Capitalization” are to the quotient obtained by dividing (i) the Aggregate Equity Value (as defined in the DePalma Business Combination Agreement (as defined below)), by (ii) $10.00;

 

  •  

“amended and restated certificate of incorporation” are to our certificate of incorporation of, as amended and restated on September 30, 2021, and as further amended on December 7, 2022, June 27, 2023 and December 19, 2023;

 

  •  

“anchor investors” are to the qualified institutional buyers or institutional accredited investors which are not affiliated with us, our sponsor (as defined below), our directors or any member of our management and that purchased units in our initial public offering (as defined below), and purchased from our sponsor an aggregate of 2,473,864 founder shares at their original purchase price of approximately $0.002 per share;

 

  •  

“ASC” are to the FASB (as defined below) Accounting Standards Codification;

 

  •  

“ASU” are to the FASB Accounting Standards Update;

 

  •  

“board of directors,” “board” or “directors” are to our board of directors;

 

  •  

“business combination” are to a merger, capital stock share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

 

1

Table of Contents
  •  

“Cantor” are to Cantor Fitzgerald & Co., the representative of the underwriters in our initial public offering;

 

  •  

“Class A common stock” are to the shares of our Class A common stock, par value $0.0001 per share;

 

  •  

“Class B common stock” are to the shares of our Class B common stock, par value $0.0001 per share;

 

  •  

“Combination Period” are to the up to 36-month period, from the closing of the initial public offering to October 5, 2024 (or such earlier date as determined by our board of directors), that the we have to consummate an initial business combination; provided that the Combination Period may be further extended, if approved by our board of directors and stockholders, pursuant to an amendment to the amended and restated certificate of incorporation and consistent with applicable laws, regulations and stock exchange rules;

 

  •  

“common stock” are to the Class A common stock and the Class B common stock, together;

 

  •  

“Company”, “our Company,” “we” or “us” are to Marblegate Acquisition Corp., a Delaware corporation;

 

  •  

“Company Equity Value” are to the product obtained by multiplying (i) the aggregate number of shares of common stock outstanding as of immediately prior to the Effective Time (as defined below) and after giving effect to any redemptions of shares of common stock, by (ii) $10.00;

 

  •  

“Company Exchange Ratio” are to an amount equal to the quotient obtained by dividing (i) the Company Equity Value, by (ii) the Aggregate Equity Value;

 

  •  

“Continental” are to Continental Stock Transfer & Trust Company, trustee of our trust account and warrant agent of our public warrants (as defined below);

 

  •  

“Conversion Shares” are to the unpaid principal of the 2022 Promissory Note, the February 2023 Note (as defined below), the July 2023 Note (as defined below) and the December 2023 Note (as defined below) for Working Capital Loans (as defined below) that may be converted by Marblegate SOMF into Class A common stock under the terms of the respective promissory notes;

 

  •  

“December 2023 Note” are to the unsecured promissory note we issued to Marblegate SOMF on December 21, 2023, pursuant to which we may borrow up to an aggregate maximum amount of $450,000 for Working Capital Loans;

 

  •  

“DePalma” or “DePalma Companies” are to DePalma Acquisition I LLC, a Delaware limited liability company, and DePalma Acquisition II LLC, a Delaware limited liability company;

 

  •  

“DePalma Business Combination” are to the proposed business combination transactions involving the Company and the DePalma Companies, including all of the transactions contemplated by the DePalma Business Combination Agreement (as defined below);

 

  •  

“DePalma Business Combination Agreement” are to the business combination agreement (as it may be amended or restated from time to time) entered into on February 14, 2023 by the Company with Marblegate, New MAC (as defined below), Merger Sub (as defined below), and the DePalma Companies;

 

  •  

“DePalma Merger” are to the merger of Merger Sub with and into the Company with the Company surviving as a wholly owned subsidiary of New MAC;

 

  •  

“DePalma Registration Statement” are to the Registration Statement on Form S-4, as confidentially filed with the SEC;

 

  •  

“DGCL” are to the Delaware General Corporation Law;

 

  •  

“DWAC System” are to the Depository Trust Company’s Deposit/Withdrawal At Custodian System;

 

  •  

“Exchange Act” are to the Securities Exchange Act of 1934, as amended;

 

  •  

“Extensions” are to the extensions to the Combination Period approved at each of the First Extension Meeting, the Second Extension Meeting and the Third Extension Meeting, collectively;

 

  •  

“FASB” are to the Financial Accounting Standards Board;

 

  •  

“February 2023 Note” are to the unsecured promissory note we issued to Marblegate SOMF on February 13, 2023, pursuant to which we may borrow up to an aggregate maximum amount of $1,100,000 for Working Capital Loans;

 

  •  

“FINRA” are to the Financial Industry Regulatory Authority;

 

  •  

“First Extension Meeting” are to the 2022 special meeting in lieu of the 2022 annual meeting of stockholders held on December 2, 2022, at which our stockholders approved an amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2023 to July 5, 2023 (or such earlier date as determined by our board of directors).;

 

  •  

“Founder Conversion” are to the 4,000,000 shares of Class A common stock issued on June 28, 2023, in connection with the Second Extension Meeting, to the sponsor, upon the conversion of an equal number of shares of Class B common stock held by the sponsor, as founder shares;

 

2

Table of Contents
  •  

“founder shares” are to the shares of Class B common stock initially purchased by our sponsor prior to the initial public offering, including the shares of Class A common stock (i) issued in connection with the Founder Conversion, and (ii) that will be issued upon the automatic conversion of the shares of Class B common stock at the time of our business combination as described herein (for the avoidance of doubt, such shares of Class A common stock will not be “public shares” (as defined below));

 

  •  

“GAAP” are to the accounting principles generally accepted in the United States of America;

 

  •  

“IFRS” are to the International Financial Reporting Standards, as issued by the International Accounting Standards Board;

 

  •  

“initial public offering” or “IPO” are to the initial public offering that we consummated on October 5, 2021;

 

  •  

“initial stockholders” are to our sponsor and any other holders of our founder shares prior to our initial public offering (or their permitted transferees);

 

  •  

“Investment Company Act” are to the Investment Company Act of 1940, as amended;

 

  •  

“IPO Promissory Note” are to the unsecured promissory note we issued to our sponsor on January 15, 2021, in connection with our IPO, pursuant to which we were able to borrow up to an aggregate principal amount of $300,000);

 

  •  

“IPO Registration Statement” are to the Registration Statement on Form S-1 initially filed with the SEC on September 9, 2021, as amended, and declared effective on September 30, 2021 (File No. 333-259422);

 

  •  

“JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;

 

  •  

“July 2023 Note” are to the unsecured promissory note we issued to Marblegate SOMF on July 20, 2023, pursuant to which we may borrow up to an aggregate maximum amount of $500,000 for Working Capital Loans;

 

  •  

“management” or our “management team” are to our officers and directors;

 

  •  

“MAC Registration Rights Agreement” are to that certain registration rights agreement, dated as of September 30, 2021, by and among the Company, the sponsor, and the other parties thereto;

 

  •  

“Marblegate” are to Marblegate Asset Management, LLC, a Delaware limited liability company, and its affiliates;

 

  •  

“Marblegate SOMF” are to Marblegate Special Opportunities Master Fund, L.P, a Delaware limited partnership and a member of the sponsor;

 

  •  

“Marcum” are to Marcum LLP, our independent registered public accounting firm;

 

  •  

“Merger Sub” are to MAC Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of New MAC;

 

  •  

“Nasdaq” are to The Nasdaq Stock Market LLC;

 

  •  

“New MAC” are to Marblegate Capital Corporation, a Delaware corporation;

 

  •  

“New MAC Common Stock” are to the common stock, par value $0.0001 per share, of New MAC;

 

  •  

“PCAOB” are to the Public Company Accounting Oversight Board (United States);

 

  •  

“private placement” are to the private placement of 910,000 private placement units (as defined below) purchased by our sponsor and Cantor, which occurred simultaneously with the closing of our initial public offering, at a purchase price of $10.00 per unit for an aggregate purchase price of $9,100,000;

 

  •  

“private placement shares” are to the shares of our Class A common stock included in the private placement units;

 

  •  

“private placement units” are to the units issued in the private placement, which private placement units are identical to the units (as defined below) sold in our initial public offering, subject to certain limited exceptions as described in this Report;

 

  •  

“private placement warrants” are to the warrants included in the private placement units;

 

  •  

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

 

  •  

“public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchased public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares;

 

  •  

“public warrants” are to our redeemable warrants sold as part of the units in our initial public offering (whether they were subscribed for in our initial public offering or purchased in the open market) and to any private placement warrants if held by third parties other than our sponsor, officers or directors (or permitted transferees), in each case, following the consummation of our initial business combination;

 

  •  

“Report” are to this Annual Report on Form 10-K for the fiscal year ended December 31, 2023;

 

  •  

“Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002;

 

  •  

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

 

  •  

“Second Extension Meeting” are to the special meeting of stockholders held on June 27, 2023, at which our stockholders approved the second amendment to the certificate of incorporation to extend the end of the Combination Period from July 5, 2023 to January 5, 2024 (or such earlier date as determined by our board of directors);

 

3

Table of Contents
  •  

“Securities Act” are to the Securities Act of 1933, as amended;

 

  •  

“SPACs” are to special purpose acquisition companies;

 

  •  

“sponsor” are to Marblegate Acquisition LLC, a Delaware limited liability company controlled by certain of our officers and directors;

 

  •  

“Third Extension Meeting” are to the special meeting in lieu of an annual meeting of stockholders held on December 19, 2023, at which our stockholders approved the third amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2024 to October 5, 2024 (or such earlier date as determined by our board of directors);

 

  •  

“trust account” are to the U.S.-based trust account in which an amount of $301,500,000 from the net proceeds of the sale of the units in the initial public offering and private placement units was placed immediately following the closing of the initial public offering;

 

  •  

“units” are to the units sold in our initial public offering, which consist of one public share and one-half of one public warrant; and

 

  •  

“Working Capital Loans” are to funds that, in order to provide working capital or finance transaction costs in connection with a business combination, the initial stockholders or an affiliate of the initial stockholders or certain of our directors and officers may, but are not obligated to, loan us.

 

4

Table of Contents

PART I

 

Item 1.

Business.

Overview

We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a business combination with one or more businesses.

While we may pursue an initial business combination target in any stage of its corporate evolution or in any industry or sector, we have concentrated our efforts on identifying high quality businesses that have recently undergone a restructuring. Our management team and Marblegate, an affiliate of our sponsor, have extensive experience investing in post-restructured companies. We believe that this experience makes us very well situated to identify, source, negotiate and execute a business combination at a favorable valuation with an attractive post-restructuring company.

The 2024 SPAC Rules may materially affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.

Initial Public Offering and Extensions of Our Combination Period

On October 5, 2021, we consummated our initial public offering of 30,000,000 units. Each unit consists of one share of Class A common stock, and one-half of one redeemable warrant of the Company, with each warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $300,000,000.

Simultaneously with the closing of the initial public offering, we completed the private sale of an aggregate of 910,000 units to our sponsor and Cantor at a purchase price of $10.00 per private placement unit, generating gross proceeds of $9,100,000.

A total of $301,500,000, comprised of $292,400,000 of the proceeds from the initial public offering and $9,100,000 of the proceeds of the sale of the private placement units was placed in the trust account maintained by Continental, acting as trustee.

It is the job of our sponsor and management team to complete our initial business combination. Our management team is led by Andrew Milgram, our Chief Executive Officer, and Paul Arrouet, our President, who have many years of experience in investing in post-restructured companies. We must complete our initial business combination within the Combination Period, which is up to 36 months from the closing of our initial public offering. If our initial business combination is not consummated within the Combination Period, then, unless our board of directors and stockholders approve a further extension of the Combination Period, our existence will terminate, and we will distribute all amounts in the trust account.

Extensions of Our Combination Period

We originally had up to 15 months from the closing of our initial public offering, or until January 5, 2023, to consummate an initial business combination. However, at the First Extension Meeting held on December 2, 2022, our stockholders approved the amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2023 to July 5, 2023 (or such earlier date as determined by our board of directors). In connection with the First Extension Meeting, stockholders holding 28,989,609 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account. As a result, approximately $293.5 million (approximately $10.12 per public share) was removed from the trust account and paid to such holders.

At the Second Extension Meeting held on June 27, 2023, our stockholders approved the second amendment to the certificate of incorporation to extend the end of the Combination Period from July 5, 2023 to January 5, 2024 (or such earlier date as determined by our board of directors). In connection with the Second Extension Meeting, stockholders holding 244,327 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account. As a result, approximately $2.5 million (approximately $10.29 per share) was removed from the trust account and paid to such holders.

At the Third Extension Meeting held on December 19, 2023, our stockholders approved the third amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2024 to October 5, 2024 (or such earlier date as determined by our board of directors). In connection with the Second Extension Meeting, stockholders holding 128,459 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account. As a result, approximately $1.4 million (approximately $10.62 per share) was removed from the trust account and paid to such holders. Following the redemptions, we had 637,605 public shares outstanding.

We may seek to further extend the Combination Period consistent with applicable laws, regulations and stock exchange rules. Such an extension would require the approval of our public stockholders, who will be provided the opportunity to redeem all or a portion of their public shares. Such redemptions will likely have a material adverse effect on the amount held in our trust account, our capitalization, principal stockholders and other impacts on our Company or management team, such as our ability to maintain our listing on Nasdaq.

Founder Conversion

On June 28 2023, we issued 4,000,000 shares of Class A common stock to the sponsor, upon the conversion of an equal number of shares of Class B common stock held by the sponsor in the Founder Conversion. The 4,000,000 shares of Class A common stock issued in connection with the Founder Conversion are subject to the same restrictions as applied to the shares of Class B common stock before the Founder Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial business combination as described in the IPO Registration Statement; consequently, the shares of Class A common stock issued in connection with the Founder Conversion are not registered under the Securities Act and remain unregistered until registration is demanded by the sponsor pursuant to a letter agreement we entered into with our sponsor, officers and directors. Following the Founder Conversion and the redemptions in connection with the Extensions, (i) there were 5,547,605 shares of Class A common stock issued and outstanding and 6,303,333 shares of Class B common stock issued and outstanding, and (ii) the sponsor held 71.2% of the outstanding shares of common stock.

DePalma Business Combination Agreement

The below subsection describes the material provisions of the DePalma Business Combination Agreement, but does not purport to describe all the terms thereof. This summary of the DePalma Business Combination Agreement is qualified in its entirety by reference to the complete text of the DePalma Business Combination Agreement, a copy of which is filed hereto as Exhibit 2.1 and incorporated by reference herein. Unless otherwise defined herein, the capitalized terms used below have the same meanings given to them in the DePalma Business Combination Agreement. Unless otherwise indicated, this Report does not assume the closing of the DePalma Business Combination.

On February 14, 2023, we entered into the DePalma Business Combination Agreement with Marblegate, New MAC, Merger Sub and the DePalma Companies, pursuant to which, among other things, the parties agreed to the DePalma Business Combination under which we agreed to combine with DePalma in a series of transactions that will result in New MAC becoming a publicly-traded company whose shares are expected to trade on the Nasdaq Global Market.

(i) immediately prior to the consummation of the transactions contemplated by the DePalma Business Combination Agreement, New MAC and the DePalma Companies will effect a series of reorganization transactions, resulting in the DePalma Companies becoming wholly- owned subsidiaries of New MAC;

(ii) Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of New MAC, in accordance with the terms and subject to the conditions of the DePalma Business Combination Agreement; and

 

5

Table of Contents

(iii) upon the effectiveness of the DePalma Merger (the “Effective Time”), (x) each share of Class A common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Company Per Share Consideration (as defined below); (y) each share of Class B common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Company Per Share Consideration, and (z) each warrant of the Company outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive one warrant of New MAC, with New MAC assuming our obligations under the existing warrant agreement.

The DePalma Business Combination is expected to close in the second quarter of 2024, following the receipt of the requisite stockholder approvals and the fulfilment of other customary closing conditions.

The aggregate consideration payable to DePalma at the closing of the DePalma Business Combination (the “Closing”) will be based on a valuation of DePalma of approximately $750,000,000 plus the Minimum Cash Amount. The per share consideration allocable to each share of our common stock (the “Company Per Share Consideration”) is the number of shares of New MAC Common Stock, rounded up to the nearest whole share, equal to the quotient obtained by dividing (i) the product obtained by multiplying (A) the Company Exchange Ratio by (B) the Aggregate New MAC Capitalization, by (ii) the total number of shares of our common stock outstanding immediately prior to the Effective Time and after giving effect to any redemptions of shares of our common stock.

Prior to the Closing, the Parties shall take all actions necessary or appropriate to designate and nominate five directors to the New MAC board of directors, which shall include two directors designated by the sponsor, and three directors designated by the Parties to serve as non-executive directors, each of whom shall by independent according to the SEC rules and listing standards of Nasdaq.

Ancillary Agreements

Concurrently with the execution of the DePalma Business Combination Agreement, the sponsor and the Supporting Shareholders have entered into support agreements with us, New MAC and the DePalma Companies (such agreements, collectively, the “Sponsor Support Agreement”), pursuant to which the sponsor and the Supporting Shareholders have agreed, among other things, to vote all shares of our common stock held by them in favor of the DePalma Business Combination Agreement and the transactions contemplated thereby (including the DePalma Merger) and to not redeem any of their shares of our common stock.

The foregoing description of the Sponsor Support Agreement is not complete and are subject to and qualified in their entirety by reference to such agreement, and the terms of which are incorporated by reference herein. A copy of the Sponsor Support Agreement is filed with this Report as Exhibit 10.15.

Upon consummation of the DePalma Business Combination, the Sponsor and New MAC will enter into a Management Services Agreement (“MSA”), pursuant to which the sponsor will provide certain management services to New MAC including (i) evaluating, managing, performing due diligence on, negotiating and overseeing the acquisition and disposition of New MAC’s and its subsidiaries’ assets, (ii) evaluating, managing, negotiating and overseeing the origination, structuring, restructuring and workout of taxi-medallion loans and other loans held by New MAC (other than typical daily loan servicing activities), (iii) managing New MAC’s and its subsidiaries’ day-to-day business and operations in complying with any regulatory requirements applicable to them in respect of their business activities, (iv) evaluating the financial and operational performance of any of New MAC’s subsidiaries, (v) providing a management team to serve as executive officers of New MAC and/or its subsidiaries, including providing day- to-day financial, operational and other executive management services (vi) identifying, evaluating, managing, performing due diligence on, negotiating and overseeing the provision of debt or equity financing as well as the acquisition of all or a portion of target businesses or assets, in each case, by New MAC, and (vii) performing any other services for and on behalf of New MAC and its subsidiaries to the extent that such services are consistent with those that are customarily performed by the executive officers and employees of a publicly listed company.

The MSA shall be effective upon consummation of the DePalma Business Combination and continue in operation, unless terminated in accordance with its terms, until the fifth (5th) anniversary of the Closing, subject to certain automatic renewals.

On June 15, 2023, we issued a press release announcing the confidential submission of the DePalma Registration Statement.

Business Strategy

Our acquisition and value creation strategy is to identify, acquire and build a company that has recently gone through a restructuring. After the initial business combination, we envision our strategy may include additional mergers and acquisitions with a focus on generating attractive risk- adjusted returns for our stockholders. Many post-restructured companies offer a valuation discount resulting from complexity, its ownership base and illiquidity. These post-restructuring companies are in a position for growth with recently deleveraged balance sheets. These companies tend to be sitting in the hands of distressed investors with limited ability to acquire additional capital to fund growth and acquisitions.

We have utilized and will continue to utilize the unique network and industry experience of our management team in seeking an initial business combination and executing our acquisition strategy. Over the course of their careers, the members of our management team have developed a broad network of relationships across industries and subsectors that we believe further complement our sourcing pipeline of acquisition opportunities. The companies we target are often in fragmented or fractured industries with attractive growth and acquisition opportunities. These sectors include but are not limited to education, business services, consumer products and healthcare.

We have and will continue to leverage our management team’s expertise to source and evaluate these often-opaque, under-covered enterprises and the impact of restructurings on these businesses, as turnaround initiatives implemented during restructurings may have yet to be reflected in the companies’ financial earnings results. In addition, corporate balance sheets are often restructured by swapping old debt for new equity or new debt and equity. Original lenders frequently lack the ability to serve as the company’s new owners, manage the enterprise or execute an exit transaction.

Our sourcing channels, developed as distressed investors and turnaround specialists, have and we expect they will continue to provide our management team with a robust flow of acquisition opportunities, including the DePalma Business Combination. Members of our management team have communicated and continue to communicate with their networks of relationships to articulate the parameters for our search for a target company and a potential business combination and pursue and review potential interesting candidates.

We believe a business combination through a SPAC provides value-add for owners of previously financially distressed companies and our investors, alike. We believe we can serve as a source of capital for business owners with a business combination providing a significant monetization event for owners seeking liquidity or even continued equity participation for those seeking continued ownership. Target companies potentially benefit from access to a public vehicle that provides capital to support growth initiatives.

 

6

Table of Contents

Our investors can benefit from ownership in a business at a discounted valuation and with significantly reduced liabilities. Creating value for our stockholders is the primary goal of this business strategy.

Competitive Advantages

We have capitalized and intend to continue to capitalize on the following competitive advantages in our pursuit of a target company:

Proactive and Proprietary Transaction Sourcing. Our management team believes that its market reputation, proactive approach to sourcing transactions, and extensive network of relationships have and will continue to provide proprietary investment opportunities. Marblegate’s deep expertise across a broad swath of industries and throughout the capital structure often make it an attractive partner for companies seeking capital solutions. Our management team believes that it has an established record of generating proprietary investment opportunities resulting from Marblegate’s unique sourcing strategies. These companies are often overlooked due to their complexity. The team leverages multiple sourcing channels including proprietary relationships with regional banks, distressed investors, private equity sponsors and seasoned operators and management teams.

Execution and Structuring Capability. Our management team believes that its expertise in restructuring companies provides us with a unique perspective and a deep understanding in the analysis of post-restructured companies, which can often be opaque, lack research coverage and involve a complex history. Marblegate’s experience in these markets allows it to source and complete transactions possessing structural attributes that create an attractive investment thesis.

These types of transactions are typically complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiation and documentation. Our management team has expertise in investing in distressed companies, restructuring the companies and working with management to create growth strategies post re-org. The complexities of companies exiting a reorganization are well understood by our management team and provide for a broad opportunity set. Our management team believes that by focusing its investment activities on these types of transactions, we will be able to identify acquisition opportunities that have attractive risk/reward profiles based on their valuations and structural characteristics.

History of Successful Acquisitions. As of December 31, 2023, Marblegate managed approximately $2.6 billion across multiple funds, primarily for institutional clients such as pension funds, endowments, foundations, family offices, funds of funds and high net worth individuals. Marblegate has invested approximately $4.3 billion across multiple industries since the launch of its first fund in 2009. These investments include but are not limited to companies in healthcare, transportation, materials, consumer staples, financials, media and telecom, industrials and consumer discretionary industries. Marblegate implements growth initiatives to create and expand earnings power, cash flow, and enterprise value. Through a combination of operational improvements and managerial enhancements Marblegate has a demonstrable history of revenue enhancement and expense control. Utilizing data and technology Marblegate is able to drive measurable improvements and create expansion opportunities across the enterprises in which Marblegate invests. As a consequence of Marblegate’s investments these companies developed stronger balance sheets, better asset mixes and revitalized operating models generating stable growth opportunities.

Post-acquisition Added Value. Our management team members have many years of experience across multiple industries and subsectors resulting in broad expertise and an extensive network of relationships and resources. After consummation of the initial business combination, we anticipate assisting the target company in several areas, including: (i) strategic and financial goals and projections, (ii) technology and data enhancements (iii) capital markets advice and financing alternatives, (iv) identification and recruitment of senior management and (v) identification and analysis of potential strategic acquisitions.

Market Opportunity. We believe that U.S. bankruptcies have led to a large pool of target companies. According to Reorg Research, Inc., since 2016, approximately 881 companies (with a minimum of $100 million or more of total debt) across 12 industries have filed for bankruptcy in the United States.

Private companies have made up more than 96% of U.S. bankruptcies from 2011 to 2023. According to S&P Capital IQ, from 2016 to 2023, approximately 96% of total U.S. bankruptcy filings have been made by private companies.

From 2009 to 2023, Marblegate has invested in companies across multiple industries, including capital goods, commercial services, diversified consumer services, diversified financials, healthcare equipment and services, hotels, restaurant and leisure, pharmaceuticals, biotechnology and life sciences, transportation, energy, food staples and retailing, media, real estate, retailing, software and services, utilities, materials, and insurance.

Notwithstanding the foregoing, past performance of Marblegate and our management team is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate, including the DePalma Business Combination. You should not rely on the historical performance record of Marblegate or our management team as indicative of our future performance. Additionally, in the course of their respective careers, members of our management team have been involved in businesses and deals that were unsuccessful. In addition, our officers and directors may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations with respect to initial business combination opportunities.

Business Combination Criteria

In line with our business strategy, we seek candidates for our business combination with the following general criteria, which emphasize our areas of expertise as well as where we believe the opportunity set is robust.

 

7

Table of Contents
  •  

Post-Restructured Companies. We believe that post-restructured companies offer the potential for discounted valuations to their publicly traded peers given the complexity involved in understanding restructurings and post-restructured businesses (with the lack of information and research coverage) and the ownership base of former lenders whose debt was swapped for equity in restructurings. As restructuring specialists, our management team has a strong understanding of how to evaluate post-restructured companies and a robust network to identify opportunities among these companies.

 

  •  

Revitalized Growth Strategy. We focus on acquisition targets that have the potential to develop a leading, growing or significant niche market position in their respective industries. We believe that companies that successfully reorganize themselves use the process to not only reorder their liability structure but also to rework and reinvigorate their growth strategy. The unshackling of a business from an overburdened balance sheet and cost structure can enable it to invest in growth initiatives that will grow top line revenues as well as total enterprise profitability. We analyze the strengths and weaknesses of potential target businesses relative to their competitors. We seek to acquire one or more businesses that we believe have the ability to demonstrate advantages such as improvements to quality of product or significant measurable cost savings when compared to their competitors, which may help to increase their market share and profitability.

 

  •  

Discount to Publicly Traded Peers. We seek potential candidates that are valued at a significant discount to their publicly traded peers. This discount allows for meaningful return potential for stockholders post the business combination and provides the targets’ current owners the opportunity for liquidity and multiple expansion.

 

  •  

Businesses with Stronger Balance Sheets. We target companies that have strengthened their balance sheets through a restructuring process. In addition to restructuring the balance sheet, a successful restructuring process can also drive positive operating results from turnaround initiatives taken during a restructuring. Better asset mixes and revitalizing their operating models can create stable growth potential for these businesses going forward.

 

  •  

Compelling Industry Characteristics. We focus on acquisition targets that have the potential to be or are industry leaders. These companies tend to operate in fragmented markets which present opportunities for significant consolidation and growth. We seek to identify an acquisition target that may benefit from synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction and increased operating leverage. In general, we focus our investing attention on industries which enjoy broad stability and have favorable growth dynamics.

While we have used and will continue to use these criteria and guidelines in evaluating initial business combination opportunities, including the DePalma Business Combination, the business combination opportunity we ultimately pursue may be with a target business that only meets some but not all of these criteria and guidelines.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we find an opportunity that has characteristics more compelling to us than the characteristics described above, we would pursue such opportunity.

Our Business Combination Process

In evaluating prospective business combinations, such as DePalma, we have conducted and will continue to conduct a thorough due diligence review process that encompasses, among other things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate. We also utilize our expertise analyzing target companies and evaluating operating projections, financial projections and determining the appropriate return expectations given the risk profile of the target business.

We are not prohibited from pursuing an initial business combination with a company that is affiliated with Marblegate or investment funds or accounts advised by Marblegate or our sponsor, officers, or directors. While DePalma is affiliated with our sponsor, executive officers or directors, in the event we do not consummate the DePalma Business Combination, and seek to complete our initial business combination with another company that is affiliated with Marblegate or investment funds or accounts advised by Marblegate or our sponsor, officers, or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our Company from a financial point of view.

An investment fund advised by Marblegate indirectly owns founder shares and private placement units. Additionally, Marblegate and Andrew Milgram and Paul Arrouet are deemed the beneficial owners of such founder shares and private placement units by virtue of exercising investment power over such shares or units on behalf of such investment funds. Because of this ownership, Marblegate, investment funds advised by Marblegate and our officers and directors, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination, particularly because such funds managed by Marblegate invest in distressed and post- restructured companies as part of their investment programs. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition to any agreement with respect to our initial business combination.

All of our executive officers are employed by Marblegate. Marblegate is continuously made aware of potential business opportunities, one or more of which we may desire to pursue for an initial business combination.

Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of Marblegate and our officers or directors will not materially affect our

 

8

Table of Contents

ability to complete our initial business combination, as we believe any such opportunities presented would be smaller than what we are interested in, in different fields than what we would be interested in, or that our obligations are to entities that are not themselves in the business of engaging in business combinations. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Marblegate, investment funds advised by Marblegate or an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such entity. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our Company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.

Our officers and directors may become an officer or director of another SPAC with a class of securities intended to be registered under the Exchange Act, even before we have entered into a definitive agreement regarding our initial business combination.

Initial Business Combination

Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors. Based on the valuation analysis of our management and board of directors, we have determined that the fair market value of DePalma was substantially in excess of 80% of the funds in the trust account and that the 80% test was therefore satisfied.

We may, at our option, pursue an Affiliated Joint Acquisition. Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and Marblegate considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition may be effected through a co-investment with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by issuing to such parties a class of equity or equity- linked securities. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance” throughout this Report. The amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 25% of the sum of the total number of all shares of common stock outstanding upon completion of our initial public offering plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an initial business combination; (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class B common stock; or (iv) as part of the Affiliated Joint Acquisition. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of our common stock.

We anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% fair market value test. If the initial business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.

 

9

Table of Contents

Financial Position

With funds available in the trust account for an initial business combination in the amount of $6,781,024 as of December 31, 2023, we offer a target business a variety of options such as creating a liquidity event for its owners to provide capital for the potential growth and expansion of its operations or to strengthen its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.

Effecting Our Initial Business Combination

We are not presently engaged in, and we will not engage in, any operations until we consummate our initial business combination. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private placement units, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of our initial public offering or otherwise), 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. We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.

If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.

We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. In addition, we may target businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the private placement units, and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.

Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.

Sources of Target Businesses

Target business candidates have been brought and we expect they will continue to be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses have also been brought and we expect they will continue to be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read our prospectus for our initial public offering or this Report and know what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we have received a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and our sponsor and their respective industry and business contacts as well as their affiliates. We may engage the services of professional firms or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated initial business combination, we do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. We agreed to pay our sponsor a total of $10,000 per month for secretarial and administrative support and reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.

 

10

Table of Contents

We are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with Marblegate or our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared ownership with Marblegate, our sponsor, officers or directors. While DePalma is affiliated with our sponsor, executive officers or directors, in the event we do not consummate the DePalma Business Combination, and seek to complete our initial business combination with another initial business combination target that is affiliated with Marblegate, our sponsor, officers, or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions that such an initial business combination is fair to our Company from a financial point of view. We are not required to obtain such an opinion in any other context.

If any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Marblegate or an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such entity.

Selection of a Target Business and Structuring of our Initial Business Combination

Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.

We anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders. However, we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post- transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% fair market value test. If the initial business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.

To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management endeavors to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

In evaluating a prospective business target, such as DePalma, we have conducted and will continue to conduct a thorough due diligence review, which encompasses, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that is made available to us.

The time required to complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.

 

11

Table of Contents

Lack of Business Diversification

For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. In addition, we are focusing our search for an initial business combination in a single industry. By completing our initial business combination with only a single entity, our lack of diversification may:

 

  •  

subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and

 

  •  

cause us to depend on the marketing and sale of a single product or limited number of products or services.

Limited Ability to Evaluate the Target’s Management Team

Although we closely scrutinize the management of a prospective target business, including the management team of DePalma, when evaluating the desirability of effecting our initial business combination with such business and plan to continue to do so if the DePalma Business Combination is not consummated and we seek other business combination opportunities, our assessment of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, including the DePalma Business Combination in which the Sponsor will have the right to designate two of the five directors on the post-Closing board of directors, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.

We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.

Following an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Stockholders May Not Have the Ability to Approve Our Initial Business Combination

We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule (as is the case with the DePalma Business Combination as currently contemplated), or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.

 

Type of Transaction

    Whether Stockholder/
Approval is Required
Purchase of assets    No
Purchase of stock of target not involving a merger with the company    No
Merger of target into a subsidiary of the company    No
No Merger of the company with a target    Yes

Under Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:

 

  •  

we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding;

 

  •  

any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or

 

  •  

the issuance or potential issuance of common stock will result in our undergoing a change of control.

See “DePalma Business Combination Agreement” above for more information on the requisite approvals needed for the DePalma Business Combination.

Permitted Purchases of our Securities

If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers or their affiliates may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private

 

12

Table of Contents

transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial business combination.

The purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.

Our sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.

Any purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.

As of the date of this Report, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. If such arrangements or agreements are entered into, we will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons. Any such report will include (i) the amount of shares of common stock purchased and the purchase price; (ii) the purpose of such purchases; (iii) the impact of such purchases on the likelihood that the business combination transaction will be approved; (iv) the identities or characteristics of security holders who sold shares if not purchased in the open market or the nature of the sellers; and (v) the number of shares of common stock for which we have received redemption requests.

Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination

We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. As of December 31, 2023, the amount in the trust account was approximately $10.64 per public share (including accrued interest thereon). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to Cantor. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares, and any public shares held by them in connection with the completion of our initial business combination. The anchor investors will not be entitled to redemption rights with respect to any founder shares held by them in connection with the completion of our business combination.

Manner of Conducting Redemptions

We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our Company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial business combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with such rules.

 

13

Table of Contents

If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

 

  •  

conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and

 

  •  

file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.

Upon the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.

In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.

If, however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

 

  •  

conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and

 

  •  

file proxy materials with the SEC.

In the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.

If we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant to a letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, private placement shares, and any public shares purchased during or after our initial public offering (including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, unless otherwise required by applicable law, regulation or stock exchange rules, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As of December 31, 2023, after accounting for the redemption of public shares in connection with the Extensions, the sponsor owns 71.2% of the issued and outstanding shares of common stock. Accordingly, the sponsor will have the ability, voting on its own, to satisfy quorum requirements and to approve an initial business combination, and none of our public shares will need to vote in favor of an initial business combination in order to have our initial business combination approved. We intend to give not less than 10 days’ prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction. The anchor investors will not be entitled to redemption rights with respect to any founder shares held by them in connection with the completion of a business combination.

The proposed initial business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.

Limitation on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval

Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering (the “Excess Shares”). Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed initial business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.

 

14

Table of Contents

Tendering Stock Certificates in Connection with Redemption Rights

We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the meeting held to approve a proposed initial business combination by a date set forth in the proxy materials mailed to such holders or to deliver their shares to the transfer agent electronically using the DWAC System, at the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our proxy materials until the date set forth in such proxy materials to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder.

However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.

The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion of the initial business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.

Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.

If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.

If our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination with a different target until October 5, 2023.

Redemption of Public Shares and Liquidation if no Initial Business Combination

Our amended and restated certificate of incorporation provides that we have up to 36 months from the closing of our initial public offering, or until October 5, 2023, to complete our initial business combination. If we are unable to complete our initial business combination by the end of the Combination Period (unless our board of directors and stockholders approve a further extension of the Combination Period), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination by the end of the Combination Period.

Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to complete our initial business combination by the end of the Combination Period. However, if our sponsor, officers or directors, underwriters or the anchor investors acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination by the end of the Combination Period.

 

15

Table of Contents

Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by the end of the Combination Period or certain amendments to our charter prior thereto or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number of then outstanding public shares.

If we do not consummate our initial business combination by the deadline set forth in our amended and restated certificate of incorporation, we expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the $123,870 of proceeds held outside the trust account as of December 31, 2023, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.

If we were to expend all of the net proceeds of our initial public offering and the sale of the private placement units, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.63 (as of December 31, 2023). The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.63 (as of December 31, 2023). Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.

Although we seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. Marcum, our independent registered public accounting firm, and the underwriters of our initial public offering will not execute agreements with us waiving such claims to the monies held in the trust account.

In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.05 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.05 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.

However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our Company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

In the event that the proceeds in the trust account are reduced below (i) $10.05 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.05 per public share.

 

16

Table of Contents

We have sought and will continue to seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. As of December 31, 2023, the amount held outside of the trust account was $123,870.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by the end of the Combination Period may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by the end of the Combination Period is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination by the end of the Combination Period (unless our board of directors and stockholders approve a further extension of the Combination Period), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following the end of the Combination Period, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.05 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.

If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.05 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our Company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to offer redemption rights in connection with any proposed initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by the end of the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination by the end of the Combination Period, subject to applicable law. Stockholders who do not exercise their redemption rights in connection with an amendment to our certificate of incorporation would still be able to exercise their redemption rights in connection with a subsequent business combination. In no other circumstances will a stockholder have any right or

 

17

Table of Contents

interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.

Competition

In identifying, evaluating and selecting a target business for our initial business combination, we have encountered competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.

Employees

We currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they devote in any time period varies based on the stage of the initial business combination process we are in. We do not intend to have any full-time employees prior to the completion of our initial business combination.

Periodic Reporting and Financial Information

Our units, Class A common stock, and warrants are registered under the Exchange Act, and as a result, we have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports, including this Report, contain financial statements audited and reported on by our independent registered public accountants.

We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business, such as the DePalma Registration Statement. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.

We are required to evaluate our internal control procedures for the fiscal year ending December 31, 2023 as required by the Sarbanes- Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes- Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. We filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to continue to take advantage of the benefits of this extended transition period.

 

18

Table of Contents

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following October 5, 2026, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of the prior June 30.

 

Item 1A.

Risk Factors.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, below is a partial list of material risks, uncertainties and other factors that could have a material effect on us and our operations:

 

  •  

we are a blank check company and an early stage company with no revenue or basis to evaluate our ability to select a suitable business target;

 

  •  

we may not be able to complete the DePalma Business Combination or any other business combination in the Combination Period;

 

  •  

our expectations around the performance of a prospective target business or businesses, such as DePalma, may not be realized;

 

  •  

we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination, including the DePalma Business Combination;

 

  •  

our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;

 

  •  

we may not be able to obtain additional financing to complete our initial business combination, including the DePalma Business Combination, or reduce the number of stockholders requesting redemption;

 

  •  

we may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time;

 

  •  

our stockholders may not be given the opportunity to choose the initial business target or to vote on the initial business combination;

 

  •  

trust account funds may not be protected against third party claims or bankruptcy;

 

  •  

an active market for our public securities may not develop and our stockholders will have limited liquidity and trading;

 

  •  

our financial performance following a business combination with an entity may be negatively affected by their lack of an established record of revenue, cash flows and experienced management;

 

  •  

there may be more competition to find an attractive target for an initial business combination, which could increase the costs associated with completing our initial business combination and may result in our inability to find a suitable target;

 

  •  

changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination;

 

  •  

we may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after the initial public offering, which may include acting as a financial advisor in connection with an initial business combination or as placement agent in connection with a related financing transaction. Our underwriters are entitled to receive deferred underwriting commissions that will be released from the trust account only upon a completion of an initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services to us after the initial public offering, including, for example, in connection with the sourcing and consummation of an initial business combination;

 

  •  

if we do not consummate the DePalma Business Combination, we may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all;

 

  •  

our warrants are accounted for as derivative liabilities and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock or may make it more difficult for us to consummate an initial business combination;

 

  •  

since our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may acquire during or after the initial public offering), and because our sponsor, officers and directors may profit substantially even under circumstances in which our public stockholders would experience losses in connection with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination;

 

  •  

the value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of our common stock at such time is substantially less than $10.63 per share (as of December 31, 2023);

 

19

Table of Contents
  •  

resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we have not completed our initial business combination within the Combination Period, our public stockholders may receive only approximately $10.63 per share (as of December 31, 2023), or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless;

 

  •  

we may not be able to complete an initial business combination with certain potential target companies if a proposed transaction with the target company may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations, including the Committee on Foreign Investment in the United States;

 

  •  

recent increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate an initial business combination;

 

  •  

investments in entities that have undergone restructurings are subject to additional risks;

 

  •  

a 1% U.S. federal excise tax may be imposed on us in connection with our redemptions of shares in connection with a business combination or other stockholder vote pursuant to which stockholders would have a right to submit their shares for redemption;

 

  •  

there is substantial doubt about our ability to continue as a “going concern”; and

 

  •  

adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions, could adversely affect our business, financial condition or results of operations, or our prospects.

Military or other conflicts in Ukraine, the Middle East or elsewhere may lead to increased volume and price volatility for publicly traded securities, or affect the operations or financial condition of potential target companies, which could make it more difficult for us to consummate an initial business combination.

Military or other conflicts in Ukraine, the Middle East or elsewhere may lead to increased volume and price volatility for publicly traded securities, or affect the operations or financial condition of potential target companies, and to other company or industry-specific, national, regional or international economic disruptions and economic uncertainty, any of which could make it more difficult for us to identify a business combination target and consummate an initial business combination on acceptable commercial terms, or at all.

Market conditions, economic uncertainty or downturns could adversely affect our business, financial condition, operating results and our ability to consummate a business combination.

In recent years, the United States and other markets have experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain, including as a result of supply chain disruptions, the Ukraine-Russia conflict, conflict in the Middle East, instability in the U.S. and global banking systems, rising fuel prices, increasing interest rates or foreign exchange rates and high inflation and the possibility of a recession. A significant downturn in economic conditions may make it more difficult for us to consummate a business combination.

We cannot predict the timing, strength, or duration of any future economic slowdown or any subsequent recovery generally, or in any industry. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, operating results and our ability to consummate a usiness combination could be adversely affected.

We may seek to further extend the Combination Period, which could have a material adverse effect on the amount held in our trust account and other adverse effects on our Company.

We may seek to further extend the Combination Period. Such an extension would require the approval of our public stockholders , who will be provided the opportunity to redeem all or a portion their public shares. Such redemptions will likely have a material adverse effect on the amount held in our trust account, our capitalization, principal stockholders and other impacts on our Company or management team, such as our ability to maintain our listing on Nasdaq.

If we seek to further extend the Combination Period, such extension would not be in compliance with Nasdaq rules, and unless Nasdaq were to grant us an exemption, will likely lead Nasdaq to suspend trading in or delist our securities.

Our securities are listed on the Nasdaq Capital Market. Nasdaq IM-5101-2 requires that a SPAC complete one or more business combinations within 36 months of the effectiveness of its initial public offering registration statement, which, in our case, would be September 30, 2024 (the “Nasdaq Deadline”). If we were to seek to further extend the Combination Period beyond October 5, 2024, our Combination Period would extend beyond the Nasdaq Deadline. Consequently, further extension of our Combination Period does not comply with Nasdaq rules. There is a risk that, even if an extension were approved by our stockholders, trading in our securities may be suspended and we may be subject to delisting by Nasdaq. We cannot assure you that (i) Nasdaq will not delist our securities in the event such an extension were approved and we do not complete one or more business combinations by the Nasdaq Deadline, (ii) we will be able to obtain a hearing with Nasdaq’s Hearings Panel to appeal the delisting determination, or (iii) our securities will not be suspended pending the Hearing Panel’s decision.

If Nasdaq delists any of our securities from trading and we are unable to list our securities on another national securities exchange, we expect our securities could potentially be quoted on an over-the-counter market. However, if this were to occur, we could face significant material adverse consequences.

Cyber incidents or attacks directed at us or third parties could result in information theft, data corruption, operational disruption and/or financial loss.

We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with whom we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. Any of these occurrences, or a combination of them, could have material adverse consequences on our business and lead to financial loss.

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

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

On January 24, 2024, the SEC adopted the 2024 SPAC Rules requiring, among other matters, (i) additional disclosures relating to SPAC business combination transactions; (ii) additional disclosures relating to dilution and to conflicts of interest involving sponsors and their affiliates in both SPAC initial public offerings and business combination transactions; (iii) additional disclosures regarding projections included in SEC filings in connection with proposed business combination transactions; and (iv) the requirement that both the SPAC and its target company be co-registrants for business combination registration statements

In addition, the SEC’s adopting release provided guidance describing circumstances in which a SPAC could become subject to regulation under the Investment Company Act, including its duration, asset composition, business purpose, and the activities of the SPAC and its management team in furtherance of such goals.

Compliance with the 2024 SPAC Rules and related guidance may (i) increase the costs of and the time needed to negotiate and complete an initial business combination and (ii) constrain our ability to complete an initial business combination.

If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.

The SEC’s adopting release with respect to the 2024 SPAC Rules provided guidance relating to the potential status of SPACs as investment companies subject to regulation under the Investment Company Act and the regulations thereunder. Whether a SPAC is an investment company is dependent on specific facts and circumstances and we can give no assurance that a claim will not be made that we have been operating as an unregistered investment company

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including (i) restrictions on the nature of our investments; and (ii) restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.

In addition, we may have imposed upon us burdensome requirements, including: (i) registration as an investment company; (ii) adoption of a specific form of corporate structure; and (iii) reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We are mindful of the SEC’s investment company definition and guidance and intend to complete an initial business combination with an operating business, and not with an investment company, or to acquire minority interests in other businesses exceeding the permitted threshold.

We do not believe that our business activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account were initially invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations; the holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended business combination. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the trust account, in November 2023, we instructed Continental, as trustee of the trust account, to liquidate the investments held in the trust account and instead to hold the funds in the trust account in cash or in an interest bearing demand deposit account at a bank.

Pursuant to the Investment Management Trust Agreement, dated September 30, 2021, by and between the Company and Continental, as trustee, Continental is not permitted to invest in securities or assets other than as described above. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intended to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our initial public offering was not intended for persons who were seeking a return on investments in government securities or investment securities. The trust account is intended solely as a temporary depository for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (x) in a manner that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within the Combination Period; or (y) with respect to any other provision relating to the rights of holders of shares of our Class A common stock or pre-initial business combination activity; or (iii) absent an initial business combination within the Combination Period, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares.

We are aware of litigation claiming that certain SPACs should be considered investment companies. Although we believe that these claims are without merit, we cannot guarantee that we will not be deemed to be an investment company and thus subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.63 (as of December 31, 2023) per public share upon the liquidation of our trust account and our warrants will expire worthless.

For additional of risks relating to our operations, other than the above, see the section titled “Risk Factors” contained in our (i) IPO Registration Statement, (ii) Annual Reports on Form 10-K for the fiscal years ended December 31, 2021 and December 31, 2022, filed with the SEC on April 1, 2022 and April 3, 2023, respectively, (iii) quarterly reports on Form 10-Q for the quarters ended September 30, 2021, March 31, 2022, June 30, 2022. September 30, 2022 and March 31, 2023, filed with the SEC on November 11, 2021, May 13, 2022, August 12, 2022, November 10, 2022 and May 15, 2023, respectively, and (vi) Definitive Proxy Statements on Schedule 14A filed the SEC on November 9, 2022, June 6, 2023 and November 28, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business or ability to consummate an initial business combination. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

For additional risk factors relating to DePalma and the DePalma Business Combination, see the DePalma Registration Statement once publicly filed with the SEC.

 

Item 1B.

Unresolved Staff Comments.

Not applicable.

 

Item 1C.

Cybersecurity.

As a blank check company, we do not have any operations and our sole business activity has been to search for and consummate a business combination. However, because we have investments in our trust account and bank deposits and we depend on the digital technologies of third parties, we and third parties may be subject to attacks on or security breaches in our or their systems. Because of our reliance on the technologies of third parties, we also depend upon the personnel and the processes of third parties to protect against cybersecurity threats, and we have no personnel or processes of our own for this purpose. In the event of a cybersecurity incident impacting us, the management team will report to the board of directors and provide updates on the management team’s incident response plan for addressing and mitigating any risks associated with such an incident. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We also lack sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have material adverse consequences on our business and lead to financial loss. We have not encountered any cybersecurity incidents since our initial public offering.

 

20

Table of Contents
Item 2.

Properties.

Our executive offices are located at 411 Theodore Fremd Avenue, Suite 206S, Rye, New York, 10580 and our telephone number is (914) 415-4081. The cost for our use of this space is included in the $10,000 per month fee we pay to our sponsor for office space, administrative and shared personnel support. We consider our current office space adequate for our current operations.

 

Item 3.

Legal Proceedings.

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

 

Item 4.

Mine Safety Disclosures.

Not applicable.

 

21

Table of Contents

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

(a) Market Information

Our units, public shares and public warrants are each traded on the Nasdaq Capital Market under the symbols GATEU, GATE and GATEW, respectively. Our units commenced public trading on the Nasdaq Global Market on October 1, 2021, and our public shares and public warrants commenced separate public trading on November 22, 2021. On August 8, 2023, our units, Class A common stock and warrants were transferred to the Nasdaq Capital Market at the opening of business.

(b) Holders

On April 1, 2024, there were two holders of record of our units, two holders of record of shares of our Class A common stock, 35 Class B holders and two holders of record of our warrants.

(c) Dividends

We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

None.

(e) Recent Sales of Unregistered Securities

On June 28 2023, we issued 4,000,000 shares of Class A common stock to the sponsor, upon the conversion of an equal number of shares of Class B common stock held by the sponsor in the Founder Conversion. The 4,000,000 shares of Class A common stock issued in connection with the Founder Conversion are subject to the same restrictions as applied to the shares of Class B common stock before the Founder Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial business combination as described in the IPO Registration Statement; consequently, the shares of Class A common stock issued in connection with the Founder Conversion are not registered under the Securities Act and remain unregistered until registration is demanded by the sponsor pursuant to a letter agreement we entered into with our sponsor, officers and directors. Following the Founder Conversion and the redemptions in connection with the Extensions, (i) there were 5,547,605 shares of Class A common stock issued and outstanding and 6,303,333 shares of Class B common stock issued and outstanding, and (ii) the sponsor held 71.2% of the outstanding shares of common stock.

(f) Use of Proceeds from the Initial Public Offering

None. For a description of the use of proceeds generated in our initial public offering and private placement, see Part II, Item 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on April 1, 2022. There has been no material change in the planned use of proceeds from our initial public offering and private placement as described in the IPO Registration Statement.

In November 2023, we instructed Continental to liquidate the investments held in the trust account and instead to hold the funds in the trust account in an interest-bearing demand deposit account at a bank, with Continental continuing to act as trustee, until the earlier of the consummation of our initial business combination or our liquidation. As a result, following the liquidation of investments in the trust account, the remaining proceeds from the initial public offering and private placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.

(g) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In connection with the Third Extension Meeting on December 19, 2023, stockholders holding 128,459 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account. As a result, approximately $1.4 million (approximately $10.62 per share) was removed from the trust account and paid to such holders. Following the redemptions, as of December 31, 2023, we had 637,605 public shares outstanding.

The following table contains monthly information about the repurchases of our equity securities for the three months ended December 31, 2023:

 

Period

    (a) Total
number of
shares (or units)
purchased		      (b) Average price paid
per share (or unit)		      (c) Total number of
shares (or units)
purchased as part
of publicly
announced plans
or programs		      (d) Maximum number
(or approximate
dollar value) of shares
(or units) that may yet
be purchased under
the plans or programs		  

October 1 – October 31, 2023

      —         —         —         —   

November 1 – November 30, 2023

      —         —         —         —   

December 1 – December 31, 2023

      128,459      $ 10.62        —         —   

 

22

Table of Contents
Item 6.

[Reserved]

 

Item 7.

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

 

Cautionary

Note Regarding Forward-Looking Statements.

All statements other than statements of historical fact included in this Report including, without limitation, statements in this section regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report.

Overview

We are a blank check company formed under the laws of the State of Delaware on December 10, 2020 for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Units, our capital stock, debt or a combination of cash, stock and debt.

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

Extension of Combination Period

We originally had up to 15 months from the closing of our initial public offering, or until January 5, 2023, to consummate an initial business combination. However, at the First Extension Meeting, our stockholders approved the amendment to the certificate of incorporation to extend the end of the Combination Period from January 5, 2023 to July 5, 2023 (or such earlier date as determined by our board of directors). In connection with the First Extension Meeting, stockholders holding 28,989,609 public shares exercised their right to redeem their shares for a pro rata portion of the funds in the Company’s trust account. As a result, approximately $293.5 million (approximately $10.12 per public share) was removed from the Trust Account and paid to such holders on December 2, 2022.

On June 27, 2023, the Company held the Second Extension Meeting, at which the Company’s stockholders approved a second amendment to the amended and restated certificate of incorporation to extend the date by which the Company must consummate its initial business combination or an additional six (6) months, from July 5, 2023 to January 5, 2024, or such earlier date as determined by the board. In connection with the Second Extension Meeting, stockholders holding 244,327 public shares exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. As a result, approximately $2.5 million (approximately $10.29 per share) was removed from the Trust Account to pay such holders on July 4, 2023.

On December 19, 2023, the Company held the Third Extension Meeting, at which the Company’s stockholders approved a third amendment to the amended and restated certificate of incorporation to extend the date by which the Company must consummate its initial business combination for an additional nine (9) months, from January 5, 2024 to October 5, 2024, or such earlier date as determined by the board. In connection with the Third Extension Meeting, stockholders holding 128,459 public shares exercised their right to redeem such shares for a pro rata portion of the funds in the trust account. As a result, approximately $1.4 million (approximately $10.62 per share) was removed from the trust account to pay such holders on December 22, 2023. Following redemptions and as of December 31, 2023, the Company has 637,605 public shares outstanding.

We may seek to further extend the Combination Period consistent with applicable laws, regulations and stock exchange rules. Such an extension would require the approval of our public stockholders, who will be provided the opportunity to redeem all or a portion of their public shares. Such redemptions will likely have a material adverse effect on the amount held in our trust account, our capitalization, principal stockholders and other impacts on our Company or management team, such as our ability to maintain our listing on Nasdaq.

Founder Conversion

On June 28 2023, we issued 4,000,000 shares of Class A common stock to the sponsor, upon the conversion of an equal number of shares of Class B common stock held by the sponsor. The 4,000,000 shares of Class A common stock issued in connection with the Founder Conversion are subject to the same restrictions as applied to the shares of Class B common stock before the Founder Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial Business Combination; consequently, the shares of Class A common stock issued in connection with the Founder Conversion are not registered under the Securities Act and remain unregistered until registration is demanded by the sponsor pursuant to a letter agreement we entered into with our sponsor, officers and directors. Following the Founder Conversion and the redemptions in connection with the extensions, (i) there were 5,547,605 shares of Class A common stock issued and outstanding and 6,303,333 shares of Class B common stock issued and outstanding, and (ii) the sponsor held 71.2% of the outstanding shares of common stock.

DePalma Business Combination

On February 14, 2023, we entered into the DePalma Business Combination Agreement with Marblegate, New MAC, Merger Sub and the DePalma Companies, pursuant to which, among other things, the parties agreed to the DePalma Business Combination under which we agreed to combine with DePalma in a series of transactions that will result in New MAC becoming a publicly-traded company whose shares are expected to trade on the Nasdaq Global Market.

 

23

Table of Contents

Pursuant to the DePalma Business Combination Agreement, and subject to the terms and conditions contained therein, among other things:

 

  (i)

immediately prior to the consummation of the transactions contemplated by the DePalma Business Combination Agreement, New MAC and the DePalma Companies will effect a series of reorganization transactions, resulting in the DePalma Companies becoming wholly-owned subsidiaries of New MAC;

 

  (ii)

Merger Sub will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of New MAC, in accordance with the terms and subject to the conditions of the DePalma Business Combination Agreement; and

 

  (iii)

upon the Effective Time, (x) each share of Class A common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Company Per Share Consideration; (y) each share of Class B common stock issued and outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive the Company Per Share Consideration, and (z) each warrant of the Company outstanding immediately prior to the Effective Time shall be cancelled and converted into the right to receive one warrant of New MAC, with New MAC assuming our obligations under the existing warrant agreement.

The Business Combination is expected to close in the second quarter of 2024 following the receipt of the requisite stockholder approvals and the fulfilment of other customary closing conditions. For a full description of the DePalma Business Combination Agreement and the proposed DePalma Business Combination, please see “Item 1. Business” in the 2023 Annual Report.

Nasdaq Listing

On August 2, 2023, we received approval from the Nasdaq Listing Qualifications Department of Nasdaq that our application to transfer the listing of our units, public shares and warrants from The Nasdaq Global Market to The Nasdaq Capital Market was approved. The units, public shares and warrants were transferred to The Nasdaq Capital Market at the opening of business on August 8, 2023 and continue to trade under the symbol “GATEU”, “GATE” and “GATEW” respectively. The Nasdaq Capital Market operates in substantially the same manner as the Nasdaq Global Market, and listed companies must meet certain financial requirements and comply with Nasdaq’s corporate governance requirements.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from December 10, 2020 (inception) through December 31, 2023 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on investments held in the Trust Account established for the benefit of our public stockholders with Continental Stock Transfer & Trust Company acting as trustee. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and other expenses in connection with searching for and completing a Business Combination.

For the year ended December 31, 2023, we had net loss of $5,389,629, which consists of interest income on investments held in the Trust Account of $427,781 and change in fair value of warrant liabilities of $8,873, offset by operating and formation costs of $5,747,453 and provision for income tax of $78,830.

For the year ended December 31, 2022, we had net income of $1,230,338, which consists of interest income on investments held in the Trust Account of $3,305,765 and change in fair value of warrant liabilities of $233,870, offset by operating and formation costs of $1,670,335 and provision for income tax of $638,962.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and in the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial business combination.

Liquidity, Capital Resources and Going Concern

On October 5, 2021, we consummated the initial public offering of 30,000,000 units, generating gross proceeds of $300,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 910,000 private placement units at a price of $10.00 per private placement unit in the private placement, generating gross proceeds of $9,100,000.

 

24

Table of Contents

Following the initial public offering and the private placement, a total of $301,500,000 was placed in the Trust Account. We incurred $42,630,587 in initial public offering related costs, including $6,000,000 of underwriting fees, $15,000,000 of deferred underwriting fees, net of reimbursement, $1,015,137 of other offering costs including $509,600 for the fair value of the private placement warrants included in the private placement units, and $505,537 of offering costs, and $20,615,450 for the fair value of the founder shares attributable to certain anchor investors.

For the year ended December 31, 2023, cash used in operating activities was $2,562,914. Net loss of $5,389,629 was affected by interest earned on investments held in the Trust Account of $427,781 and change in fair value of warrant liabilities of $8,873. Changes in operating assets and liabilities provided $3,263,369 of cash from operating activities.

For the year ended December 31, 2022, cash used in operating activities was $1,001,285. Net income of $1,230,338 was affected by interest earned on investments held in the Trust Account of $3,305,765 and change in fair value of warrant liabilities of $233,870. Changes in operating assets and liabilities provided $1,308,012 of cash from operating activities.

As of December 31, 2023, we had investments held in the Trust Account of $6,781,024 (including $446,709 of interest income, net of unrealized losses) consisting of investments in money market funds. Interest income on the balance in the Trust Account may be used by us to pay taxes. During the year ended December 31, 2023, we withdrew $93,430 of interest income from the Trust Account to pay franchise and income taxes and $2,515,240 in connection with redemptions.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions and taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

In November 2023, we instructed Continental to liquidate the investments held in the trust account and instead to hold the funds in the trust account in an interest-bearing demand deposit account at a bank, with Continental continuing to act as trustee, until the earlier of the consummation of our initial business combination or our liquidation. As a result, following the liquidation of investments in the trust account, the remaining proceeds from the initial public offering and private placement are no longer invested in U.S. government securities or money market funds invested in U.S. government securities.

As of December 31, 2023, we had cash of $123,870 outside of the Trust Account. We have used and intend to continue to use the funds held outside the Trust Account primarily to complete a business combination, such as the DePalma Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the sponsor, members of the sponsor, or certain of our officers, directors or their affiliates may, but are not obligated to, loan us Working Capital Loans, as may be required. If we complete a business combination, we would repay any Working Capital Loans. In the event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay any Working Capital Loans but no proceeds from our Trust Account would be used for such repayment. On June 30, 2022, we issued the 2022 Promissory Note to Marblegate SOMF, a member of our sponsor, for a Working Capital Loan for which we may borrow up to the principal sum of $600,000. The 2022 Promissory Note bears no interest and is due and payable upon the earlier of (i) the date on which we consummate our initial business combination or (ii) the date that the winding up of the Company is effective. At the option of the lender, at any time prior to payment in full of the principal balance of the 2022 Promissory Note, the lender may elect to convert up to $600,000 of the unpaid principal balance of the note into Conversion Shares, equal to (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued in the private placement. On July 1, 2022, February 2, 2023 and February 8, 2023, we borrowed $200,000, $200,000 and $200,000 under the 2022 Promissory Note, respectively. On February 13, 2023, the Company issued the 2023 Promissory Note (as defined in Note 5), an additional promissory note to Marblegate SOMF in the amount of $1,100,000. On July 20, 2023, the Company issued the “July 2023 Note (as defined in Note 5), an additional promissory note to Marblegate SOMF in the amount of $500,000. On December 21, 2023, the Company issued another promissory note in the principal amount of up to $450,000 to Marblegate SOMF (the “December 2023 Note” as defined in Note 5). If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, including the DePalma Business Combination, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. On February 13, 2023, March 1, 2023 and April 4, 2023, we borrowed $125,000, $50,000 and $50,000 under the 2023 Promissory Note, respectively. As of December 31, 2023 and 2022, $2,225,000 and $200,000 are outstanding on the working capital loans, respectively.

We have incurred and will continue to incur significant costs in pursuit of our acquisition plans. We will likely need to raise additional capital through loans or additional investments from our sponsor, stockholders, officers, directors, or third parties. Our officers, directors and the sponsor may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. If we are unable to complete the business combination because we do not have sufficient funds available, we will be forced to cease operations and liquidate the Trust Account. In connection with our assessment of going concern considerations in accordance with ASU Topic 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have until October 5, 2024 (or such earlier date as determined by the Company’s board of

 

25

Table of Contents

directors), to consummate a business combination. It is uncertain that we will be able to consummate a business combination by this time. If a business combination is not consummated by this date and an extension has not been requested by the sponsor and approved by our stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity issue and the mandatory liquidation raise substantial doubt about our ability to continue as a going concern. The financial statements and the notes thereto contained elsewhere in this Report do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be required to liquidate after October 5, 2024 (or such earlier date as determined by the Company’s board of directors). We intend to complete a business combination before the mandatory liquidation date.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2023 or December 31, 2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement pay the Sponsor a total of up to $10,000 per month for secretarial and administrative support. We began incurring these fees on September 30, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

The underwriters are entitled to a deferred fee of 5.0% of the gross proceeds of the initial 30,000,000 units sold in the Initial Public Offering, or $15,000,000. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement. On August 11, 2023, the Company entered into a fee reduction agreement with the underwriters whereby the underwriters agreed to forfeit $12,000,000 of the aggregate $15,000,000 deferred fee contingent upon the consummation of the DePalma Business Combination (as described below). The reduced deferred fee of $3,000,000 shall be payable on the consummation of the DePalma Business Combination, as contemplated by the underwriting agreement. If the contemplated DePalma Business Combination is not completed, and the Company enters into a Business Combination with another target, the deferred underwriting fee due would then revert to the original amount of $15,000,000.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Warrant Liabilities

We account for the warrants issued in connection with our initial public offering in accordance with the guidance contained in ASC Topic 815-40-15-7D, (“Derivatives and Hedging”), under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the private placement warrants are exercised or expire, and any change in fair value will be recognized in our statements of operations.

Class A Common Stock Subject to Possible Redemption

We account for our Class A common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our balance sheets.

Net Income (Loss) Per Common Share

Net income (loss) per common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. The Company applies the two-class method in calculating income (loss) per share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.

Recent Accounting Standards

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s Management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures.

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

 

26

Table of Contents
Item 7A.

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 8.

Financial Statements and Supplementary Data.

Reference is made to pages F-1 through F-22 comprising a portion of this Report, which are incorporated herein by reference.

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

 

Item 9A.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

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

Management’s Annual Report on Internal Control over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting as of December 31, 2023.

This Report does not include an attestation report of our internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the fiscal year ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

27

Table of Contents
Item 9B.
Other Information.
Trading Arrangements
During the quarterly period ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
Additional Information
None.
 
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
 
28

Table of Contents

PART III

 

Item 10.

Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

As of the date of this Report, our directors and officers are as follows:

 

Name

    Age   

Position

Andrew Milgram    50    Chief Executive Officer and Executive Director
Paul Arrouet    53    President and Executive Director
Jeffrey Kravetz    45    Chief Financial Officer
Harvey Golub    84    Chairman of the Board
Patrick J. Bartels, Jr.    48    Director
Richard Goldman    63    Director
Alan Mintz    62    Director
Wallace Mathai-Davis    79    Director

The experience of our directors and executive officers is as follows:

Andrew Milgram has served as our Chief Executive Officer and an executive director since January 2021. Since August 2008, he has served as the managing partner of Marblegate, which he co-founded. Prior to forming Marblegate, Mr. Milgram was a Principal at Epic Asset Management, where he was responsible for generating, evaluating, executing and managing investments in a portfolio of distressed and special situation assets across a variety of industry sectors. In addition, he coordinated the firm’s overall research process and directed its team of investment analysts. Mr. Milgram has sat on a variety of official and ad-hoc creditor committees, and has been deeply involved in a number of corporate restructurings in both the United States and abroad. Prior to joining Epic, Mr. Milgram was a part of the capital market businesses at Deutsche Bank Alex. Brown and Bank of Tokyo-Mitsubishi. Mr. Milgram began his career at Swiss Bank Corp (now UBS), where he was part of the global emerging market team responsible for the bank’s proprietary investments in Russia, Africa and the Middle East. Mr. Milgram holds the Chartered Financial Analyst designation. Mr. Milgram is the Chairman of the Board of Millennium Health, and a member of the board of directors of Septuagint Solutions LLC, STVT-AAI Education Inc. (d/b/a Ancora Education), Britax Group Limited and Rhinoco Inc. He sits on the Board of Directors of the Greenwich Council of the Boy Scouts of America. Mr. Milgram is a member of the Economic Club of New York and the Metro NY Chapter of YPO. Mr. Milgram’s qualifications to serve on our board of directors include his extensive leadership, management and board experience, his track record as a founder and Chief Investment Officer of Marblegate and its affiliated funds, his current board experience, including as Chairman of the Board of Millennium Health, and his network of contacts in the distressed credit and restructuring arena.

Paul Arrouet has served as our President and an executive director since January 2021. Since 2008, he has also served as Managing Partner of Marblegate. Prior to forming Marblegate, Mr. Arrouet was a six-year Senior Managing Director as well as a twelve-year distressed specialist in the Distressed/High Yield Trading & Sales Department at Bear Stearns & Co. At Bear Stearns, he managed the trading book focused on stressed/distressed capital structures as well as actively making markets to generate customer flow. Mr. Arrouet spent the first part of his career at Bear Stearns in sales, specializing in distressed debt, high yield and restructuring opportunities. Prior to joining Bear Stearns, he was a salesman and Vice President at Alex. Brown, responsible for helping launch a distressed sales and trading platform as an extension of a successful High Yield Group. He began his career as a junior distressed trader at Oppenheimer & Co. Mr. Arrouet earned a Bachelor of Arts degree from the University of Pennsylvania. Mr. Arrouet’s qualifications to serve on our board of directors include his extensive leadership and management experience, his track record as Managing Partner and principal trader at Marblegate and its affiliated funds, and his wide network of contacts in the distressed investing field.

Jeffrey Kravetz has served as our Chief Financial Officer since March 13, 2023. Since March 2023, he has also served as the Chief Financial Officer of Marblegate Asset Management where he is responsible for the accounting, operational and financial activities of the firm. From March 2015 to March 2023, Mr. Kravetz served as the Chief Financial Officer of Contrarian Capital Management, L.L.C., an investment management firm, where he was responsible for the accounting, operational and financial activities of the firm’s investment and management entities. From 2015 to 2023, Mr. Kravetz served as director of various non-public investment vehicles affiliated with Contrarian Capital Management, L.L.C. Prior to joining Contrarian, Mr. Kravetz served in a variety of roles, including as a Director and Fund Controller at MSD Capital from September 2003 to February 2015. Prior to that, he was an Auditor at both Deloitte & Touche, LLP (June 2002 to September 2003) and Arthur Andersen, LLP (September 2000 to June 2002). Mr. Kravetz holds a B.S. in Accounting from Binghamton University School of Management and is a Certified Public Accountant. He is a member of the New York State Society of Certified Public Accountants.

Harvey Golub has served as our Chairman of the Board since October 2021. In early 2001, Mr. Golub retired as CEO and chairman of American Express. Currently, Mr. Golub is the non-executive chairman of the board of Dynasty Financial Partners. He also serves on the board of Pagaya Technologies, Ltd., and is a member of its audit, risk and nominating and corporate governance committees. He served as chairman of Miller Buckfire & Company (a Stifel Company) from July 2011 to December 2018. He has also served as a member of the advisory board of Marblegate Asset Management LLC since 2009. Mr. Golub also serves on the boards of the American Enterprise Institute (AEI) and the Manhattan Institute for Policy Research, serves on Jupiter Medical Center’s board of trustees and is the chairman of its finance and planning committees. Mr. Golub is also chairman of the Maltz Jupiter Theatre endowment board, and is a director emeritus of New York-Presbyterian Hospital and the Lincoln Center for the Performing Arts and a member of its investment committee. Previously, Mr. Golub served as non-executive chairman on the boards of American International Group (AIG), Campbell Soup Company, and The Reader’s Digest Association. He has also served as a member of the board of Dow Jones & Company, Hess Corporation, RHJ International, and several private companies. Mr. Golub received a B.S. degree from the New York University in 1961. Mr. Golub is well qualified to serve as a member of our board of directors due to his extensive experience in leadership and advisor roles and his network of business contacts.

 

29

Table of Contents

Patrick J. Bartels, Jr. has served as one of our directors since December 2022. Mr. Bartels has served as the Managing Member of Redan Advisors LLC, a firm that provides fiduciary services, including board of director representation and strategic planning advisory services for domestic and international public and private business entities, since December 2018. His professional experience includes investing in complex financial restructurings and process-intensive situations in North America, Asia and Europe in a broad universe of industries. Mr. Bartels has served as a director on numerous public and private boards of directors. Mr. Bartels has served on the boards of directors of Arch Resources, Inc. (NYSE: ARCH) since October 2016, Agile Thought (Nasdaq: AGIL) since April 2023, View, Inc. (Nasdaq: VIEW) since February 2024 and Trinity Place Holdings (Nasdaq: TPHS) since April 2023. He serves on or previously served on the boards of WCI Communities, Inc. (from August 2009 to February 2017), Grizzly Energy, LLC (f/k/a Vanguard Natural Resources, Inc.) (since February 2019), Parker Drilling Company (since March 2019), B. Riley Principal Merger Corp. (from April 2019 to February 2020), Hexion Inc. (since July 2019), Monitronics International, Inc. (since July 2019), Centric Brands Inc. (from March 2020 to October 2020), B. Riley Principal Merger Corp. II (from May 2020 to November 2020), Libbey Inc. (since May 2020), Noble Corporation (from February 2021 to October 2022), and on several private company boards. From April 2002 to November 2018, Mr. Bartels served as a Managing Principal at Monarch Alternative Capital LP, a private investment firm that focused primarily on event-driven credit opportunities. From February 2000 to April 2002, he served as research analyst for high yield investments at INVESCO, where he analyzed primary and secondary debt offerings of companies in various industries. Mr. Bartels began his career at PricewaterhouseCoopers LLP, where he was a Certified Public Accountant. He holds the Chartered Financial Analyst designation. Mr. Bartels received a Bachelor of Science in Accounting with a concentration in Finance from Bucknell University. Mr. Bartels is well qualified to serve as a member of our board of directors due to his extensive accounting, financial and investment experience, as well as his experience as a director for multiple companies including several that have undertaken bankruptcy and restructuring processes.

Richard M. Goldman has served as one of our directors since October 2021. Since 2012, Mr. Goldman has been the managing member of Becket Capital, LLC, an advisory services firm for investment management companies. From 2011 to 2012, Mr. Goldman served as Chief Operating Officer of Guggenheim Investments, the global asset management and investment advisory division of Guggenheim Partners, the global asset management and investment advisory division of Guggenheim Partners. From 2006 to 2012, Mr. Goldman was the Chief Executive Officer of Rydex Investments, the investment advisor to Rydex Funds. He also served as the Chief Executive Officer of Forstmann Leff Associates from 2003 to 2005 and was the Head of Deutsche Asset Management’s Americas Institutional Business from 1999 to 2003. Prior to this, Mr. Goldman held leadership positions at State Street Global Advisors, IBM and Procter & Gamble. From August, 2019 to June 2021, Mr. Goldman served as a member of the Board of Directors of Silver Spike Acquisition Corporation, a SPAC that completed a business combination with WM Holding Company, LLC (NASDAQ:MAPS) in June 2021. He also served as a director of Silver Spike Acquisition Corp. II (August 2019 to April 2023) and Silver Spike III Acquisition Corp. (August 2019 to May 2023), two other special purpose acquisition companies. Since December 2022, he has served on the board of directors of AlphaTrAI, Inc., a fintech company. He also currently serves on the audit committee of the Grayscale Funds Trust and on the boards of directors of Resolute Investment Managers, Inc. and its affiliates and TortoiseEcofin Parent Holdco LLC. Mr. Goldman previously served as the Independent Chairman of the Board of the Harvest Volatility Edge Trust; a member of the Board of Directors of Trinitas Capital Management, a credit- focused investment management firm; as Lead Independent Director for the Axonic Alternative Income Interval Fund; and as an Independent Director for the O’Shares Investments ETF Trust. Mr. Goldman received a bachelor’s degree from Bowdoin College. Mr. Goldman is well qualified to serve as a member of our board of directors due to his extensive leadership and business development roles.

Alan J. Mintz has served as one of our directors since October 2021. Mr. Mintz is a Managing Principal of Stone Lion L.P. Mr. Mintz co-founded Stone Lion in August 2008 and launched the Stone Lion Funds in November 2008. From 1997 to 2008, Mr. Mintz was employed by Bear Stearns, where he served as a Senior Managing Director, a Global Co-Head of Distressed Debt Trading and Proprietary Investments and the Director of Distressed Research. Mr. Mintz served on the board of directors of Ultra Petroleum Corporation from 2017 through 2020. He also served as a board member of various Bear Stearns’ portfolio companies. From 1990 to 1997, Mr. Mintz worked at Policano & Manzo as a Restructuring Advisor, advising creditors and debtors of financially troubled companies. For several years prior to that, he worked in public accounting, beginning his career at Arthur Andersen & Company, a nationally recognized accounting firm, where he was employed from 1983 until 1989 and was a Senior Manager in the Tax Division. Mr. Mintz received a Bachelor of Science from Boston University in 1983. Mr. Mintz is well qualified to serve as a member of our board of directors due to his extensive experience as an investment professional and financial advisor.

Wallace Mathai-Davis has served as one of our directors since October 2021. Mr. Mathai-Davis has been a member of Marblegate’s Board of Advisors since 2009. He has over 30 years of experience as a C-suite executive in FinTech, international asset management, wealth management and merchant banking. Mr. Mathai-Davis is a co-founder and Board member of Q.ai, an artificial intelligence (AI) digital Registered Investment Advisor which offers AI constructed SMA hedge fund portfolios digitally to non-institutional investors. A controlling interest of Q.ai was acquired by Forbes Global Media in 2019. Mr. Mathai-Davis is Chairman of 360 Trading Networks Inc., the North American subsidiary of 360 Treasury Systems (the largest FX ECN in Europe). He was a member of the Supervisory Board of the parent 360 Treasury Systems in Germany for many years prior to its sale to the Deutsche Boerse. Mr. Mathai-Davis co-founded and was co-CEO and Board member of ChinaVest, Ltd., one of the first independent merchant banks chartered in the People’s Republic of China. He was a director of Regina Pacific International, a China Holding Company (CHC), with diversified real estate and operating company assets in China. Prior to co-founding ChinaVest, he joined the Board of Directors of Mercantile Bankshares as Chairman of Investment and Wealth Management for the purpose of restructuring the investment and wealth management businesses. Mr. Mathai-Davis was the COO, CFO and partner at Offitbank from 1986 to 2002. Mr. Mathai-Davis has served on the boards of three public companies and numerous boards of investment related funds. Mr. Mathai Davis has been widely involved in the nonprofit sector and was treasurer of the board of trustees of the Cathedral Church of St John the Divine for 13 years. Mr. Mathai-Davis is well qualified to serve as a member of our board of directors due to his extensive experience in leadership roles within the financial sector.

Family Relationships

No family relationships exist between any of our directors or executive officers.

Involvement in Certain Legal Proceedings

There are no material proceedings to which any director or executive officer, or any associate of any such director or officer is a party adverse to our Company, or has a material interest adverse to our Company.

Number and Terms of Office of Officers and Directors

We currently have seven directors. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we were required to hold an annual meeting one year after our first fiscal year end following our listing on Nasdaq. The First Extension Meeting on December 2, 2022 was held in lieu of our first annual meeting of stockholders. The Third Extension Meeting on December 19, 2023 was held in lieu of our second annual meeting of stockholders.

 

30

Table of Contents

The term of office of the first class of directors, consisting of Richard M. Goldman and Wallace Mathai-Davis, who were re-elected at the First Extension Meeting, will expire at our fourth annual meeting of stockholders. The term of office of the second class of directors, consisting of Harvey Golub and Alan J. Mintz, who were re-elected at the Third Extension Meeting, will expire at our fifth annual meeting of stockholders. The term of office of the third class of directors, consisting of Andrew Milgram, Paul Arrouet, and Patrick J. Bartels, Jr. will expire at the third annual meeting of stockholders.

Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.

Committees of the Board of Directors

Our board of directors has two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of independent directors.

Audit Committee

We have established an audit committee of the board of directors. Alan Mintz, Richard Goldman and Wallace Mathai-Davis serve as members of our audit committee, and Alan Mintz chairs the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Alan Mintz, Richard Goldman and Wallace Mathai-Davis meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.

Each member of the audit committee is financially literate and our board of directors has determined that Alan Mintz qualifies as an “audit committee financial expert” as defined in applicable SEC rules.

We have adopted an amended audit committee charter, which details the principal functions of the audit committee, including:

 

  •  

the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us;

 

  •  

pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;

 

  •  

setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations;

 

  •  

setting clear policies for audit partner rotation in compliance with applicable laws and regulations;

 

  •  

obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality- control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;

 

  •  

reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;

 

  •  

reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the FASB, the SEC or other regulatory authorities; and

 

  •  

advising the Board and any other Board committees if the clawback provisions of Rule 10D-1 under the Exchange Act (the “Rule”) are triggered based upon a financial statement restatement or other financial statement change, with the assistance of Management and to the extent that our securities continue to be listed on an exchange and subject to the Rule.

Compensation Committee

We have established a compensation committee of the board of directors. Alan Mintz and Richard Goldman serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Alan Mintz and Richard Goldman are independent and Richard Goldman chairs the compensation committee.

We have adopted an amended compensation committee charter, which details the principal functions of the compensation committee, including:

 

  •  

reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluations;

 

31

Table of Contents
  •  

reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers;

 

  •  

reviewing on an annual basis our executive compensation policies and plans;

 

  •  

implementing and administering our incentive compensation equity-based remuneration plans;

 

  •  

assisting management in complying with our proxy statement and annual report disclosure requirements;

 

  •  

approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;

 

  •  

if required, producing a report on executive compensation to be included in our annual proxy statement;

 

  •  

reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors; and

 

  •  

advising the Board and any other Board committees if the clawback provisions of the Rule are triggered based upon a financial statement restatement or other financial statement change, with the assistance of Management and to the extent that our securities continue to be listed on an exchange and subject to the Rule.

Notwithstanding the foregoing, as indicated above, other than the payment to our sponsor of $10,000 per month, for secretarial and administrative support and reimbursement of expenses, and the $50,000 monthly fee paid to Mr. Bartels for his services as a member of the special committee of our board of directors (“Special Committee”) from December 2022 to May 2023, which monthly fee Mr. Bartels agreed to reduce to $20,000 thereafter, to be paid until the earlier of (x) the date of the consummation of the DePalma Business Combination and (y) the date on which we advise Mr. Bartels we have determined to terminate discussions with the DePalma Companies with respect to the DePalma Business Combination; provided, however, that in any event we will be obligated to pay Mr. Bartels a minimum of six (6) monthly payments (aggregating three hundred thousand dollars ($300,000)), no compensation of any kind, including finders, consulting or other similar fees, has been or will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.

Code of Ethics

We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit and compensation committee charters as exhibits to the IPO Registration Statement. You can review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.

Compensation Recovery and Clawback Policy

Under the Sarbanes-Oxley Act, in the event of misconduct that results in a financial restatement that would have reduced a previously paid incentive amount, we can recoup those improper payments from our executive officers. The SEC also recently adopted rules which direct national stock exchanges to require listed companies to implement policies intended to recoup bonuses paid to executives if the company is found to have misstated its financial results.

On November 29, 2023, our board of directors approved the adoption of the Compensation Recovery Policy (the “Clawback Policy”), in order to comply with the final clawback rules adopted by the SEC under the Rule, and the listing standards, as set forth in the Nasdaq Listing Rule 5608 (the “Final Clawback Rules”).

The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from our current and former executive officers as defined in the Rule (“Covered Officers”) in the event that we are required to prepare an accounting restatement, in accordance with the Final Clawback Rules. The recovery of such compensation applies regardless of whether a Covered Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. Under the Clawback Policy, our Board of Directors may recoup from the Covered Officers erroneously awarded incentive compensation received within a lookback period of the three completed fiscal years preceding the date on which we are required to prepare an accounting restatement.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that during the year ended December 31, 2023, all reports applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a timely manner in accordance with Section 16(a) of the Exchange Act, except that each of Jeffrey Kravetz and Patrick J. Bartels, Jr. did not timely file one Form 3.

 

Item 11.

Executive Compensation.

None of our officers has received any cash compensation for services rendered to us. We have agreed to pay our sponsor a total of $10,000 per month for secretarial and administrative support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. With the exception of Mr. Bartels, who is being paid a monthly fee of $50,000 for his services as a member of the Special Committee from December 2022 to May 2023, which monthly fee Mr. Bartels agreed to reduce to $20,000 thereafter, to be paid until the earlier of (x) the date of the consummation of the DePalma Business Combination and (y) the date on which we advise Mr. Bartels we have determined to terminate discussions with the DePalma Companies with respect to the DePalma Business Combination; provided, however, that in any event we will be obligated to pay Mr. Bartels a minimum of six (6) monthly payments (aggregating three hundred thousand dollars ($300,000)), no compensation of any kind, including any finder’s fee, advisory fee, reimbursement fee or consulting fee, has been or will be paid by us to our sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). However, these individuals are reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. We do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. Our audit committee reviews on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates. Any such payments prior to an initial business combination are made using funds held outside the trust account. Other than quarterly audit committee review of such payments, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with identifying and consummating an initial business combination.

 

32

Table of Contents

After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed initial business combination, such as the DePalma Registration Statement. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.

We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our common stock as of April 1, 2024 based on information obtained from the persons named below, with respect to the beneficial ownership of common stock, by:

 

  •  

each person known by us to be the beneficial owner of more than 5% of our outstanding common stock;

 

  •  

each of our executive officers and directors that beneficially owns our common stock; and

 

  •  

all our executive officers and directors as a group.

In the table below, percentage ownership is based on 11,850,938 shares of our common stock, consisting of (i) 5,547,605 shares of our Class A common stock and (ii) 6,303,333 shares of our Class B common stock, issued and outstanding as of April 1, 2024. On all matters to be voted upon, including the election of directors of the board, holders of the shares of Class A common stock and shares of Class B common stock vote together as a single class. Currently, all of the shares of Class B common stock are convertible into Class A common stock on a one-for-one basis.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this Report.

 

     Class A Common Stock     Class B Common Stock    

Approximate

Percentage

of
Outstanding
Common
Stock

  

Name and Address of

Beneficial Owner (1)

    Number of
Shares
Beneficially
Owned		      Approximate
Percentage
of Class		     Number of
Shares
Beneficially
Owned		      Approximate
Percentage
of Class		  

Marblegate Acquisition LLC (2)

      4,610,000        83.1 %      3,829,469        60.75 %      71.2 % 

Andrew Milgram (2)

      4,610,000        83.1 %      3,829,469        60.75 %      71.2 % 

Paul Arrouet (2)

      4,610,000        83.1 %      3,829,469        60.75 %      71.2 % 

Richard Goldman (3)

      —         —        —         —        —   

Harvey Golub (3)

      —         —        —         —        —   

Jeffrey Kravetz

      —         —        —         —        —   

Alan J. Mintz (3)

      —         —        —         —        —   

Wallace Mathai-Davis (3)

      —         —        —         —        —   

Patrick J. Bartels, Jr.

      —         —        —         —        —   

All executive officers and directors as a group (8 individuals)

      4,610,000        83.1 %      3,829,469        60.75 %      71.2 % 

Other 5% Stockholders

             

Cantor Fitzgerald & Co. (4)

      300,000        5.41 %      —         —        2.53 % 

(1) Unless otherwise noted, the business address of each of the following entities or individuals is c/o Marblegate Acquisition LLC, 5 Greenwich Office Park, Suite 400, Greenwich, CT 06831.

(2) Our sponsor is the record holder of such shares. Marblegate is the managing member of our sponsor and has voting and investment discretion with respect to the securities held by our sponsor and may be deemed to beneficially own such shares. Andrew Milgram and Paul Arrouet, as Managing Partners of Marblegate, may be deemed to exercise voting and investment power over the securities held by our sponsor and therefore may be deemed to beneficially own such securities. Each such entity or person disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly.

(3) Each such person is a direct or indirect member of our sponsor and disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly.

(4) As described elsewhere in this Report, Cantor purchased 300,000 private placement units for a purchase price of $10.00 per unit in the private placement. Each private placement unit contains one share of Class A common stock and one-half of one whole warrant. Each whole warrant contained in a private placement unit entitles the holder to purchase one whole share of our Class A common stock at $11.50 per share. The private placement warrants included in the private placement units (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination. The business address for Cantor is 499 Park Avenue, New York, New York 10022.

 

33

Table of Contents

Securities Authorized for Issuance under Equity Compensation Plans

None.

Changes in Control

None. For more information on the DePalma Business Combination, please see “Item 1. Business.”

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

In January 2021, our sponsor purchased 8,625,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In September 2021, we effected a stock dividend of 0.3694 shares for each share of Class B common stock outstanding, resulting in our sponsor holding 11,810,833 founder shares. The number of founder shares issued (as adjusted for the stock dividend) was determined based on the expectation that such founder shares would represent 25% of the outstanding shares upon completion of our initial public offering (including the private placement shares). Up to 1,507,500 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. The founder shares (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.

On June 28 2023, in connection with the Second Extension Amendment, the sponsor converted 4,000,000 shares of Class B common stock into 4,000,000 shares of Class A common stock in the Founder Conversion. The 4,000,000 shares of Class A common stock issued in connection with the Founder Conversion are subject to the same restrictions as applied to the shares of Class B common stock before the Founder Conversion, including, among others, certain transfer restrictions, waiver of redemption rights and the obligation to vote in favor of an initial business combination as described in the IPO Registration Statement; consequently, the shares of Class A common stock issued in connection with the Founder Conversion are not registered under the Securities Act and remain unregistered until registration is demanded by the sponsor pursuant to a letter agreement we entered into with our sponsor, officers and directors.

Our sponsor and Cantor purchased an aggregate of 910,000 private placement units (610,000 private placement units purchased by our sponsor and 300,000 private placement units purchased by Cantor) for a purchase price of $10.00 per unit in the private placement. Each private placement unit contains one share of Class A common stock and one-half of one whole warrant. Each whole warrant contained in a private placement unit entitles the holder to purchase one whole share of our Class A common stock at $11.50 per share. The private placement warrants included in the private placement units (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder until 30 days after the completion of our initial business combination.

If any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which Marblegate or an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such entity.

We have agreed to pay our sponsor a total of $10,000 per month for secretarial and administrative support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.

In December 2022, in connection with Mr. Bartels’ appointment to our board of directors, we agreed to pay Mr. Bartels $50,000 per month for his services as a member of the Special Committee from December 2022 to May 2023, which monthly fee Mr. Bartels agreed to reduce to $20,000 thereafter, to be paid until the earlier of (x) the date of the consummation of the DePalma Business Combination and (y) the date on which we advise Mr. Bartels we have determined to terminate discussions with the DePalma Companies with respect to the DePalma Business Combination; provided, however, that in any event we will be obligated to pay Mr. Bartels a minimum of six monthly payments (aggregating $300,000).

Other than the foregoing, no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, has been or will be paid by us to our sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is). However, these individuals are reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. We do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. Our audit committee reviews on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and determines which expenses and the amount of expenses that are reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.

On January 15, 2021, we issued the IPO Promissory Note to our sponsor, pursuant to which we may borrow up to an aggregate principal amount of $300,000. The IPO Promissory Note was non-interest bearing and was payable on the earlier of September 30, 2021 or the completion of the initial public offering. The outstanding loan of $186,819 was repaid at the closing of the initial public offering.

 

34

Table of Contents

In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us Working Capital Loans on a non-interest bearing basis as may be required. If we complete an initial business combination, we would repay any such Working Capital Loans. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay any such Working Capital Loans but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into units, at a price of $10.00 per unit at the option of the lender. The units would be identical to the private placement units. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

On June 30, 2022, we issued the 2022 Promissory Note to Marblegate SOMF, a member of our sponsor, for a Working Capital Loan for which we may borrow up to the principal sum of $600,000. The 2022 Promissory Note bears no interest and is due and payable upon the earlier of (i) the date on which we consummate our initial business combination or (ii) the date that the winding up of the Company is effective. At the option of the lender, at any time prior to payment in full of the principal balance of the 2022 Promissory Note, the lender may elect to convert up to $600,000 of the unpaid principal balance of the note into Conversion Shares, equal to (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued in the private placement. On July 1, 2022, we borrowed $200,000 under the 2022 Promissory Note. As of December 31, 2022 and 2021, there were $200,000 and $0 outstanding balances under the 2022 Promissory Note.

On February 13, 2023, we issued the February 2023 Note in the principal amount of up to $1,100,000 to Marblegate SOMF for Working Capital Loans for advances Marblegate SOMF has made, and may make in the future, to us. The February 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate our initial business combination and (ii) the date that our winding up is effective. At the election of Marblegate SOMF, all or a portion of the unpaid principal amount of the February 2023 Note may be converted into Conversion Shares, equal to: (x) the portion of the principal amount of the February 2023 Note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by us to the sponsor and Cantor in the private placement. The Conversion Shares are entitled to the registration rights set forth above in the 2022 Promissory Note.

On July 20, 2023, we issued the July 2023 Note in the principal amount of up to $500,000 to Marblegate SOMF in connection with advances Marblegate SOMF has made, and may make in the future, to us for Working Capital Loans. The July 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate our initial business combination and (ii) the date that our winding up is effective. At the election of Marblegate SOMF, all or a portion of the unpaid principal amount of the July 2023 Note may be converted into Conversion Shares, equal to: (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by the Company to the sponsor and Cantor in the private placement. The Conversion Shares are entitled to the registration rights set forth in the July 2023 Note.

On December 21, 2023, we issued the December 2023 Note in the principal amount of up to $450,000 to Marblegate SOMF in connection with advances Marblegate SOMF has made, and may make in the future, to us for Working Capital Loans. The December 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which we consummate our initial business combination and (ii) the date that our winding up is effective. At the election of Marblegate SOMF, all or a portion of the unpaid principal amount of the December 2023 Note may be converted into Conversion Shares, equal to: (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by the Company to the sponsor and Cantor in the private placement. The Conversion Shares are entitled to the registration rights set forth in the December 2023 Note.

We have entered into indemnification agreements with each of our officers and directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

In connection with the closing of our initial public offering, our sponsor sold 2,473,864 founder shares to certain anchor investors at their original purchase price. The Company estimated the aggregate fair value of the founder shares attributable to the anchor investors to be $20,656,764, or $8.35 per share.

 

35

Table of Contents

After our initial business combination, including the proposed DePalma Business Combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company. In addition, the management services for New MAC following the consummation of the DePalma Business Combination will be provided by Marblegate and paid pursuant to the MSA. All of these director and management services fees will be fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders in connection with our proposed business combination, such as the DePalma Registration Statement. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation. With respect to the MSA, we have engaged in preliminary discussions with Marblegate but have not definitively agreed to any limits regarding the amount of director or management services fees that may be paid by New MAC to its directors or to Marblegate under the MSA. Any payments to be made pursuant to the MSA will be determined, or recommended to the New MAC board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on the New MAC board of directors.

For more information on the agreements entered into in connection with the DePalma Business Combination, please see “Item 1. Business”

Director Independence

Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Richard Goldman, Alan Mintz, Wallace Mathai-Davis and Patrick J. Bartels, Jr. are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors have regularly scheduled meetings at which only independent directors are present.

 

Item 14.

Principal Accountant Fees and Services.

The following is a summary of fees paid or to be paid to Marcum, for services rendered.

Audit Fees

Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees of Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the years ended December 31, 2023 and 2022 totaled $109,695 and $67,965, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.

Audit-Related Fees

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. During the years ended December 31, 2023 and 2022, we did not pay Marcum any audit-related fees.

Tax Fees

Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice. We did not pay Marcum for tax services, planning or advice for the years ended December 31, 2023 and December 31, 2022.

All Other Fees

All other fees consist of fees billed for all other services. We did not pay Marcum for any other services for the years ended December 31, 2023 and December 31, 2022.

Pre-Approval Policy

Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

 

36

Table of Contents

PART IV

 

Item 15.

Exhibit and Financial Statement Schedules.

(a) The following documents are filed as part of this Report:

(1) Financial Statements.

 

     Page  

Report of Independent Registered Public Accounting Firm (PCAOB ID 688)

     F-2  

Balance Sheets

      F-3  

Statements of Operations

      F-4  

Statements of Changes in Stockholders’ Deficit

      F-5  

Statements of Cash Flows

      F-6  

Notes to Financial Statements

      F-7 to F-22  

(2) Financial Statement Schedules/

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto beginning on page F-1 of this Report.

(3) Exhibits.

We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits can be inspected on the SEC website at www.sec.gov.

 

Item 16.

Form 10-K Summary.

Omitted at our Company’s option.

 

37

Table of Contents
MARBLEGATE ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
 
  
 
F-2
 
Financial Statements:
  
  
 
F-3
 
  
 
F-4
 
  
 
F-5
 
  
 
F-6
 
  
 
F-7 to F-22
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Marblegate Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Marblegate Acquisition Corp. (the “Company”) as of December 31, 2023 and 2022, the related statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the financial statements, the Company is a Special Purpose Acquisition Corporation that was formed for the purpose of completing a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities extend the business combination deadline by an additional nine months through October 5, 2024. The Company entered into a business combination agreement with a business combination target on February 14, 2023; however, the completion of this transaction is subject to the approval of the Company’s stockholders among other conditions. There is no assurance that the Company will obtain the necessary approvals, satisfy the required closing conditions, raise the additional capital it needs to fund its operations, and complete the transaction prior to October 5, 2024, if at all. The Company also has no approved plan in place to extend the business combination deadline and fund operations for any period of time after October 5, 2024, in the event that it is unable to complete a business combination by that date. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 
/s/ Marcum
LLP
Marcum
LLP
We have served as the Company’s auditor since 2020
.
Los Angeles, CA
April 1, 2024
 
F-2
MARBLEGATE ACQUISITION CORP.
BALANCE SHEETS
 
    
December 31,
  
    
2023
    
2022
  
ASSETS
     
Current assets
     
Cash
    $ 123,870     $ 568,355  
Prepaid expenses
      35,596       325,696  
  
 
 
    
 
 
  
Total Current Assets
      159,466       894,051  
Other assets
      —        —   
Investments held in Trust Account
      6,781,024       10,325,848  
  
 
 
    
 
 
  
TOTAL ASSETS
   
$
6,940,490
 
  
$
11,219,899
 
  
 
 
    
 
 
  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
     
Current liabilities
     
Accounts payable and accrued expenses
    $ 373,758     $ 567,819  
Excise tax payable
      38,791       —   
Income taxes payable
      70,906       638,962  
  
 
 
    
 
 
  
Total Current Liabilities
      483,455       1,206,781  
Deferred legal fees
      3,927,583       192,196  
Working
capital loan – related party
      2,225,000       200,000  
Warrant liability
      7,507       16,380  
Deferred underwriting fee payable
      15,000,000       15,000,000  
  
 
 
    
 
 
  
Total Liabilities
   
 
21,643,545
 
  
 
16,615,357
 
  
 
 
    
 
 
  
Commitments and Contingencies (Note 6)
     
Class A common stock subject to possible redemption, $0.0001 par value; 200,000,000 shares authorized; 637,605 and 1,010,391 shares at $10.63 and $10.37 per share redemption value as of December 31, 2023 and 2022, respectively
      6,780,204       10,389,781  
Stockholders’ Deficit
     
Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued and outstanding
      —        —   
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 4,910,000 and 910,000 shares issued and outstanding (excluding 637,605 and 1,010,391 shares subject to possible redemption) as of December 31, 2023 and 2022, respectively
      491       91  
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 6,303,333 and 10,303,333 shares issued and outstanding as of December 31, 2023 and 2022, respectively
      630       1,030  
Additional
paid-in
capital
      —        —   
Accumulated deficit
      (21,484,380 )      (15,786,360 ) 
  
 
 
    
 
 
  
Total Stockholders’ Deficit
   
 
(21,483,259
) 
  
 
(15,785,239
) 
  
 
 
    
 
 
  
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
   
$
6,940,490
 
  
$
11,219,899
 
  
 
 
    
 
 
  
The accompanying notes are an integral part of the financial statements.
 
F-3
MARBLEGATE ACQUISITION CORP.
STATEMENTS OF OPERATIONS
 
    
For the Year Ended

December 31,
  
    
2023
    
2022
  
Operating and formation costs
    $ 5,747,453     $ 1,670,335  
  
 
 
    
 
 
  
Loss from operations
   
 
(5,747,453
) 
  
 
(1,670,335
) 
Other income:
     
Change in fair value of warrant liabilities
      8,873       233,870  
Interest income on investments held in Trust Account
      427,781       3,305,765  
  
 
 
    
 
 
  
Total other income
      436,654       3,539,635  
  
 
 
    
 
 
  
(Loss) Income before provision for income taxes
      (5,310,799 )      1,869,300  
Provision for income taxes
      (78,830 )      (638,962 ) 
  
 
 
    
 
 
  
Net (loss) income
   
$
(5,389,629
) 
  
$
1,230,338
 
  
 
 
    
 
 
  
Basic and diluted weighted average shares outstanding, Class A common stock
      880,992       27,696,716  
  
 
 
    
 
 
  
Basic and diluted net (loss) income per common share, Class A common stock
   
$
(0.45
) 
  
$
0.03
 
  
 
 
    
 
 
  
Basic and diluted weighted average shares outstanding, Class B common stock and
non-redeemable
Class A common stock
      11,213,333       11,213,333  
  
 
 
    
 
 
  
Basic and diluted net (loss) income per common share, Class B common stock and
non-redeemable
Class A common stock
   
$
(0.45
) 
  
$
0.03
 
  
 
 
    
 
 
  
The accompanying notes are an integral part of the financial statements.
 
F-4
MARBLEGATE ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
 
    
Class A

Common Stock
     
Class B

Common Stock
    
Additional
Paid-in
     
Retained
    
Total
Stockholders’
  
    
Shares
     
Amount
     
Shares
    
Amount
    
Capital
     
Earnings
    
Deficit
  
Balance – December 31, 2021
   
 
910,000
 
   
 
91
 
   
 
10,303,333
 
  
 
1,030
 
  
 
— 
 
   
 
(14,617,552
) 
  
 
(14,616,431
) 
Accretion for Class A common stock to redemption amount
      —         —         —        —        —         (2,399,146 )      (2,399,146 ) 
Net income
      —         —         —        —        —         1,230,338       1,230,338  
Balance – December 31, 2022
   
 
910,000
 
   
$
91
 
   
 
10,303,333
 
  
$
1,030
 
  
$
— 
 
   
$
(15,786,360
) 
  
$
(15,785,239
) 
Conversion of Class B common stock to Class A common stock
      4,000,000        400        (4,000,000 )      (400 )      —         —        —   
Recognition of excise tax liability on stock redemptions
      —         —         —        —        —         (38,793 )      (38,793 ) 
Accretion for Class A common stock to redemption amount
      —         —         —        —        —         (269,598 )      (269,598 ) 
Net loss
      —         —         —        —        —         (5,389,629 )      (5,389,629 ) 
  
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
    
 
 
  
Balance – December 31, 2023
   
 
4,910,000
 
   
$
491
 
   
 
6,303,333
 
  
$
630
 
  
$
— 
 
   
$
(21,484,380
) 
  
$
(21,483,259
) 
  
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
    
 
 
  
The accompanying notes are an integral part of the financial statements.
 
F-5
MARBLEGATE ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
 
    
For the Year Ended

December 31,
  
    
2023
    
2022
  
Cash Flows from Operating Activities:
     
Net (loss) income
    $ (5,389,629 )    $ 1,230,338  
Adjustments to reconcile net (loss) income to net cash used in operating activities:
     
Interest earned on investments held in Trust Account
      (427,782 )     (3,305,765 ) 
Change in fair value of warrant liabilities
      (8,873 )      (233,870 ) 
Changes in operating assets and liabilities:
     
Prepaid expenses
      290,100       18,585  
Other assets
      —        237,900  
Accrued expenses
      (194,062 )      220,369  
Deferred legal fee
      3,735,387       192,196  
Income taxes payable
      (568,056 )      638,962  
  
 
 
    
 
 
  
Net cash used in operating activities
   
 
(2,562,915
)
  
 
(1,001,285
) 
  
 
 
    
 
 
  
Cash Flows from Investing Activities:
     
Cash withdrawn from Trust Account to pay franchise and income taxes
      93,430       989,480  
Cash withdrawn from Trust Account in connection with redemption
      3,879,175       293,509,365  
  
 
 
    
 
 
  
Net cash provided by investing activities
   
 
3,972,605
 
  
 
294,498,845
 
  
 
 
    
 
 
  
Cash Flows from Financing Activities:
     
Proceeds from convertible promissory note - related party
      2,025,000       200,000  
Redemption of common stock
      (3,879,175 )     (293,509,365 ) 
  
 
 
    
 
 
  
Net cash used in financing activities
   
 
(1,854,175
)
  
 
(293,309,365
) 
  
 
 
    
 
 
  
Net Change in Cash
   
 
(444,485
)
  
 
188,195
 
Cash – Beginning
      568,355       380,160  
  
 
 
    
 
 
  
Cash – Ending
   
$
123,870
 
  
$
568,355
 
  
 
 
    
 
 
  
Supplementary cash flow information:
     
Cash paid for income taxes
    $ 646,886     $ —   
  
 
 
    
 
 
  
Non-cash
investing and financing activities:
     
Accretion for Class A common stock subject to redemption amount
    $ 269,598     $ 2,399,062  
  
 
 
    
 
 
  
The accompanying notes are an integral part of the financial statements.
 
F-6
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Marblegate Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on December 10, 2020. The Company was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of December 31, 2023, the Company had not yet commenced any operations. All activity through December 31, 2023 relates to the Company’s formation, the initial public offering (the “Initial Public Offering”), which is described below, and identifying a target Company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates
non-operating
income in the form of interest income from the investments held in the Trust Account (as defined below).
The registration statement for the Company’s Initial Public Offering (the “IPO Registration Statement”) was declared effective on September 30, 2021. On October 5, 2021, the Company consummated the Initial Public Offering of 30,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), generating gross proceeds of $300,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 910,000 units (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to Marblegate Acquisition LLC (the “Sponsor”) and Cantor Fitzgerald & Co. (“Cantor”), generating gross proceeds of $9,100,000, which is described in Note 4.
Transaction costs amounted to $42,630,587, consisting of $6,000,000 of underwriting fees, net of reimbursement, $15,000,000 of deferred underwriting fees, $1,015,137 of other offering costs (including $509,600 for the fair value of the private warrants included in the Private Placement Units, and $505,537 of offering costs) and $20,615,450 for the fair value of the Founder Shares attributable to certain anchor investors (see Note 5).
Following the closing of the Initial Public Offering on October 5, 2021, an amount of $301,500,000 ($10.05 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”), located in the United States and held in cash items or invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of
Rule2a-7 of
the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing a definitive agreement to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.05 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (as amended, the “Amended and Restated Certificate of Incorporation”), conduct the
 
F-7
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period (as defined below) and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or
pre-initial
Business Combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
On December 7, 2022, the Company filed an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “First Extension Amendment”). The First Extension Amendment extended the date by which the Company must consummate its initial business combination from January 5, 2023, to July 5, 2023, or such earlier date as determined by the Company’s board of directors.
On June 27, 2023, the Company filed a second amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Second Extension Amendment”). The Second Extension Amendment extended the date by which the Company must consummate its initial business combination for an additional six (6) months, from July 5, 2023 to January 5, 2024, or such earlier date as determined by the Company’s board of directors.
On June 28, 2023, in connection with the Second Extension Amendment, the Sponsor converted 4,000,000 shares of Class B common stock into 4,000,000 shares of Class A common stock (the “Founder Conversion”), which represented 40% of the outstanding shares of the Company’s Class A common stock as of the date of the conversion.
On July 19, 2023, the Company received a written notice from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the preceding 30 consecutive business days, the Company’s Market Value of Publicly Held Shares (“MVPHS”) was below the $15 million minimum requirement for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(2)(C) (the “MVPHS Deficiency”).
On August 2, 2023, the Staff approved the Company’s application to list its units, Class A common stock, par value $0.0001 per share, and warrants on The Nasdaq Capital Market. The Company’s securities were transferred to The Nasdaq Capital Market at the opening of business on August 8, 2023.
On August 8, 2023, the Company received a written notice from the Staff notifying the Company that, because the Company has phased down its securities to The Nasdaq Capital Market, the Staff has determined that for the last 10 consecutive business days, the Company’s minimum MVPHS has been $1,000,000 or greater. Accordingly, the Company has regained compliance with the rule and the Staff indicated that the MVPHS Deficiency has been cured.
As previously disclosed by the Company, on June 5, 2023, the Company received a written notice from the Staff indicating that the Company is not in compliance with Nasdaq Listing Rule 5450(a)(2) (the “Minimum Total Holders Rule”), which requires the Company to have at least 400 total holders for continued listing on The Nasdaq Global Market. On August 2, 2023, the Company received a written notice from the Staff notifying the Company that, based on the materials submitted by the Company in connection with its application to transfer its listing to The Nasdaq Capital Market, the Staff has determined that the Company has regained compliance with the Minimum Total Holders Rule for The Nasdaq Global Market set forth in Listing Rule 5450(a)(2). Accordingly, the Staff indicated that the matter has been closed.
 
F-8
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
As previously disclosed by the Company, on March 31, 2023, the Company received a written notice from the Staff indicating that we are no longer in compliance with the minimum market value of listed shares (“MVLS”) of $50 million for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(A). On August 8, 2023, the Company received a written from the Staff notifying the Company that, because the Company has phased down its securities to The Nasdaq Capital Market, the Staff has determined that for the last 10 consecutive business days, the Company’s minimum MVLS has been $35,000,000 or greater. Accordingly, the Company has regained compliance with the rule and the Staff indicated that the matter has been closed.
The prior
non-compliance
notices received by the Company relating to its listing on The Nasdaq Global Market are deemed to be resolved as a result of the Company’s transfer of its publicly-listed securities to The Nasdaq Capital Market.
On December 19, 2023, the Company filed a third amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Third Extension Amendment”). The Third Extension Amendment extended the date by which the Company must consummate its initial business combination for an additional nine (9) months, from January 5, 2024 to October 5, 2024, or such earlier date as determined by the Company’s board of directors. In connection with the Third Extension Amendment, stockholders holding 128,459 Public Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $1.4 million (approximately $10.62 per share) was removed from the Trust Account to pay such holders. Following redemptions, the Company has 637,605 Public Shares outstanding.
As a result of the Third Extension Amendment, the Company has until October 5, 2024 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, including all available extensions, then, unless our board of directors and stockholders approve a further extension of 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 aper-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor and Cantor have agreed to waive their liquidation rights with respect to the Founder Shares and the shares of Class A common stock underlying the Private Placement Units (the “Private Placement Shares”) if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $10.05.
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.05 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.05 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
The anchor investors will not be entitled to (i) redemption rights with respect to any Founder Shares held by them in connection with the completion of the initial Business Combination, (ii) redemption rights with respect to any Founder Shares held by them in connection with a stockholder vote to amend the Amended and Restated Certificate of Incorporation in a manner that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company has not consummated an initial Business Combination within the Combination Period or (iii) rights to liquidating distributions from the Trust Account with respect to
 
F-9
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
any Founder Shares held by them if the Company fails to complete the initial Business Combination within the Combination Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Combination Period).
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The Company will not use, now or in the future, any funds in the Trust Account, including any interest thereon, to pay for any excise tax imposed under the Inflation Reduction Act of 2022. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Going Concern
As of December 31, 2023, the Company had $123,870 in its operating bank account, $6,781,024
in investments held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and an adjusted working capital deficit of
$252,884 which excludes franchise and income taxes payable as such amounts can be paid from the interest earned in the Trust Account. As of December 31, 2023, $446,709 of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations.
During the year ended December 31, 2023, the Company withdrew an aggregate of $93,430 of interest income from the Trust Account to pay franchise and income taxes and $3,879,175 in connection with redemptions.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for structuring, negotiating and consummating the Business Combination and/or any other related activities.
The Company may need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs (“Working Capital Loans”). Accordingly, the Company may not be able to obtain additional financing. In instances of working capital deficits, the Sponsor has agreed to fund cash shortfalls up to $600,000. On June 30, 2022, the Company issued a promissory note to a member of the Sponsor for a working capital loan for which the Company may borrow up to an aggregate amount of $600,000 (see Note 5). On February 13, 2023, the Company issued the February 2023 Note (as defined in Note 5) to the Sponsor in the amount of $1,100,000. On July 20, 2023, the Company issued a promissory note in the principal amount of up to $500,000 to Marblegate SOMF (the “July 2023 Note” as defined in Note 5). On December 21, 2023, the Company issued a promissory note in the principal amount of up to $450,000 to Marblegate SOMF (the “December 2023 Note” as defined in Note 5). If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. As of December 31, 2023 and 2022, $2,225,000 and $200,000 are outstanding on the Working Capital Loans, respectively.
The Company has incurred significant costs in pursuit of its acquisition plans. The Company may need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be
 
F-10
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. If the Company is unable to complete the Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account. In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)2014-15,“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until October 5, 2024 (or such earlier date as determined by the Company’s board of directors), to consummate a Business Combination (the “Combination Period”). It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date and an extension has not been requested by the Sponsor and approved by the Company’s stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity issue and the mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be required to liquidate after October 5, 2024 (or such earlier date as determined by the Company’s board of directors). The Company intends to continue to seek to complete a Business Combination, such as the DePalma Business Combination, before the mandatory liquidation date.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
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 stockholder 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 a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the 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 financial statements and the reported amounts of 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 financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Accordingly, the actual results could differ significantly from those estimates.
 
F-11
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
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. There were
no
cash equivalents as of December 31, 2023 and 2022.
Investments Held in Trust Account
As of December 31, 2023, the Company’s investments held in the Trust Account are held in an interest-bearing demand deposit account and are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included in interest earned on investments held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ deficit. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.
In connection with the special meeting of stockholders held by the Company on December 2, 2022, stockholders holding 28,989,609 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $293.5 million (approximately $10.12 per share) was removed from the Trust Account to pay such holders.
In connection with the special meeting of stockholders held by the Company on June 27, 2023, stockholders holding 244,327 shares of the Company’s Class A common stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $2.5 million (approximately $10.29 per share) was removed from the Trust Account to pay such holders.
In connection with the special meeting of stockholders held by the Company on December 19, 2023, stockholders holding 128,459 Public Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account. As a result, approximately $1.4 million (approximately $10.62 per share) was removed from the Trust Account to pay such holders.
Accordingly, at December 31, 2023 and 2022, 637,605 and 1,010,391 Class A common stock subject to possible redemption is presented at $10.63 and $10.37 redemption value as temporary equity, respectively, outside of the stockholders’ deficit section of the Company’s balance sheets.
At December 31, 2023 and 2022, the Class A common stock reflected in the balance sheets is reconciled in the following table:
 
Gross proceeds
    $ 300,000,000  
Less:
   
Proceeds allocated to Public Warrants
      (15,600,000 ) 
Class A common stock issuance costs
      (21,504,526 ) 
Redemption of Class A common stock
      (293,509,365 ) 
Plus:
   
Remeasurement of carrying value to redemption value
      41,003,672  
  
 
 
  
Class A common stock subject to possible redemption at December 31, 2022
   
 
10,389,781
 
Less:
   
Redemption of Class A common stock
      (3,879,175 ) 
Plus:
   
Remeasurement of carrying value to redemption value
      269,598  
  
 
 
  
Class A common stock subject to possible redemption at December 31, 2023
   
$
6,780,204
 
  
 
 
  
 
F-12
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
Offering Costs
The Company complied with the requirements of FASB
ASC Topic 340-10-S99-1 and SEC
Staff Accounting Bulletin Topic 5A – “Expenses of Offering.” Offering costs consisted of underwriting, legal, accounting and other expenses incurred through the Initial Public Offering that are 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. Offering costs associated with the Public Shares were charged to stockholders’ deficit upon the completion of the Initial Public Offering. Offering costs amounted to $42,630,587, of which $42,588,262 were charged to stockholders’ deficit upon the completion of the Initial Public Offering (inclusive of the $20,615,450 for the fair value of the Founder Shares attributable to certain anchor investors (see Note 5) and $41,314 were expensed to the statements of operation. Offering costs of $1,011 allocated to the Private Placement Warrants were expensed to the statements of operations.
Income Taxes
The Company accounts for income taxes under FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of December 31, 2023 and 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation and may be examined by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net (Loss) Income per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net (loss) income per common stock is computed by dividing net (loss) income by the weighted average number of shares of common stock outstanding for the period. Remeasurement associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted (loss) income per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 15,455,000 Class A common stock in the aggregate. As of December 31, 2023 and 2022, the Company did
not
have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net (loss) income per common stock is the same as basic net (loss) income per common stock for the periods presented.
 
F-13
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
The following table reflects the calculation of basic and diluted (loss) income per common stock (in dollars, except per share amounts):
 
    
For the Year Ended

December 31,
  
    
2023
     
2022
  
    
Redeemable
Class A
     
Non-Redeemable

Class A &B
     
Redeemable
Class A
     
Non-Redeemable

Class A &B
  
Basic and diluted net (loss) income per share of common stock
            
Numerator:
            
Allocation of net (loss) income, as adjusted
    $ (392,599 )     $ (4,997,030 )     $ 875,772      $ 354,566  
Denominator:
            
Basic and diluted weighted average shares outstanding
      880,992        11,213,333        27,696,716        11,213,333  
  
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted net (loss) income per share of common stock
    $ (0.45 )     $ (0.45 )     $ 0.03      $ 0.03  
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature, except for the warrant liabilities (see Note 10).
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 prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
 
  •  
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.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). Derivative instruments are initially recorded at fair value on the grant date and
re-valued
at each reporting date, with changes in the fair value reported in the statements of operation. Derivative assets and liabilities are classified in the balance sheets as current or
non-current
based on whether or not
net-cash
settlement or conversion of the instruments is required within 12 months of the balance sheet date.
Warrant Liabilities
The Company accounts for the warrants issued in connection with the private placement in accordance with the guidance contained in ASC 815 whereby under that provision the warrants that do not meet the criteria for equity treatment must be recorded as a liability. Accordingly, the Company evaluated and will classify the warrants included in the Private Placement Units (the “Private Placement Warrants”) under liability treatment at its fair value and adjust the instrument to fair value at each reporting period. This liability will be
re-measured
at each balance sheet date until the Private Placement Warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statements of operations.
 
F-14
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation maximum coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Recent Accounting Standards
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s Management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering consummated on October 5, 2021, the Company sold 30,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consisted of one share of the Company’s Class A common stock and
one-half
of one redeemable warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor and Cantor purchased an aggregate of 910,000 Private Placement Units at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $9,100,000, in a private placement. Each Private Placement Unit consists of one share of Class A common stock and
one-half
of one warrant. Each whole warrant is exercisable to purchase one Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7). A portion of the proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Units will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On January 15, 2021, in consideration for the payment of certain of the Company’s offering costs, the Company applied $25,000 of outstanding advances from the Sponsor towards the issuance of 8,625,000 shares of the Company’s Class B common stock. In September 2021, the Company effected a stock dividend of 0.3694 shares for each share of Class B common stock outstanding, resulting in the Sponsor holding 11,810,833 Founder Shares (the “Founder Shares”). The Founder Shares included an aggregate of up to 1,507,500 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the holders of the Founder Shares will collectively own, on an
as-converted
basis, 25% of the Company’s issued and outstanding shares after the Initial Public Offering (including the Private Placement Shares). As a result of the underwriter’s option not to exercise its over-allotment option, a total of 1,507,500 Founder Shares were forfeited.
The holders of the Founder Shares have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of our initial Business Combination or (B) subsequent to our initial Business Combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after our initial Business Combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
In connection with the closing of the Initial Public Offering, the Sponsor sold 2,473,864 Founder Shares to certain anchor investors at their original purchase price. The Company estimated the aggregate fair value of the Founder Shares attributable to the anchor investors to be $20,656,764, or $8.35 per share. The fair value of the Founder Shares were valued using a binomial/lattice model. The excess of the fair value of the Founder Shares was determined to be an offering cost in accordance with Staff Accounting Bulletin Topic 5A. Accordingly, the offering cost was allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to the total proceeds received. Offering costs related to the Founder Shares amounted to $20,656,764, of which $20,615,450 was charged to stockholders’ deficit upon the completion of the Initial Public Offering and $41,314 was expensed to the statements of operation and included in transaction costs attributable to warrant liabilities.
On October 5, 2021, upon the closing of the Initial Public Offering, the Sponsor sold membership interests to each of four directors of the Company. The membership interests entitle each director to 25,000 Founder Shares, for an aggregate of 100,000 shares, to be transferred to the directors if a Business Combination is consummated. The total consideration paid for these membership interests was $200. Three of the directors were also part of the Sponsor group and invested $409,929 for their
pro-rata
share of the Sponsor
 
F-15
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
contribution for Founder Shares and Private Placement Units. Each Founder Share will automatically convert to one share of Class A common stock upon consummation of a Business Combination. The Sponsor will retain all voting and dispositive power over all Founder Shares until the consummation of the Business Combination, after which the Sponsor will distribute to each holder of the membership interests its share of the Founder Shares, subject to applicable
lock-up
restrictions.
The sale of the membership interests to the Company’s directors is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 100,000 shares granted to the Company’s directors was $835,000 or $8.35 per share. The Founder Shares were granted subject to a performance condition (i.e., the occurrence of a 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. As of December 31, 2023, the Company determined that a Business Combination is not considered probable, and, therefore, no stock-based compensation expense has been recognized. Stock-based compensation would be recognized at the date a Business Combination is considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founder Shares multiplied by the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares.
On June 28, 2023, in connection with the Second Extension Amendment, the Sponsor converted 4,000,000 shares of Class B common stock into 4,000,000 shares of Class A common stock, which represented 40% of the outstanding shares of the Company’s Class A common stock as of the date of such conversion.
Promissory Note – Related Party
On January 15, 2021, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note was
non-interest
bearing and payable on the earlier of September 30, 2021 or the completion of the Initial Public Offering. The outstanding loan of $186,819 was repaid at the time of the Initial Public Offering.
On March 27, 2022, the Sponsor signed a commitment letter stating that in instances of cash shortfalls, the Sponsor agreed to provide support of up to $600,000 to enable the Company to continue its operations and meet its potential obligations. On June 30, 2022, the Company issued a promissory note to Marblegate Special Opportunities Master Fund, L.P., a member of the Sponsor (“Marblegate SOMF”), for a Working Capital Loan for which the Company may borrow up to the principal sum of $600,000 (the “2022 Note”). The note bears no interest and is due and payable upon the earlier of (i) the date on which the Company consummates its initial business combination or (ii) the date that the winding up of the Company is effective. At the option of the payee (“Payee”), at any time prior to payment in full of the principal balance of the note, the Payee may elect to convert up to $600,000 of the unpaid principal balance of the note into that number of shares of Class A common stock of the Company (the “Conversion Shares”), equal to (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares shall be identical to the shares of Class A common stock included in the units issued in the Private Placement. On July 1, 2022, the Company borrowed $200,000 under the promissory note for the Working Capital Loan. As of December 31, 2023 and 2022, there were $600,000 and $200,000 outstanding balances under the 2022 Note.
On February 13, 2023, the Company issued a promissory note in the principal amount of up to $1,100,000 to Marblegate SOMF (the “February 2023 Note”). The February 2023 Note was issued in connection with advances Marblegate SOMF has made, and may make in the future, to the Company for working capital expenses. The February 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. At the election of the Marblegate SOMF, all or a portion of the unpaid principal amount of the February 2023 Note may be converted into shares of Class A common stock of the Company (the “Conversion Shares”), equal to: (x) the portion of the principal amount of the Note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by the Company to its sponsor and the representative of the underwriters in a private placement in connection with the Company’s initial public offering. The Conversion Shares are entitled to the registration rights set forth in the February 2023 Note. As of December 31, 2023, there was $1,100,000 outstanding balances under the February 2023 Note.
On July 20, 2023, the Company issued a promissory note in the principal amount of up to $500,000 to Marblegate SOMF (the “July 2023 Note”). The July 2023 Note was issued in connection with advances Marblegate SOMF has made, and may make in the future, to the Company for working capital expenses. The July 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. At the election of Marblegate SOMF, all or a portion of the unpaid principal amount of the July 2023 Note may be converted into shares of Class A common stock of the Company (the “Conversion Shares”), equal to: (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by the Company to its sponsor and the representative of the underwriters in a private placement in connection with the Company’s initial public offering. The Conversion Shares are entitled to the registration rights set forth in the July 2023 Note. As of December 31, 2023, there was $500,000 outstanding balance under the July 2023 Note.
 
F-16
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
On December 21, 2023, the Company issued a promissory note in the principal amount of up to $450,000 to Marblegate SOMF (the “December 2023 Note”). The July 2023 Note was issued in connection with advances Marblegate SOMF has made, and may make in the future, to the Company for working capital expenses. The July 2023 Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company consummates its initial business combination and (ii) the date that the winding up of the Company is effective. At the election of Marblegate SOMF, all or a portion of the unpaid principal amount of the December 2023 Note may be converted into Conversion Shares, equal to: (x) the portion of the principal amount of the note being converted, divided by (y) $10.00, rounded up to the nearest whole number of shares. The Conversion Shares will be identical to the shares of Class A common stock included in the units issued by the Company to its sponsor and the representative of the underwriters in a private placement in connection with the Company’s initial public offering. The Conversion Shares are entitled to the registration rights set forth in the December 2023 Note. As of December 31, 2023, there was $25,000 outstanding under the December 2023 Note.
Administrative Support Agreement
The Company entered into an agreement, commencing on September 30, 2021 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total not to exceed $10,000 per month for secretarial and administrative support. For the year ended December 31, 2023, the Company incurred $120,000 in fees for these services, which fees are included in accrued expenses in the accompanying balance sheet. For the year ended December 31, 2022, the Company incurred $120,000 in fees for these services, which fees are included in accrued expenses in the accompanying balance sheet.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on September 30, 2021, the holders of the Founder Shares, the Private Placement Units (and the securities contained therein), and the units that may be issued upon conversion of Working Capital Loans (and the securities contained therein) are entitled to registration rights. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding anything to the contrary, Cantor may only make a demand on one occasion and only during the
5-year
period beginning on the effective date of the IPO Registration Statement. In addition, Cantor may participate in a “piggy-back” registration only during the
7-year
period beginning on the effective date of the IPO Registration Statement. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
At the time of the IPO, the Company granted the underwriters
a 45-day option
to purchase up to 4,500,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. As a result of the underwriters’ election not to exercise their over-allotment, the 4,500,000 additional Units were not purchased.
The underwriters were entitled to a deferred fee of 5.0% of the gross proceeds of the 30,000,000 Units sold in the Initial Public Offering, or $15,000,000.
 
F-17
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
On August 11, 2023, the Company entered into a fee reduction agreement with the underwriters whereby the underwriters agreed to forfeit $12,000,000 of the aggregate $15,000,000 deferred fee contingent upon the consummation of the DePalma Business Combination (as described below). The reduced deferred fee of $3,000,000 shall be payable on the consummation of the DePalma Business Combination, as contemplated by the underwriting agreement. If the contemplated DePalma Business Combination is not completed, and the Company enters into a Business Combination with another target, the deferred underwriting fee due would then revert to the original amount of $15,000,000.
Business Combination Agreement
On February 14, 2023, the Company entered into a business combination agreement (as it may be amended or restated from time to time, the “DePalma Business Combination Agreement”), with Marblegate Asset Management, LLC, a Delaware limited liability company (“Marblegate”), Marblegate Capital Corporation, a Delaware corporation (“New MAC”), MAC Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of New MAC (“Merger Sub”), DePalma Acquisition I LLC, a Delaware limited liability company (“DePalma I”), and DePalma Acquisition II LLC, a Delaware limited liability company (“DePalma II,” and together with DePalma I, “DePalma”), pursuant to which the Company agreed to combine with DePalma in a series of transactions that will result in New MAC becoming a publicly-traded company whose shares are expected to trade on the Nasdaq Global Market (the “DePalma Business Combination”).
NOTE 7. PRIVATE WARRANTS
As of December 31, 2023 and 2022, there are 455,000 outstanding Private Placement Warrants. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the common stock issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable on a cashless basis and are
non-redeemable
so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8. STOCKHOLDERS’ DEFICIT
Preferred Stock
—The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At December 31, 2023 and 2022, there were no shares of preferred stock issued or outstanding.
Class
 A Common Stock
—The Company is authorized to issue up to 200,000,000 shares of Class A common stock, $0.0001 par value. Holders of the Company’s Class A common stock are entitled to one vote for each share. On June 28, 2023, the Sponsor converted 4,000,000 shares of Class B common stock into 4,000,000 shares of Class A common stock, which represented 40% of the outstanding shares of the Company’s Class A common stock as of the conversion date. At December 31, 2023 and 2022, there were 4,910,000 and 910,000 shares of Class A common stock issued and outstanding, excluding 637,605 and 1,010,391 shares of Class A common stock subject to possible redemption and presented as temporary equity, respectively.
Class
 B Common Stock
—The Company is authorized to issue up to 20,000,000 shares of Class B common stock, $0.0001 par value. Holders of the Company’s Class B common stock are entitled to one vote for each share. At December 31, 2023 and 2022, there were 6,303,333 and 10,303,333 shares of Class B common stock issued and outstanding.
Holders of Class A common stock and Class B common stock vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination, on a
one-for-one
basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which the shares of Class B common stock will convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the issued and outstanding shares of our Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an
as-converted
basis, 25% of the sum of all shares of common stock issued and outstanding upon the completion of the Initial Public Offering, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent units issued to the Sponsor or its affiliates upon conversion of loans made to the Company.
Public Warrants
—Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
 
F-18
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement covering the issuance, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If any such registration statement has not been declared effective by the 60th business day following the closing of a Business Combination, holders of the warrants will have the right, during the period beginning on the 61st business day after the closing of a Business Combination and ending upon such registration statement being declared effective by the SEC, and during any other period when the company fails to have maintained an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Company will not redeem the warrants unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available through out the
30-day
redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification. The Company will use its best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by the Company in this Initial Public Offering.
Redemption of Warrants When the Price per share of Class
 A common stock Equals or Exceeds $18.00 —
Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
 
  •  
in whole and not in part;
 
  •  
at a price of $0.01 per Public Warrant;
 
  •  
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
 
  •  
if, and only if, the last reported sale price of the shares of Class A common stock for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends to the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the warrants for redemption, its management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis.
The exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares or Private Placement Units (or underlying securities) held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
 
F-19
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
and interest thereon, available for the funding of the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the Market Value is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
NOTE 9. INCOME TAX
The Company’s net deferred tax assets at December 31, 2023 and 2022 are as follows:
 
    
December 31,
2023
     
December 31,
2022
  
Deferred tax assets
      
Net operating loss carryforward
    $ —       $ —   
Startup/Organization Expenses
      802,539        396,253  
  
 
 
     
 
 
  
Total deferred tax assets
      802,539        396,253  
Valuation Allowance
      (802,539 )       (396,253 ) 
  
 
 
     
 
 
  
Deferred tax assets
    $ —       $ —   
  
 
 
     
 
 
  
The income tax provision for the years ended December 31, 2023 and 2022 consists of the following:
 
    
December 31,
2023
     
December 31,
2022
  
Federal
      
Current
    $ 78,830      $ 638,962  
Deferred
      (406,286 )       (294,477 ) 
State and Local
      
Current
      —         —   
Deferred
      —         —   
Change in valuation allowance
      406,286        294,477  
  
 
 
     
 
 
  
Income tax provision
    $ 78,830      $ 638,962  
  
 
 
     
 
 
  
As of December 31, 2023 and 2022 , the Company had $0 and $0 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively.
In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2023, the change in the valuation allowance was $406,286. For the year ended December 31, 2022, the change in the valuation allowance was $294,477.
A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2023 and 2022 are as follows:
 
    
December 31,
2023
    
December 31,
2022
  
Statutory federal income tax rate
      21.0 %      21.0 % 
State taxes, net of federal tax benefit
      0.0 %      0.0 % 
Change in fair value of warrant liabilities
      0.0 %      (2.6 )% 
Transaction costs associated with the Initial Public Offering
      0.0 %      0.01 % 
Acquisition costs
      (15.0 )%     0.00 % 
Valuation allowance
      (7.7 )%     15.8 % 
  
 
 
    
 
 
  
Income tax provision
      (1.7 )%     34.2 %
  
 
 
    
 
 
  
 
 
F-20
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns for the years ended December 31, 2023 and 2022 remain open and subject to examination.
NOTE 10. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
 
    
December 31, 2023
     
December 31, 2022
  
    
Level
     
Amount
     
Level
     
Amount
  
Assets:
            
Investments held in Trust Account
      1      $ 6,781,024        1      $ 10,325,848  
Liabilities:
            
Warrant Liability – Private Placement Warrants
      3      $ 7,507        3      $ 16,380  
The Private Placement Warrants were accounted for as liabilities in accordance with ASC815-40and are presented within warrant liabilities in the accompanying balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statements of operations.
The Private Placement Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Warrants is the expected volatility of the common stock. The expected volatility as of the closing date of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target.
The following table provides quantitative information regarding Level 3 fair value measurements:
 
    
December 31, 2023
    
December 31, 2022
  
Stock price
    $ 10.44     $ 9.96  
Exercise price
    $ 11.50     $ 11.50  
Expected term (in years)
      0.84       0.59  
Volatility
      30.0 %      32.00 % 
Risk-free rate
      n/a       5.60 % 
Dividend yield
      0.0 %      0.00 % 
The following table presents the changes in the fair value of Level 3 warrant liabilities as of December 31, 2023 and 2022:
 
    
Warrant

Liabilities
  
Fair value as of December 31, 2022
    $ 16,380  
Change in fair value
      (8,873 ) 
  
 
 
  
Fair value as of December 31, 2023
    $ 7,508  
  
 
 
  
 
    
Warrant

Liabilities
  
Fair value as of December 31, 2021
    $ 250,250  
Change in fair value
      (233,870 ) 
  
 
 
  
Fair value as of December 31, 2022
    $ 16,380  
  
 
 
  
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the years ended December 31, 2023 and 2022.
 
F-21
MARBLEGATE ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023
 
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
 
F-22

Table of Contents
Exhibit No.   

Description

  1.1    Underwriting Agreement, dated September 30, 2021, by and between the Company and Cantor, as representative of the several underwriters. (2)
  2.1    Business Combination Agreement, dated February 14, 2023, by and among the Company, Marblegate, New MAC, Merger Sub and the DePalma Companies. (7)^
  3.1    Amended and Restated Certificate of Incorporation. (2)
  3.2    Amendment to the Amended and Restated Certificate of Incorporation. (5)
  3.3    Second Amendment to the Amended and Restated Certificate of Incorporation. (8)
  3.4    Third Amendment to the Amended and Restated Certificate of Incorporation. (9)
  3.5    By Laws. (1)
  4.1    Specimen Unit Certificate. (1)
  4.2    Specimen Class A Common Stock Certificate. (1)
  4.3    Specimen Warrant Certificate. (1)
  4.4    Warrant Agreement, dated September 30, 2021, by and between the Company and Continental, as warrant agent. (2)
  4.5    Description of Registered Securities. (3)
 10.1    Letter Agreement, dated September 30, 2021, by and among the Company, its officers, its directors and the sponsor. (2)
 10.2    Promissory Note, dated January 15, 2021, issued to the sponsor. (1)
 10.3    Investment Management Trust Agreement, dated September 30, 2021, by and between the Company and Continental, as trustee. (2)
 10.4    Registration Rights Agreement, dated September 30, 2021, by and among the Company, the sponsor and certain other security holders. (2)
 10.5    Administrative Support Agreement, dated September 30, 2021, by and between the Company and the sponsor. (2)
 10.7    Unit Subscription Agreement, dated September 30, 2021, by and between the Company and the sponsor. (2)
 10.8    Unit Subscription Agreement, dated September 30, 2021, by and between the Company and Cantor. (2)
 10.9    Form of Indemnity Agreement. (1)
 10.10    Form of Investment Agreement by and among the Company, the sponsor and the anchor investors (9.9%). (1)
 10.11    Form of Investment Agreement by and among the Company, the sponsor and the anchor investors (4.9%). (1)
 10.12    Form of Investment Agreement by and among the Company, the sponsor and the anchor investors (2.5%). (1)
 10.13    Promissory Note dated June 30, 2022. (4)
 10.14    Promissory Note, dated February 13, 2023. (6)
 10.15    Form of Sponsor Support Agreement, by and among the Company, New MAC, the DePalma Companies, and certain stockholders of the Company. (7)
 10.16    Letter Agreement, dated December 2, 2022, by and between the Company and Patrick J. Bartels, Jr. (10)
 10.17    Promissory Note, dated July 20, 2023. (11)
 10.18    Promissory Note, dated December 21, 2023. (9)
 14    Code of Ethics. (1)
 31.1    Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
 31.2    Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
 32.1    Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
 32.2    Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
 97    Policy Related to Recovery of Erroneously Awarded Compensation.*

Table of Contents
Exhibit No.   

Description

101.INS    Inline XBRL Instance Document.*
101.SCH    Inline XBRL Taxonomy Extension Schema Document.*
101.CAL    Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF    Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB    Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE    Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104    Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).*

 

*

Filed herewith.

**

Furnished herewith.

^

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished.

(1)

Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-259422), filed with the SEC on September 9, 2021.

(2)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on October 5, 2021.

(3)

Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on April 1, 2022.

(4)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2022.

(5)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on December 7, 2022.

(6)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 17, 2023.

(7)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 21, 2023.

(8)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on July 3, 2023.

(9)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on December 22, 2023.

(10)

Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023.

(11)

Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on July 21, 2023.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

April 1, 2024

     Marblegate Acquisition Corp.
    By:  

/s/ Andrew Milgram

    Name:   Andrew Milgram
    Title:   Chief Executive Officer
      (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name

   

Position

  

Date

/s/ Andrew Milgram

Andrew Milgram

   

Chief Executive Officer and Executive Director

(Principal Executive Officer)

  

April 1, 2024

/s/ Jeffrey Kravetz

Jeffrey Kravetz

   

Chief Financial Officer

(Principal Financial and Accounting Officer)

  

April 1, 2024

/s/ Paul Arrouet

Paul Arrouet

    President and Executive Director  

April 1, 2024

/s/ Harvey Golub

Harvey Golub

    Chairman of the Board  

April 1, 2024

/s/ Patrick J. Bartels, Jr.

Patrick J. Bartels, Jr.

    Director  

April 1, 2024

/s/ Richard Goldman

Richard Goldman

    Director  

April 1, 2024

/s/ Alan Mintz

Alan Mintz

    Director  

April 1, 2024

/s/ Wallace Mathai-Davis

Wallace Mathai-Davis

    Director  

April 1, 2024