UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | ||||
| None | ||||
| None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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 | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of September 11, 2024, a total of shares of common stock, par value $ per share, were issued and outstanding.
Goal Acquisitions Corp.
Quarterly Report on Form 10-Q
Table of Contents
| -2- |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
GOAL ACQUISITIONS CORP.
CONDENSED BALANCE SHEETS
| June 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Restricted Cash | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Due from Sponsor | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Marketable securities held in the trust account | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to Trust Account | ||||||||
| Sponsor loans issued under the Expense Advancement Agreement | ||||||||
| Income taxes payable | ||||||||
| Excise tax payable attributable to redemption of common stock | ||||||||
| Advances - Related Party | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Warrant liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 6) | ||||||||
| Common stock subject to possible redemption, and shares at redemption value at June 30, 2024 and December 31, 2023, respectively | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value per share; shares authorized; issued and outstanding at June 30, 2024 and December 31, 2023 | ||||||||
| Common stock, $ par value per share; shares authorized; shares issued and outstanding at June 30, 2024 and December 31, 2023 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| -3- |
GOAL ACQUISITIONS CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating costs | $ | $ | $ | $ | ||||||||||||
| Business combination expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income on marketable securities held in the trust account | ||||||||||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||||||||||
| Total other income, net | ||||||||||||||||
| (Loss) income before (provision for) benefit from income taxes | ( | ) | ( | ) | ||||||||||||
| (Provision for) benefit from income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, common stock subject to possible redemption | ||||||||||||||||
| Basic and diluted net loss per share, common stock subject to possible redemption | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding, non-redeemable common stock | ||||||||||||||||
| Basic and diluted net loss per share, non-redeemable common stock | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| -4- |
GOAL ACQUISITIONS CORP.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024
| Common Stock | Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Remeasurement of common stock subject to possible redemption | — | |||||||||||||||||||
| Excise tax payable attributable to redemption of common stock | — | ( | ) | ( | ) | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
| Common Stock | Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Remeasurement of common stock subject to possible redemption | — | ( | ) | ( | ) | |||||||||||||||
| Excise tax payable attributable to redemption of common stock | — | ( | ) | ( | ) | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||
| Remeasurement of common stock subject to possible redemption | — | ( | ) | ( | ) | |||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| -5- |
GOAL ACQUISITIONS CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Interest earned on cash and investments held in the trust account | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Changes in current assets and current liabilities: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Income taxes payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Principal deposited in Trust Account in connection with monthly extension deposits | ( | ) | ||||||
| Cash withdrawn from Trust Account to pay franchise and income taxes | ||||||||
| Cash withdrawn from Trust Account for redemption of common shares | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows from Financing Activities: | ||||||||
| Redemption of common shares | ( | ) | ( | ) | ||||
| Proceeds from sponsor loans issued under the Expense Advancement Agreement | ||||||||
| Advances from Sponsor | ||||||||
| Repayment of advances from Sponsor | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash – Beginning | ||||||||
| Cash – Ending | $ | $ | ||||||
| Supplemental Disclosure of Non-cash Financing Activities: | ||||||||
| Remeasurement of common shares subject to redemption | $ | ( | ) | $ | ||||
| Excise tax payable attributable to redemption of common stock | $ | $ | ||||||
| Accrual of amount to be funded by Sponsor for overwithdrawal of Trust Account | $ | $ | ||||||
| Reconciliation of Cash and Restricted Cash: | ||||||||
| Cash – Beginning of Year | $ | $ | ||||||
| Restricted Cash – Beginning of Year | ||||||||
| Cash and Restricted Cash – Beginning of Year | $ | $ | ||||||
| Cash – End of Year | $ | $ | ||||||
| Restricted Cash – End of Year | ||||||||
| Cash and Restricted Cash – End of Year | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| -6- |
GOAL ACQUISITIONS CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1 — Organization, Business Operations and Going Concern
Organization and General
Goal Acquisitions Corp. (the “Company”) was incorporated in Delaware on October 26, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses that service the sports industry. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of June 30, 2024, the Company had not yet commenced any operations. All activity from October 26, 2020 (inception) through June 30, 2024, relates to the Company’s formation and the initial public offering (“IPO”) described below, and, since the closing of the IPO, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on marketable securities held in the trust account and will recognize changes in the fair value of warrant liabilities as other income (expense).
Financing
The
registration statement for the Company’s IPO was declared effective on February 10, 2021 (the “Effective Date”). On
February 16, 2021, the Company consummated the IPO of units (the “Units” and, with respect to the common stock
included in the Units being offered, the “Public Shares”), at $per Unit, generating gross proceeds of $
Simultaneously
with the closing of the IPO, the Company consummated the sale of units (the “Private Units”), at a price of $
per Private Unit to Goal Acquisition Sponsor, LLC (the “Sponsor”), generating total gross proceeds of $
The
Company granted the underwriters in the IPO a 45-day option to purchase up to additional Units to cover over-allotments, if
any. On February 24, 2021, the underwriters exercised the over-allotment option in full, and the closing of the issuance and sale of
the additional Units (the “Over-Allotment Units”). The issuance by the Company of the Over-Allotment Units at a
price of $ per unit resulted in total gross proceeds of $
Transaction
costs amounted to $
Trust Account
Following
the closing of the IPO on February 16, 2021 and the underwriters’ full exercise of the over-allotment option on February 24, 2021,
$
Initial Business Combination
The Company will provide 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 anticipated to be $ 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 Public Shares subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion of the IPO in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
On February 7, 2023, the Company’s stockholders approved an amendment to the Investment Management Trust Agreement (the “First Trust Agreement Amendment”), dated February 10, 2021 (the “Investment Management Trust Agreement”), by and between the Company and Continental Stock Transfer & Trust Company (“Continental”), to change the date on which Continental must commence liquidation of the amount on deposit in the trust account (the “Trust Account”) established in connection with the Company’s IPO from February 16, 2023 to March 18, 2023, subject to extension by the board of directors for up to five additional thirty-day periods (the latest of which such date (August 15, 2023 if the board of directors exercises all five extensions). The Board exercised all five additional thirty-day extensions.
| -7- |
On February 7, 2023, the Company’s stockholders also approved an amendment (the “First Charter Amendment”) to the Amended and Restated Certificate of Incorporation of the Company (the “Charter”) to (i) extend the initial period of time by which the Company has to consummate an initial business combination through August 15, 2023 and (ii) make other related administrative and technical changes in the Charter, in each case, pursuant to an amendment in the form set forth in Annex A of the proxy statement the Company filed with the SEC on January 9, 2023. The Company filed the First Charter Amendment with the Secretary of State of the State of Delaware on February 8, 2023.
In
connection with the Company’s stockholders’ approval and implementation of the First Charter Amendment, the holders of
shares of the Company’s common stock exercised their right to redeem their shares for cash at a redemption price of approximately
$ per share, for an aggregate redemption amount of approximately $
On August 14, 2023, the Company’s stockholders approved an amendment (the “Second Trust Agreement Amendment”) to the Investment Management Trust Agreement, dated February 10, 2021, by and between the Company Continental, to change the date on which Continental must commence liquidation of the amount on deposit in the Trust Account established in connection with the Company’s initial public offering from August 16, 2023 to August 23, 2023, subject to extension by the board of directors on a day-by-day basis, with the ability to extend up to seven days at a time in advance, for a maximum of ninety-days, or November 15, 2023.
On August 14, 2023, the Company’s stockholders also approved an amendment (the “Second Charter Amendment”) to the Charter to (i) extend the initial period of time by which the Company has to consummate an initial business combination to November 14, 2023 and (ii) make other administrative and technical changes in the Charter in connection with the new termination date, in each case, pursuant to an amendment in the form set forth in Annex A of the proxy statement. The Company filed the Second Charter Amendment with the Secretary of State of the State of Delaware on August 14, 2023.
In
connection with the stockholders’ approval and implementation of the Second Charter Amendment proposal, the holders of
Public Shares exercised their right to redeem their shares for cash at a redemption price of approximately $ per share, for an aggregate
redemption amount of $
On
November 8, 2023, the Company held a meeting and approved an amendment to the Charter (the “Third Charter Amendment”) to
extend the initial period of time by which the Company has to consummate an initial business combination to February 10, 2024. In connection
with the stockholders’ approval and implementation of the Third Charter Amendment proposal, the holders of Public Shares
exercised their right to redeem their shares for cash at a redemption price of approximately $ per share, for an aggregate redemption
amount of $
On February 7, 2024, the Company approved an amendment to the Investment Management Trust Agreement (the “Third Trust Agreement Amendment”), dated February 10, 2021, by and between the Company and Continental Stock Transfer & Trust Company to change the date on which Continental must commence liquidation of the amount on deposit in the trust account established in connection with the Company’s initial public offering from February 10, 2024 to August 8, 2024.
On
February 7, 2024, the Company’s stockholders also approved an amendment to the Charter (the “Fourth Charter Amendment”)
to the Charter to extend the period of time by which the Company has to consummate an initial business combination to August 8, 2024.In
connection with the stockholders’ approval and implementation of the Fourth Charter Amendment proposal, the holders of Public
Shares exercised their right to redeem their shares for cash at a redemption price of approximately $ per share, for an aggregate
redemption amount of approximately $
On February 12, 2024, the Company received a written notice from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that it was no longer in compliance with the Nasdaq Listing Rules. The Company has filed an appeal of this decision and will present it’s case in front of a Nasdaq Hearings Panel (the “Panel”) was held on April 16, 2024. On May 7, 2024, the Company received the decision from the Panel notifying the Company that the trading in the Company’s securities was suspended at the open of trading on May 9, 2024. The Company had a 15 day window to appeal; the Company did not proceed with filing an appeal after the determination was received.
On
April 1, 2024,
On
April 23, 2024,
On
August 6, 2024, the Company’s stockholders approved an amendment to the Charter (the “Fifth Charter Amendment”) to
(i) extend the period of time by which the Company has to consummate an initial business combination from August 8, 2024 to May 8, 2025
(the “New Termination Date”) and (ii) make other administrative and technical changes in the Charter in connection with the
New Termination Date. In connection with the stockholders’ approval and implementation of the Fifth Charter Amendment, the holders
of Public Shares exercised their right to redeem their shares for cash at a redemption price of approximately $ per share,
for an aggregate redemption amount of approximately $
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $
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 Charter 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.
| -8- |
The Sponsor and the Company’s officers and directors have agreed (a) to waive redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Charter (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination and certain amendments to the Charter 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.
As
a result of the stockholder approval of the Trust Agreement Amendment, the Company will have until the New Termination Date to complete
a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the
Combination Period and stockholders do not approve any further amendment to the Charter to further extend the New Termination Date, the
Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account including interest (which interest shall be net of taxes payable, and less up to $
The holders of the Founder Shares have agreed to waive liquidation distributions with respect to such shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquired Public Shares in or after the IPO, such Public Shares would be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the IPO price per Unit ($).
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 vendor 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 (i) $ 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
the value of trust assets, in each case net of the interest which may be withdrawn to pay the Company’s tax obligation and up to
$
Amended and Restated Business Combination Agreement and Merger Agreement
On February 8, 2023, the Company entered into an Amended and Restated Business Combination Agreement (the “Amended and Restated Business Combination Agreement”) with Goal Acquisitions Nevada Corp., a Nevada corporation (“Goal Nevada”), Digital Virgo Group, a French corporation (société par actions simplifiée) (“Digital Virgo”), all shareholders of Digital Virgo (the “Digital Virgo Shareholders”), and IODA S.A., in its capacity as the “DV Shareholders Representative” (as defined in the Amended and Restated Business Combination Agreement), which amends and restates the Business Combination Agreement, dated as of November 17, 2022, by and among the Company, Digital Virgo, and certain other parties in its entirety.
Concurrently with the execution of the Amended and Restated Business Combination Agreement, the Company and Goal Nevada entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company will, prior to the Closing (as defined in the Merger Agreement), reincorporate as a Nevada corporation by merging with and into Goal Nevada, a newly-formed wholly-owned subsidiary of the Company, with Goal Nevada surviving the merger (the “Reincorporation Merger”).
Pursuant to the Amended and Restated Business Combination Agreement and after the consummation of the Reincorporation Merger, Digital Virgo will acquire all of the outstanding shares of Goal Nevada whereby the outstanding shares of Goal Nevada will be exchanged for shares of Digital Virgo by means of a statutory share exchange under Nevada law (the “Exchange”).
The Amended and Restated Business Combination Agreement and the Exchange, as well as the Merger Agreement and the Reincorporation Merger, were approved by the board of directors of the Company.
The Amended and Restated Business Combination Agreement contains customary representations, warranties and covenants of the parties thereto. The consummation of the transactions contemplated by the Amended and Restated Business Combination Agreement is subject to certain conditions as further described therein.
The Merger Agreement contains customary representations, warranties and covenants of the parties thereto. The consummation of the proposed Merger is subject to certain conditions as further described in the Merger Agreement.
| -9- |
The Reincorporation Merger and the Exchange
Subject to, and in accordance with, the terms and conditions of the Merger Agreement, the Company will, prior to the Closing, reincorporate as a Nevada corporation by merging with and into Goal Nevada, a newly-formed wholly-owned subsidiary of the Company, with Goal Nevada surviving the merger. Each unit of the Company (which is comprised of one share of common stock of the Company and one warrant to purchase one share of common stock of the Company), share of common stock of the Company and warrant to purchase shares of common stock of the Company issued and outstanding immediately prior to the effective time of the Reincorporation Merger will be converted, respectively, into units of Goal Nevada, shares of common stock of Goal Nevada and warrants to purchase shares of common stock of Goal Nevada (respectively, “Goal Nevada Units,” “Goal Nevada Shares” and “Goal Nevada Warrants”) on a one-for-one basis, which will have substantially identical rights, preferences and privileges as the units sold in the Company’s IPO and simultaneous private placement, the Company’s common stock, par value $ per share, and the warrants which were included in the units that were sold in the Company’s IPO and simultaneous private placement.
Pursuant to the Amended and Restated Business Combination Agreement, subject to the satisfaction or waiver of certain conditions set forth therein, Digital Virgo will effect a series of related transactions, in each case, upon the terms and subject to the conditions set forth in the Amended and Restated Business Combination Agreement, including the following:
| ● | Prior to the Closing, Digital Virgo will convert into a French public limited company (société anonyme); | |
| ● | After
the conversion into a French public limited company (société anonyme) and prior to the Closing, Digital Virgo
and the Digital Virgo Shareholders intend to effect a placement of ordinary shares of Digital Virgo to certain institutional and
other investors (the “PIPE Investors”) through both primary and/or secondary offerings (the “PIPE Investment”),
including the sale of a number of Digital Virgo ordinary shares held by the Digital Virgo Shareholders in exchange for $ | |
| ● | Immediately
after the PIPE Investment, Digital Virgo will |
Subject to, and in accordance with, the terms and conditions of the Amended and Restated Business Combination Agreement, at the Closing, (i) Digital Virgo will acquire all of the issued outstanding Goal Nevada Shares pursuant to articles of exchange filed with the Nevada Secretary of State in accordance with the Nevada Revised Statutes, whereby each issued and outstanding Goal Nevada Share will be exchanged for one Digital Virgo Class A Ordinary Share by means of the Exchange and (ii) each Goal Nevada Warrant will be automatically exchanged for one warrant issued by Digital Virgo that will be exercisable for one Digital Virgo Class A Ordinary Share. All outstanding Goal Nevada Units will be separated into their underlying securities immediately prior to the Exchange.
In addition, at the Closing, (i) Class C preferred shares, par value € per share, of Digital Virgo (the “DV Earnout Shares”) will be issued to and deposited with one or more escrow agents and will be disbursed to the Digital Virgo Shareholders, in whole or in part, after the Closing, if both an earnout milestone based on “EBITDA” (as defined in the Amended and Restated Business Combination Agreement) and a share price milestone are met and (ii) Class C preferred shares, par value € per share, of Digital Virgo (the “Sponsor Earnout Shares”) will be issued to and deposited with an escrow agent and will be disbursed to the Sponsor, after the Closing, if a share price milestone is met. The earnout milestone will be met if Digital Virgo’s EBITDA for any fiscal year ending on or before December 31, 2027 is equal or greater than $, in which case DV Earnout Escrow Shares will be released to the Digital Virgo Shareholders. The share price milestone will be met if Digital Virgo’s share price is equal to or greater than $ for at least 20 out of 30 consecutive trading days (counting only those trading days in which there is trading activity) from the period starting from the date immediately following the Closing Date and ending on December 31, 2026, in which case DV Earnout Escrow Shares will be released to the Digital Virgo Shareholders and all of the Sponsor Earnout Shares will be released to the Sponsor. Any DV Earnout Shares remaining in the earnout escrow account that have not been released to the Digital Virgo Shareholders will be released to Digital Virgo, and any Sponsor Earnout Shares remaining in the earnout escrow account that have not been released to the Sponsor will be released to Digital Virgo. The Class C preferred shares of Digital Virgo will have identical rights to the Digital Virgo Class A Ordinary Shares except that the Class C preferred shares will have no voting rights. If and when the Class C preferred shares are released from escrow to the Digital Virgo Shareholders or the Sponsor, as applicable, such shares shall automatically be converted into Digital Virgo Class A Ordinary Shares, on a one-for-one basis, with full voting rights as of their respective date of disbursement by the escrow agent. “EBITDA” means the “Adjusted EBITDA” of Digital Virgo as currently calculated by Digital Virgo for its reporting requirements under its existing credit facility.
The Sponsor has agreed to forfeit shares of common stock of the Company for no consideration effective as of the Closing.
The Company has received two notices from Digital Virgo purporting to unilaterally terminate the Amended and restated Business Combination Agreement pursuant to Section 8.03(d) of the Amended and Restated Business Combination Agreement. Since receipt of that correspondence, the Company attempted to communicate with Digital Virgo have about these matters to resolve the dispute and proceed with the transaction, but Digital Virgo has refused. Therefore, the Company commenced Arbitration with the International Chamber of Commerce (“ICC”) as prescribed within the Amended and restated Business Combination Agreement to enforce its rights under this agreement.
On April 29, 2024 the SEC issued an order declaring Digital Virgo’s Registration Statement abandoned. Digital Virgo Group S.A. had a filed a registration statement to register securities under Section 6(a) of the Securities Act of 1933. This registration statement had been on file for more than nine months and not yet become effective. Digital Virgo failed to respond to notice under Rule 479 that the registration statement would be declared abandoned unless it was timely amended or withdrawn; in view of the foregoing, the SEC ordered that the statement be declared abandoned.
| -10- |
Other Agreements
The Amended and Restated Business Combination Agreement contemplates the execution of various additional agreements and instruments, including, among others, an Amended and Restated Sponsor Support Agreement, Amended and Restated Investor Rights Agreement, and Amended and Restated Initial Shareholders Forfeiture Agreement.
Use of Funds Restricted for Payment of Taxes
From
inception to date, the Company has withdrawn a total of $
As of the date of these financial statements, the Company has not yet filed its corporate tax return and intends to remit payment for income taxes upon completion of the return.
Liquidity, Capital Resources and Going Concern
As
of June 30, 2024, the Company had $
In
order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or its
affiliates may, but are not obligated to, loan us funds as may be required. If the Company completes a Business Combination, the Company
will repay such loaned amounts. In the event that a Business Combination does not close, the Company may use a portion of the working
capital held outside the trust account to repay such loaned amounts but no proceeds from the trust account would be used for such repayment.
Up to $
As of June 30, 2024, the Company’s net tangible assets were below
the $
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, “Presentation of Financial Statements - Going Concern,” the Company has until the New Termination Date, currently May 8, 2025 to consummate a business combination. 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 of the period of time the Company has to complete a business combination has not been approved by the Company’s stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company. The Company has determined that the Company’s insufficient capital and mandatory liquidation, should a business combination not occur, and an extension not approved by the stockholders of the Company, and potential subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these financial statements are issued. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 8, 2025. The Company intends to continue to complete a business combination, including the transactions contemplated by the Amended and Restated Business Combination Agreement (the “Transaction”), before the mandatory liquidation date. The Company is within 12 months of its mandatory liquidation date as of the date that these financial statements were issued.
The Company’s 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 unable to continue as a going concern.
| -11- |
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these unaudited condensed financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these unaudited condensed financial statements.
Under the current rules and regulations of the SEC the Company is not deemed an investment company for purposes of the Investment Company Act of 1940 (the “Investment Company Act”); however, on March 30, 2022, the SEC proposed new rules (the “Proposed Rules”) relating, among other matters, to the circumstances in which SPACs such as us could potentially be subject to the Investment Company Act and the regulations thereunder. The Proposed Rules provide a safe harbor for companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria. To comply with the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce and complete a de-SPAC transaction. Specifically, to comply with the safe harbor, the Proposed Rules would require a company to file a Current Report on Form 8-K announcing that it has entered into an agreement with a target company for an initial business combination no later than 18 months after the effective date of the SPAC’s registration statement for its initial public offering. The company would then be required to complete its initial business combination no later than 24 months after the effective date of such registration statement.
There is currently uncertainty concerning the applicability of the Investment Company Act to a SPAC, which includes the Company like ours. The Company did not enter into a definitive business combination agreement within 18 months after the effective date of our registration statement relating to our IPO and there is a risk that we may not complete our initial business combination within 24 months of such date. As a result, it is possible that a claim could be made that we have been operating as an unregistered investment company. If the Company is deemed to be an investment company for purposes of the Investment Company Act, the Company may be forced to abandon our efforts to complete an initial business combination and instead be required to liquidate. If the Company is required to liquidate, the Company’s investors would not be able to realize the benefits of owning stock in a successor operating business, including the potential appreciation in the value of the Company’s stock and warrants following such a transaction.
Currently, the funds in the Company’s Trust account are held only in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company Act. The Investment Company Act defines an investment company as any issuer which (i) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities; (ii) is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or (iii) is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of Government securities and cash items) on an unconsolidated basis.
The longer that the funds in the Company’s Trust account are held in money market funds, there is a greater risk that the Company may be considered an unregistered investment company. In the event the Company is deemed an investment company under the Investment Company Act, whether based upon the Company’s activities, the investment of the Company’s funds, or as a result of the Proposed Rules being adopted by the SEC, the Company may determine that we are required to liquidate the money market funds held in the Company Trust account and may thereafter hold all funds in our trust account in cash until the earlier of consummation of the Company’s business combination or liquidation. As a result, if the Company is to switch all funds to cash, the Company will likely receive minimal interest, if any, on the funds held in the Company’s Trust account after such time, which would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of the Company.
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 (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% 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. The IR Act applies only to repurchases that occur after December 31, 2022.
On
February 7, 2023, the Company’s stockholders elected to redeem
shares for a total of $
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Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, a vote by stockholders to extend the period of time to complete a Business Combination 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 a 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 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, including the Transaction.
During the second quarter, the IRS issued final regulations with respect to the timing and payment of the excise tax. Pursuant to those regulations, the Company would need to file a return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2024. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods.
Emerging Growth Company Status
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 auditor 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.
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Use of Estimates
The preparation of unaudited condensed financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents and Restricted Cash
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had
Marketable Securities Held in the Trust Account
At
June 30, 2024 and December 31, 2023, the Trust Account had $
Sponsor Loan Conversion Option
The Company accounts for its Sponsor Loan Conversion Option (as defined in Note 5) exercisable for promissory notes payable to the Sponsor issued under the Expense Advancement Agreement under ASC 815, Derivatives and Hedging (“ASC 815”). The Sponsor Loan Conversion Option qualifies as an embedded derivative under ASC 815 and is required to be reported at fair value.
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 Depository Insurance Corporation coverage limit of $
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of June 30, 2024 and December 31, 2023, respectively, and shares of common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets, respectively.
The Company recognizes changes in redemption value immediately as they occur. Immediately upon the closing of the IPO, the Company recognized the remeasurement from initial book value to redemption amount value. The change in the carrying value of redeemable common stock resulted in charges against additional paid-in capital and accumulated deficit.
As of June 30, 2024, the common stock subject to possible redemption reflected in the balance sheets are reconciled in the following table:
| Shares | Amount | |||||||
| Common stock subject to possible redemption, December 31, 2023 | $ | |||||||
| Plus: | ||||||||
| Remeasurement of common stock subject to possible redemption carrying value to redemption value | — | ( | ) | |||||
| Less: | ||||||||
| Redemption of common shares | ( | ) | ( | ) | ||||
| Common stock subject to possible redemption, June 30, 2024 | $ | |||||||
| -14- |
Net
loss per common stock is computed by dividing net loss by the weighted average number of common stock outstanding for each of the periods.
The calculation of diluted loss per common stock does not consider the effect of the warrants that would be anti-dilutive. The warrants
are exercisable to purchase
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
Common stock subject to redemption | Common stock not subject to redemption | Common stock subject to redemption | Common stock not subject to redemption | Common stock subject to redemption | Common stock not subject to redemption | Common subject to redemption | Common stock not subject to redemption | |||||||||||||||||||||||||
| Basic and diluted net loss er common stock: | ||||||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||
| Allocation of net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| Denominator: | ||||||||||||||||||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||||||||||||||||||
| Basic and diluted net loss per common stock | $ | ) | $ | ) | $ | ) | $ | ) | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||||||||||
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature, other than discussed in Note 8.
Derivative warrant liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company accounts for its
Income Taxes
The
Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 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. Our effective tax rate was (
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 income taxes and unrecognized tax benefits as income tax expense. There
were no unrecognized tax benefits as of June 30, 2024 and December 31, 2023. During the three and six months ended June 30, 2024, the
Company’s provision for income taxes included $
The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation 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.
While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period if they are significant, unusual or infrequent. Computing the effective tax rate for the Company is complicated due to the potential impact of the timing of any Business Combination expenses and the actual interest income that will be recognized during the year. The Company has taken a position as to the calculation of income tax expense in a current period based on ASC740-270-25-3 which states, “If an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (benefit) but is otherwise able to make a reasonable estimate, the tax (or benefit) applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effective tax rate. As such, the Company is computing its taxable loss and associated income tax provision based on actual results through June 30, 2024.
| -15- |
Recent Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The adoption of ASU 2020-06 is not expected to have an impact on the Company’s financial position, results of operations or cash flows.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The FASB issued this ASU to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently reviewing what impact, if any, adoption will have on the Company’s financial position, results of operations or cash flows.
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 unaudited condensed financial statements.
Note 3 — Initial Public Offering
The
Company sold Units, at a purchase price of $ per Unit in its IPO on February 16, 2021.
On February 16, 2021, an aggregate of $ per Unit sold in the IPO was held in the Trust Account and will be held as cash or invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act.
On February 24, 2021, the underwriters of the IPO exercised the over-allotment option in full to purchase Units.
Following
the closing of the IPO on February 16, 2021 and the underwriters’ full exercise of over-allotment option on February 24, 2021,
$
| -16- |
Note 4 — Private Units
Simultaneously
with the closing of the IPO on February 16, 2021, the Sponsor purchased an aggregate of Private Units at a price of $ per
Private Unit, for an aggregate purchase price of $
On
February 24, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the sale of an additional
Private Units to the Sponsor, generating gross proceeds of $
Note 5 — Related Party Transactions
Founder Shares
On
November 24, 2020, the Sponsor purchased an aggregate of shares of the Company’s common stock for an aggregate price
of $ (the “Founder Shares”). The Founder Shares include an aggregate of up to shares subject to forfeiture
by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor will
collectively own
The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until after the completion of a Business Combination.
Promissory Note — Related Party
Concurrently
with the filing of the Company’s registration statement on Form S-1 on January 21, 2021, the Company issued an unsecured promissory
note to the Sponsor (the “Promissory Note”), pursuant to which the Company was authorized to borrow up to an aggregate principal
amount of $
Related Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Initial Stockholders, or certain of the Company’s
officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company will 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 $
Sponsor Loans Issued Under Expense Advancement Agreement
Effective
as of November 4, 2021, upon approval of the Board of Directors, the Company entered into an Expense Advancement Agreement with Goal
Acquisitions Sponsor, LLC (the “Funding Party”). Pursuant to the Expense Advancement Agreement, the Funding Party has agreed
to advance to the Company from time to time, upon request by the Company, a maximum of $
As
of June 30, 2024 and December 31, 2023, the available balance under the Expense Advancement Agreement was $
As
of June 30, 2024 and December 31, 2023, respectively, the aggregate balance outstanding on the Sponsor loans issued was $
| -17- |
Advances – Related Party
During
the six month period ended June 30, 2024, the Company repaid the Sponsor $
Note 6 — Commitments & Contingencies
Arbitrations
When Digital Virgo refused to close the Business Combination in July of 2023, the Company engaged several law firms to assist with enforcement of the Company’s rights and remedies under the Amended and Restated Business Combination Agreement. The Company requested Arbitration with the ICC and the case will be decided by a panel of three Arbitrators according to ICC rules and applying Delaware law. As of the date of this Form 10-Q, the arbitration is still in process.
In the normal course of business, the Company may be involved in various arbitrations. The Company assesses its liabilities and contingencies in connection with outstanding arbitrations, if any, utilizing the latest information available. When a loss contingency is not both probable and estimable, the Company does not establish an accrual.
Based
on currently available information, the outcome of the Company’s outstanding matters is still unknown as of the date of this filing.
Currently,
Registration Rights
The holders of the Founder Shares and Representative Shares, which are the shares of common stock issued to EarlyBirdCapital, Inc. (“EarlyBird”) and its designees prior to the consummation of the Company’s IPO, as well as the holders of the Private Units and any units that may be issued in payment of Working Capital Loans made to the Company, are entitled to registration rights pursuant to an agreement signed prior to the Effective Date of the IPO. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Representative Shares, Private Units and units issued in payment of Working Capital Loans (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a business combination. Notwithstanding anything to the contrary, EarlyBird may only make a demand on one occasion and only during the five-year period beginning on the Effective Date of the IPO. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination; provided, however, that EarlyBird may participate in a “piggy-back” registration only during the seven-year period beginning on the Effective Date of the IPO. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Business Combination Marketing Agreement
In
connection with the IPO, the Company engaged EarlyBird as an advisor in connection with a Business Combination to assist the Company
in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce
the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination,
assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and
public filings in connection with the Business Combination. The Company agreed to pay EarlyBird a cash fee for such services upon the
consummation of a Business Combination in an amount equal to
On
November 5, 2021 the Company entered into an agreement with EarlyBird together with JMP Securities LLC (“JMP”) and JonesTrading
Institutional Services LLC (“JonesTrading”) (together, the “Advisors”) to assist the Company in the possible
private placement of equity securities and/or debt securities to provide financing to the Company in connection with a Business Combination.
Deferred Legal Fees
As
of June 30, 2024 and December 31, 2023, the Company has incurred legal costs of $
Service Provider Agreements
From
time to time the Company has entered into and may enter into agreements with various services providers and advisors, including investment
banks, to help us identify targets, negotiate terms of potential Business Combinations, consummate a Business Combination and/or provide
other services. In connection with these agreements, the Company may be required to pay such service providers and advisors fees in connection
with their services to the extent that certain conditions, including the closing of a potential Business Combination, are met. If a Business
Combination does not occur, the Company would not expect to be required to pay these contingent fees. There can be no assurance that
the Company will complete a Business Combination. On July 6, 2023, the Company entered into an agreement with an advisor for an aggregate
fee of $
In July of 2023, Digital Virgo purported to terminate the Amended and Restated Business Combination Agreement, and the Company is pursuing all available remedies in ICC arbitration.
| -18- |
Note 7 — Stockholders’ Deficit
Preferred Stock — The Company is authorized to issue shares of preferred stock with a par value of $ with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2024 and December 31, 2023, there were shares of preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue shares of common stock with a par value of $ per share. On
December 16, 2020, the Company effected a stock dividend of of a share of common stock for each outstanding share of common stock,
and as a result our Sponsor holds founder shares of which an aggregate of up to shares were subject to forfeiture by
the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part. Because of the underwriters’
full exercise of the over-allotment option on February 24, 2021,
Warrants
— The Public Warrants will become exercisable 30 days after the completion of a Business Combination. No warrants will
be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable
upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration
statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period
following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that
exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public
Warrants will expire
Once the warrants become exercisable, the Company may redeem the Public Warrants:
| ● | in whole and not in part; | |
| ● | at
a price of $ | |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder (the “30-day redemption period”); | |
| ● | ||
| ● | if, and only if, there is a current registration statement in effect with respect to the share of common stock underlying such warrants. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the 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 warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
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The Private Warrants are identical to the Public Warrants underlying the Units being sold in the IPO, except that the Private Warrants and the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private 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 Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Representative Shares — The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the Effective Date of the registration statement related to the IPO pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the Effective Date of the registration statements related to the IPO, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the Effective Date of the registration statements related to the IPO except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners.
The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.
Note 8 — 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. U.S. 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. |
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| June 30, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| 2024 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in the trust account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | ||||||||||||||||
| Sponsor Loan Conversion Option | ||||||||||||||||
| December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| 2023 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Description | ||||||||||||||||
| Assets: | ||||||||||||||||
| Marketable securities held in the trust account | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | ||||||||||||||||
| Sponsor Loan Conversion Option | ||||||||||||||||
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Warrant Liabilities
The Company utilizes a Monte Carlo simulation model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of comparable companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The aforementioned warrant liabilities are not subject to qualified hedge accounting. There were no transfers between Levels 1, 2 or 3 during the period ended June 30, 2024 and December 31, 2023.
June 30, 2024 | December 31, 2023 | |||||||
| Stock price | $ | $ | ||||||
| Strike price | $ | $ | ||||||
| Term (in years) | ||||||||
| Volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
The following table presents the changes in the fair value of warrant liabilities for the period ended June 30, 2024:
Private Placement Warrants | ||||
| Fair value as of December 31, 2023 | $ | |||
| Change in fair value | ||||
| Fair value as of June 30, 2024 | $ | |||
Sponsor Loan Conversion Option
The Company established the fair value for the Sponsor Loan Conversion Option using a Monte-Carlo method model, which is considered to be a Level 3 fair value measurement.
The following table provides quantitative information regarding Level 3 fair value measurements for the Sponsor Loan Conversion Option:
June 30, 2024 | December 31, 2023 | |||||||
| Stock price | $ | $ | ||||||
| Strike price of warrants | $ | $ | ||||||
| Strike price of debt conversion | $ | $ | ||||||
| Term (in years) | ||||||||
| Volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
There
was
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the unaudited condensed financial statements were issued. Based upon this review, other than disclosed below or within these financial statements, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
As
discussed in Note 1, on August 6, 2024, the Company’s stockholders also approved the Fifth Charter Amendment to (i) extend the
period of time by which the Company has to consummate an initial business combination from August 8, 2024 to May 8, 2025. In connection
with the stockholders’ approval and implementation of the Fifth Charter Amendment, the holders of Public Shares exercised
their right to redeem their shares for cash at a redemption price of approximately $ per share, for an aggregate redemption amount
of approximately $
On
July 11, 2024, the Company along with its founder and advisor, its Sponsor, Goal Nevada entered into an agreement with a third-party
whereby this third-party has committed to provide an aggregate reimbursement of $
| -21- |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that might cause or contribute to such forward-looking statements include, but are not limited to, those set forth in the Risk Factors section of the Company’s final prospectus for the Company’s initial public offering filed with the SEC on February 11, 2021 and the Company’s Annual Report on Form 10-K filed with the SEC on April 16, 2024. The following discussion should be read in conjunction with our financial statements and related notes thereto included elsewhere in this report.
Overview
We are a blank check company incorporated on October 26, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”). The registration statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on February 10, 2021. On February 16, 2021, the Company consummated the IPO of 22,500,000 units (the “Units”) at a price of $10.00 per Unit, for total gross proceeds of $225,000,000. On February 24, 2021, the underwriters exercised the over-allotment option in full resulting in the closing of the issuance and sale of an additional 3,375,000 Units (the “Over-Allotment Units”). The issuance by the Company of the Over-Allotment Units at a price of $10.00 per unit resulted in total gross proceeds of $33,750,000. Each Unit consists of one shares of common stock, $0.0001 par value, and one redeemable warrant entitling its holder to purchase one share of common stock at a price of $11.50 per share.
Simultaneously with the closing of the IPO, the Company consummated the sale of 600,000 units (the “Private Units”), at a price of $10.00 per Private Unit. On February 24, 2021, simultaneously with the issuance and sale of the Over-Allotment Units, the Company consummated the sale of an additional 67,500 Private Units (together with the IPO Private Placement, the “Private Placements”), generating gross proceeds of $6,675,000.
Results of Operations
For the three months ended June 30, 2024, we had a net loss of $733,884. We had investment income of $29,840 on the amount held in the Trust Account. We recognized a $315 loss on the change in the fair value of the warrant liability. We incurred $687,651 of operating costs and business combination expenses. We also incurred a $75,758 provision for income taxes.
For the six months ended June 30, 2024, we had a net loss of $1,326,942. We had investment income of $63,208 on the amount held in the Trust Account. We recognized a $2,678 loss on the change in the fair value of the warrant liability. We incurred $1,124,413 of operating costs and business combination expenses. We also incurred a $263,059 provision for income taxes.
For the three months ended June 30, 2023, we had a net loss of $191,149. We had investment income of $1,175,053 on the amount held in the Trust Account and a $17,161 gain on the change in the fair value of the warrant liability. We incurred $1,146,781 of operating costs and business combination expenses. We also recognized a $236,582 provision for income taxes.
For the six months ended June 30, 2023, we had a net loss of $581,439. We had investment income of $3,004,199 on the amount held in the Trust Account. We recognized a $16,942 gain on the change in the fair value of the warrant liability. We incurred $2,992,000 of operating costs and business combination expenses. We also recognized a $610,580 provision for income taxes.
Proposed Business Combination
On February 8, 2023, we entered into an Amended and Restated Business Combination Agreement (the “Amended and Restated Business Combination Agreement”) with Goal Acquisitions Nevada Corp., a Nevada corporation (“Goal Nevada”), Digital Virgo Group, a French corporation (société par actions simplifiée) (“Digital Virgo”), all shareholders of Digital Virgo (the “Digital Virgo Shareholders”), and IODA S.A., in its capacity as the “DV Shareholders Representative” (as defined in the Amended and Restated Business Combination Agreement), which amends and restates the Business Combination Agreement, dated as of November 17, 2022, by and among the Company, Digital Virgo, and certain other parties in its entirety.
Concurrently with the execution of the Amended and Restated Business Combination Agreement, the Company and Goal Nevada entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company will, prior to the Closing (as defined in the Merger Agreement), reincorporate as a Nevada corporation by merging with and into Goal Nevada, a newly-formed wholly-owned subsidiary of the Company, with Goal Nevada surviving the merger (the “Reincorporation Merger”).