Item 8. Financial Statements and Supplementary Data.
Reference is made to pages
F-1 through F-24 comprising a portion of this Report, which are incorporated herein by reference.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
INDEX TO FINANCIAL
STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Thunder Bridge Capital Partners III, Inc.
Opinion on the financial statements
We have audited the accompanying balance sheets of Thunder Bridge Capital
Partners III, Inc. (a Delaware corporation) (the “Company”) as of December 31, 2022 and 2021, the related statements of operations,
changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its
cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted
in the United States of America.
Going concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s working capital
deficit and dependency on a completion of a business combination raise substantial doubt about the Company’s ability to continue
as a going concern. Management’s plans regarding these matters are also described in Note 2. 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 audit 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/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2020.
Philadelphia, Pennsylvania
March 31, 2023
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
BALANCE SHEETS
| |
December 31, | |
| |
2022 | | |
2021 | |
ASSETS | |
| | |
| |
Current assets: | |
| | |
| |
Cash | |
$ | 180,109 | | |
$ | 336,290 | |
Prepaid expenses | |
| 30,013 | | |
| 258,410 | |
Total current assets | |
| 210,122 | | |
| 594,700 | |
Other assets: | |
| | | |
| | |
Cash and marketable securities held in Trust Account | |
| 12,263,483 | | |
| 414,036,755 | |
Total assets | |
$ | 12,473,605 | | |
$ | 414,631,455 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 500,117 | | |
$ | 211,474 | |
Income taxes payable | |
| 1,111,143 | | |
| - | |
Warrant liability | |
| 680,940 | | |
| 7,047,500 | |
Promissory note payable - related party, at fair value | |
| 475,000 | | |
| - | |
Total current liabilities | |
| 2,767,200 | | |
| 7,258,974 | |
Deferred underwriting fee payable | |
| 14,490,000 | | |
| 14,490,000 | |
Total liabilities | |
| 17,257,200 | | |
| 21,748,974 | |
| |
| | | |
| | |
Commitments | |
| | | |
| | |
| |
| | | |
| | |
Shares subject to possible redemption, 1,097,741 and 41,400,000, at December 31, 2022 and 2021, respectively, at redemption value | |
| 11,152,340 | | |
| 414,036,755 | |
| |
| | | |
| | |
Stockholders’ Equity (Deficit): | |
| | | |
| | |
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none outstanding | |
| - | | |
| - | |
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 1,003,000 and 0 shares issued and outstanding (excluding 41,400,000 and 1,097,741 shares subject to possible redemption), at December 31, 2022 and 2021, respectively | |
| 100 | | |
| 100 | |
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 10,350,000 shares issued and outstanding at December 31, 2022 and 2021 | |
| 1,035 | | |
| 1,035 | |
Additional paid in capital | |
| - | | |
| - | |
Accumulated deficit | |
| (15,937,070 | ) | |
| (21,155,409 | ) |
Total stockholders’ equity (deficit) | |
| (15,935,935 | ) | |
| (21,154,274 | ) |
Total liabilities and stockholders’ equity (deficit) | |
$ | 12,473,605 | | |
$ | 414,631,455 | |
See accompanying notes
to the financial statements.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
STATEMENTS OF OPERATIONS
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Formation costs and other operating expenses | |
| 1,517,863 | | |
| 1,404,498 | |
Loss from operations | |
| (1,517,863 | ) | |
| (1,404,498 | ) |
Other income: | |
| | | |
| | |
Interest income | |
| 5,649,184 | | |
| 36,755 | |
Change in fair value of warrant liability | |
| 6,366,560 | | |
| 1,440,575 | |
Income before income taxes | |
| 10,497,881 | | |
| 72,832 | |
Income tax expense | |
| 1,111,143 | | |
| - | |
Net income | |
$ | 9,386,738 | | |
$ | 72,832 | |
Weighted average shares outstanding Class A common stock | |
| 41,961,331 | | |
| 37,756,096 | |
Basic and diluted net income per share, Class A common stock | |
$ | 0.20 | | |
$ | - | |
Weighted average shares outstanding Class B common stock | |
| 10,350,000 | | |
| 10,350,000 | |
Basic and diluted net income per share, Class B common stock | |
$ | 0.10 | | |
$ | - | |
See accompanying notes
to the financial statements.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
STATEMENTS OF CHANGES
IN STOCKHOLDERS’ EQUITY
| |
Class A | | |
Class B | | |
Additional | | |
| | |
Total | |
| |
Common Stock | | |
Common Stock | | |
Paid in | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity (Deficit) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance - December 31, 2020 | |
| - | | |
$ | - | | |
| 10,350,000 | | |
$ | 1,035 | | |
$ | 23,965 | | |
$ | (29,371 | ) | |
$ | (4,371 | ) |
Sale of 42,403,000 Units, net of underwriters discount, offering costs and warrant liabilities | |
| 42,403,000 | | |
| 4,240 | | |
| - | | |
| - | | |
| 392,809,780 | | |
| - | | |
| 392,814,020 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Common Stock subject to redemption | |
| (41,400,000 | ) | |
| (4,140 | ) | |
| - | | |
| - | | |
| (392,833,745 | ) | |
| (21,198,870 | ) | |
| (414,036,755 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 72,832 | | |
| 72,832 | |
Balance - December 31, 2021 | |
| 1,003,000 | | |
| 100 | | |
| 10,350,000 | | |
| 1,035 | | |
| - | | |
| (21,155,409 | ) | |
| (21,154,274 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Common Stock subject to redemption | |
| 40,302,259 | | |
| 4,030 | | |
| - | | |
| - | | |
| 407,048,786 | | |
| (4,168,399 | ) | |
| 402,884,417 | |
Common Stock redeemed | |
| (40,302,259 | ) | |
| (4,030 | ) | |
| | | |
| | | |
| (407,048,786 | ) | |
| - | | |
| (407,052,816 | ) |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 9,386,738 | | |
| 9,386,738 | |
Balance - December 31, 2022 | |
| 1,003,000 | | |
$ | 100 | | |
| 10,350,000 | | |
$ | 1,035 | | |
$ | - | | |
$ | (15,937,070 | ) | |
$ | (15,935,935 | ) |
See accompanying notes
to the financial statements.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
STATEMENTS OF CASH
FLOWS
| |
For the Years Ended
December 31, | |
| |
2022 | | |
2021 | |
Cash flow from operating activities: | |
| | |
| |
Net income | |
$ | 9,386,738 | | |
$ | 72,832 | |
Adjustments to reconcile net income to net cash used in operating activities: | |
| | | |
| | |
Interest earned in Trust Account | |
| (5,649,184 | ) | |
| (36,755 | ) |
Change in fair value of warrant liability | |
| (6,366,560 | ) | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| 228,399 | | |
| (258,410 | ) |
Accounts payable and accrued expenses | |
| 288,643 | | |
| 187,103 | |
Income taxes payable | |
| 1,111,143 | | |
| - | |
Net cash used in operating activities | |
| (1,000,821 | ) | |
| (35,230 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Investment of cash in Trust Account | |
| - | | |
| (414,000,000 | ) |
Redemption of cash from Trust Account | |
| 407,422,456 | | |
| - | |
Net cash provided by (used in) investing activities | |
| 407,422,456 | | |
| (414,000,000 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from sale of Units, net of underwriting discounts paid | |
| - | | |
| 414,773,260 | |
Payment of deferred offering costs | |
| - | | |
| (421,740 | ) |
Proceeds from promissory note - related party | |
| 510,000 | | |
| 95,000 | |
Repayment of promissory note - related party | |
| (35,000 | ) | |
| (100,000 | ) |
Redemption of Class A common stock | |
| (407,052,816 | ) | |
| - | |
Net cash provided by (used in) financing activities | |
| (406,577,816 | ) | |
| 414,346,520 | |
Net change in cash | |
| (156,181 | ) | |
| 311,290 | |
Cash at the beginning of the period | |
| 336,290 | | |
| 25,000 | |
Cash at the end of the period | |
$ | 180,109 | | |
$ | 336,290 | |
See accompanying notes
to the financial statements.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Thunder
Bridge Capital Partners III, Inc. (the “Company”) is a blank check company incorporated in Delaware on June 12, 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 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, 2022, the Company had not yet commenced any operations. All activity for the period June 12, 2020 (inception) through
December 31, 2022 related to the Company’s formation, the initial public offering (the “Initial Public Offering”) and
subsequent to the completion of the Initial Public Offering, identifying a target for a Business Combination. The Company will not generate
any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating
income in the form of interest income from the proceeds derived from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering was declared effective on February 4, 2021. On February 10, 2021,
the Company consummated the Initial Public Offering of 41,400,000 units (“Units” and, with respect to the Class
A common stock included in the Units offered, the “Public Shares”), generating gross proceeds of $414,000,000, which is described
in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 1,003,000 private placement units (the
“Private Placement Units”) at a price of $10.00 per unit in a private placement to TBCP III, LLC (the “Sponsor”),
generating gross proceeds of $10,030,000, which is described in Note 4. The Private Placement Units consist of one share of the Company’s
Class A common stock, $0.0001 par value (the “Private Placement Shares”), and one-fifth of one redeemable warrant (the “Private
Placement Warrants”). Each whole Private Placement Warrant entitles the holder to purchase one share of Class A common stock at
an exercise price of $11.50 per whole share.
Following
the closing of the Initial Public Offering on February 10, 2021, an amount of $414,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the Private Placement Units was placed in a trust account (“Trust Account”)
which may be 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 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,
as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust
Account, as described below.
Transaction
costs amounted to $23,191,740 consisting of $8,280,000 of underwriting fees, $14,490,000 of deferred underwriting fees
(see Note 6) and $421,740 of other costs. Of the transaction costs, $463,835 associated with the issuance of warrants that have
been classified as a liability have been expensed during the year ended December 31, 2021. In addition, at the closing of the Initial
Public Offering, $1,263,117 of cash was held outside of the Trust Account and was available for working capital purposes.
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. NASDAQ rules provide that the Business Combination must be with one or more target businesses that
together have a fair market value equal to at least 80% of the balance in the Trust Account (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 of 1940, as amended (the “Investment
Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing
of the Initial Public Offering, $10.00 per Unit sold in the Initial Public Offering, including the proceeds from the sale of the
Private Placement Units, was placed in the Trust Account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16)
of 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 Rule 2a-7 of the Investment Company Act, as determined by the Company, until the
earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the
Company’s stockholders, as described below.
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS (continued)
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. In connection with a proposed Business Combination,
the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek
to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business
Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor
of the Business Combination.
The
public stockholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account (initially
$10.00 per 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). The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the
deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 7). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants. These shares of Class A common stock
will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
If
a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the
Company will, pursuant to its Certificate of Incorporation, offer such redemption pursuant to the tender offer rules of the Securities
and Exchange Commission (the “SEC”), and file tender offer documents containing substantially the same information as would
be included in a proxy statement with the SEC prior to completing a Business Combination.
The
Company’s Sponsor has agreed (a) to vote its Founder Shares (as defined in Note 5), the common stock included in the Private
Units (the “Private Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business
Combination, (b) not to propose an amendment to the Company’s Certificate of Incorporation with respect to the Company’s
pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public
stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares
(including the Founder Shares) and Private Placement Units (including underlying securities) into the right to receive cash from the Trust
Account in connection with a stockholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection
with a Business Combination if the Company does not seek stockholder approval in connection therewith) or a vote to amend the provisions
of the Amended and Restated Certificate of Incorporation relating to stockholders’ rights of pre-Business Combination activity and
(d) that the Founder Shares and Private Placement Units (including underlying securities) shall not participate in any liquidating
distributions upon winding up if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions
from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to
complete its Business Combination.
At
the Meeting (as defined in Note 2) held on December 16, 2022, the stockholders of the Company approved an amendment to the Company’s
charter to extend the date by which the Company has to either consummate a Business Combination or wind up the Company and redeem 100%
of the Public Shares sold in the IPO from February 10, 2023 to August 10, 2023 (or such earlier date as determined by the Board) (the
“Combination Period”). If the Company is unable to complete a Business Combination by the end 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 no 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 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
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation
and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of
creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public
Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS (continued)
The
Sponsor has agreed that it will 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 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) $10.00 per
Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account,
if less than $10.00 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 monies held in
the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the
underwriter of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor
has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that
the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor
would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by
third parties including, without limitation, claims by vendors and prospective target businesses. 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, 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.
If the Company has not completed
a Business Combination by the end 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 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 $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public
shares, which redemption will completely extinguish the rights of the public stockholders as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining stockholders and its Board of Directors, dissolve and liquidate, subject in each
case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In the event of a liquidation, the public stockholders will be entitled to receive a full pro rata interest in the Trust Account
(initially anticipated to be approximately $10.00 per share, plus any pro rata interest earned on the Trust Fund not previously released
to the Company and less up to $100,000 of interest to pay dissolution expenses). There will be no redemption rights or liquidating
distributions with respect to the Founder Shares (as defined below), Private Placement Shares or the Private Placement Warrants, which
will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The
Company has completed its Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used
to fund offering expenses was released to the Company for general working capital purposes. Additionally, the Sponsor has executed the
Promissory Note (as defined in Note 5) to loan the Company up to $1,500,000. Through December 31, 2022, the Company has borrowed $475,000
under the Promissory Note.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS (continued)
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statement does not include any adjustments
that might result from the outcome of this uncertainty.
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.
Liquidity
and Going Concern Consideration
As of December 31, 2022, the Company had a working
capital deficit of approximately $2,557,000, including approximately $180,000 in its operating bank account.
The Company’s liquidity
needs to date have been satisfied through a contribution of $25,000 from Sponsor to cover certain expenses in exchange for the issuance
of the Founder Shares, an advance from an affiliate of the Sponsor of the payment of certain formation and operating costs on behalf of
the Company and the proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, as of December
31, 2022 and 2021, there were $475,000 and $0 amounts outstanding under the Working Capital Loan (Note 5).
In connection with the Company’s
assessment of going concern considerations in accordance with Accounting Standards Codification 205-40, Presentation of Financial
Statements - Going Concern, we have evaluated the Company’s liquidity and financial condition and determined that it is probable
the Company will not be able to meet its obligations over the period of one year from the issuance date of the financial statements. In
addition, while the Company plans to seek additional funding or to consummate an initial business combination, there is no guarantee the
Company will be able to borrow such funds from its Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and
directors in order to meet its obligations through the earlier of the consummation of an initial business combination or one year from
this filing. We have determined that the uncertainty surrounding the Company’s liquidity condition raises substantial doubt about
its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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 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 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
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of December 31, 2022 and 2021, respectively.
Income
Taxes
The
Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes” (“ASC 740”),
which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future
taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be
realized.
ASC Topic
740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to
be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax
benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as
of December 31, 2022 and 2021. The
Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from
its position.
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)
Shares
Subject to Possible Redemption
The
Company accounts for its shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing
Liabilities from Equity.” Shares subject to mandatory redemption (if any) is classified as a liability instrument and is measured
at fair value. Conditionally redeemable shares of common stock (including shares of 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) is classified as temporary equity. At all other times, shares are classified as stockholders’ equity. The Company’s
shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of
uncertain future events. Accordingly, at December 31, 2022 and 2021, shares subject to possible redemption are presented as temporary
equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Offering
Costs
The
Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering”.
Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the
IPO. Offering costs are charged against the carrying value of Class A common stock or the statement of operations based on the relative
value of the Class A common stock and the Public Warrants to the proceeds received from the Units sold upon the completion of the IPO.
Accordingly, offering costs in the aggregate of $23,191,740 were recognized, $463,835 of which was allocated to the warrants
and immediately expensed included in formation costs and other operating expenses in the Statements of Operations, and $22,727,905 was
allocated to Class A common stock, reducing the carrying amount of such shares.
Cash
Held in Trust Account
At
December 31, 2022 and 2021, the assets held in the Trust Account were invested in a money market fund.
Net
Income Per Share of Common Stock
The Company complies with accounting
and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. We have two classes of shares, which are referred
to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income
per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period.
The
calculation of diluted loss per share does not consider the effect of the Public Warrants issued in connection with the Initial Public
Offering and the sale of the Private Placement Warrants, because the exercise of the warrants is contingent upon the occurrence of future
events.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Income Per Share
of Common Stock (continued)
A
reconciliation of net income per share of common stock is as follows:
| |
For the Year Ended December 31, 2022 | | |
For the Year Ended December 31, 2021 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| |
| | |
| | |
| | |
| |
Basic and diluted net income per share | |
| | |
| | |
| | |
| |
Numerator: | |
| | |
| | |
| | |
| |
Allocation of net income, as adjusted | |
$ | 7,529,535 | | |
$ | 1,857,203 | | |
$ | 57,162 | | |
$ | 15,670 | |
Less: Accretion allocated based on ownership percentage | |
| (3,343,665 | ) | |
| (824,734 | ) | |
| (28,847 | ) | |
| (7,908 | ) |
Plus: Accretion applicable to Class A redeemable shares | |
| 4,168,399 | | |
| | | |
| 36,755 | | |
| | |
Income by class | |
$ | 8,354,269 | | |
$ | 1,032,469 | | |
$ | 65,070 | | |
$ | 7,762 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average common stock outstanding | |
| 41,961,331 | | |
| 10,350,000 | | |
| 37,756,096 | | |
| 10,350,000 | |
Basic and diluted net income per share | |
$ | 0.20 | | |
$ | 0.10 | | |
$ | - | | |
$ | - | |
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration 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 $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.
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 sheet, primarily due to their short-term nature.
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”). For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date
and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification
of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end
of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not
net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Recently
Issued Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statements.
Subsequent
Events
Management
of the Company evaluates events that have occurred after the balance sheet date of December 31, 2022 through the date these financial
statements were issued. Based upon review, management did not identify any recognized or non-recognized subsequent events that
would have required adjustment or disclosure in the financial statements, except for the following:
On
December 16, 2022, the Company held a special meeting of its stockholders (the “Meeting”). In connection with the
Meeting, as set forth in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
December 22, 2022, the holders of 40,302,259 shares of the Company’s Class A common stock (the “Redeeming
Stockholders”) properly exercised their right to redeem their shares for cash.
On
December 30, 2022, an initial redemption payment was made by Continental Stock Transfer & Trust Company (“CST”), as trustee
of the Trust Account, to the Redeeming Stockholders at a rate of $10.10 per share and, on January 11, 2023, CST made an additional redemption
payment (the “Additional Payment”) to the Redeeming Stockholders at a rate of $0.02841302 per share, for a total redemption
payment per share of $10.12841302. It was later determined that the Company did not withdraw all of the interest from the Trust Account
that it was allowed to withdraw to cover income and franchise taxes and, therefore, the Additional Payment should have been $0.00157381
per share, for a total redemption payment of $10.10157381 per share. This meant that the Redeeming Stockholders were overpaid in the amount
of $0.02683921 per share (the “Overpayment Amount”). The Redeeming Stockholders are in the process of being notified
of this situation and are being instructed to return the Overpayment Amount to CST. To date, the Company has recovered substantially all of the Overpayment Amount.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 41,400,000 Units at a purchase price of $10.00 per Unit. Each Unit consists
of one share of the Company’s Class A common stock, $0.0001 par value, and one fifth 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 Initial Public Offering, the Sponsor purchased an aggregate of 1,003,000 Private Placement Units at a price of $10.00 per
unit for an aggregate purchase price of $10,030,000.
Each
Private Placement Unit is identical to the units offered in the Initial Public Offering, except there will be no redemption rights or
liquidating distributions from the Trust Account with respect to the private placement shares or private placement warrants, which will
expire worthless if we do not consummate a Business Combination within the Combination Period.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
August 26, 2020, the Company issued an aggregate of 8,625,000 shares of Class B common stock (the “Founder Shares”)
to the Sponsor for an aggregate purchase price of $25,000. In February 2021, we effected a stock dividend of 0.2 shares for
each Founder Share outstanding, resulting in our sponsor holding an aggregate number of 10,350,000 Founder Shares. The Founder
Shares included an aggregate of up to 1,350,000 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s
over-allotment is not exercised in full or in part, so that the Sponsor will collectively own, on an as-converted basis, 20%
of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public
Shares in the Initial Public Offering).
The
Sponsor has agreed not to transfer, assign, or sell any of its Founder Shares until the earlier to occur of: (A) one year after
the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange
or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for
cash, securities, or other property. Notwithstanding the foregoing, if the last reported sale price of the Company’s 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 the Business Combination,
the Founder Shares will be released from the lock-up.
Promissory
Note — Related Party
On
June 12, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public
Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and was payable on the earlier of March
31, 2021 or the completion of the Initial Public Offering. On March 3, 2021, the $100,000 outstanding under the Note was repaid in
full.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the Sponsor,
or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation
of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation
of a Business Combination into units at a price of $10.00 per unit. The units will be identical to the Private Placement Units. 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. On March 25, 2022,
the Company executed a promissory note with respect to the Working Capital Loan for the Sponsor to loan funds to the Company up to $1,500,000
(the “Promissory Note”). At December 31, 2022 there was $475,000 outstanding under the Promissory Note.
THUNDER BRIDGE CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
5. RELATED PARTY TRANSACTIONS (continued)
Related
Party Loans (continued)
The fair value of the Promissory
Note as of December 31, 2022 was $475,000, with changes in fair value recorded to the statements of operations. For the year ended December
31, 2022, there were no changes in fair value recorded to the statements of operations.
Administrative
Support Agreement
The
Company entered into an agreement, whereby, commencing on February 10, 2021, through the earlier of the consummation of a Business Combination
or the Company’s liquidation, the Company pays an affiliate of the Sponsor a total of $10,000 per month for office space, utilities,
and secretarial and administrative support. The Company had incurred and paid $120,000 and $110,000 for the years ended December
31, 2022 and 2021, respectively.
Advisory
Agreement
The
Company entered into an agreement, whereby, commencing on February 10, 2021, through the earlier of the consummation of a Business Combination
or the Company’s liquidation, the Company will pay an affiliate of Chief Executive Officer a monthly fee of $20,000 for advisory
services related to its search for and consummation of its Initial Business Combination. The Company had incurred and paid $240,000 and
$220,000 for the years ended December 31, 2022 and 2021, respectively.
Initial
Public Offering
In
February 2021, our Chief Executive Officer purchased 100,000 units at a price of $10.00 per unit for an aggregate purchase
price of $1,000,000 as part of our Initial Public Offering.
NOTE
6. COMMITMENTS
Registration
Rights
Pursuant
to a registration rights agreement entered into on February 10, 2021, the holders of the Founder Shares, Private Placement Units (and
their underlying securities) and the units that may be issued upon conversion of the Working Capital Loans (and their underlying securities)
are entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the
Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement
provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination
of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriter’s
Agreement
The
Company granted the underwriter a 45-day option to purchase up to 5,400,000 additional Units to cover over-allotments at the
Initial Public Offering price, less the underwriting discounts and commissions, which was exercised on February 10, 2021.
The
underwriter was paid a cash underwriting discount of two percent (2.00%) of the gross proceeds of the Initial Public Offering, or $8,280,000.
In addition, the underwriter is entitled to a deferred underwriting discount of three and half percent (3.50%) of the gross proceeds of
the Initial Public Offering, or $14,490,000. The deferred fee was placed in the Trust Account and will be paid in cash upon the closing
of a Business Combination, subject to the terms of the underwriting agreement.
THUNDER BRIDGE
CAPITAL PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
7. WARRANT LIABILITY
Public
Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months
from the closing of the Initial Public Offering. The Public Warrants will expire five years from the consummation of a Business
Combination or earlier upon redemption or liquidation.
The
Company will not be obligated to deliver any Class A 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 Public Warrant will be exercisable for cash or on a cashless basis,
and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of
the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available.
The
Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business
combination, it will use its best efforts to file with the SEC, and within 60 business days following our initial business combination
to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise
of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or
are redeemed. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not
effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such time as
there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration
statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another
exemption.
Once
the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:
|
● |
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 reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within a 30-trading day period commencing no earlier than the date the warrants become exercisable and ending on the third business day before the date on which the Company sends the notice of redemption to the warrant holders. |
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7. WARRANT LIABILITY
(continued)
In
addition, once the Public Warrants become exercisable, the Company may redeem the Public Warrants for redemption:
|
● |
in whole and not in part; |
|
● |
at a price of $0.10 per Public Warrant; |
|
● |
upon not less than 30 days’ prior written notice of redemption to each warrant holder, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock to be determined by reference to a formula set out in the warrant agreement; |
|
● |
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within a 30-trading day period commencing no earlier than the date the warrants become exercisable and ending on the third business day before the date on which the Company sends the notice of redemption to the warrant holders (the “30-day Reference Period”); and |
|
● |
unless the last reported sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading days within the 30-day Reference Period, the private placement warrants are also concurrently redeemed at the same price and terms as the outstanding Public Warrants (provided that the redemption may be on a cashless basis). |
If
and when the warrants become redeemable by the Company, it may exercise our redemption right even if it is unable to register or qualify
the underlying securities for sale under all applicable state securities laws; provided, that 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 our initial public offering.
The
exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances
including in the event of a share dividend, or recapitalization, reorganization, merger, or consolidation. Additionally, in no event will
the Company be required to net cash settle the Public Warrants, except in the event of certain tender offers, as defined in the warrant.
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.
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
held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding
of the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on
the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described above will be adjusted (to the
nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price and the $10.00 per share redemption trigger
price described
above will be adjusted (to the nearest cent) to be equal to the greater of the Market Value and the Newly Issued Price.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7. WARRANT LIABILITY
(continued)
The
private placement warrants are identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except
that the private placement warrants will and the Shares of Class A common stock issuable upon the exercise of the private placement 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 placement warrants will be exercisable on a cashless basis and will be non-redeemable so
long as they are held by the initial purchasers or their permitted transferees (other than in the case the Public Warrants are redeemed
for $0.10 as described above). If the private placement warrants are held by someone other than the initial purchasers or their permitted
transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the
Public Warrants.
At December 31, 2022, there were 8,280,000 whole
public warrants and 206,000 private placement warrants outstanding with a fair value of $662,400 and $18,540, respectively.
The
Company accounts for the 8,280,000 warrants issued in connection with the Initial Public Offering and the 200,600 private
placement warrants in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet
the criteria for equity treatment thereunder, each warrant must be recorded as a derivative liability. The warrant agreement contains
an Alternative Issuance provision that if less than 70% of the consideration receivable by the holders of the Class A common stock
in the Business Combination is payable in the form of common equity in the successor entity, and if the holders of the warrants properly
exercises the warrants within thirty days following the public disclosure of the consummation of Business Combination by the Company,
the warrant price shall be reduced by an amount equal to the difference (but in no event less than zero) of (i) the warrant price in effect
prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) minus (B) the Black-Scholes Warrant Value (as defined
below). The “Black-Scholes Warrant Value” means the value of a Warrant immediately prior to the consummation of the Business
Combination based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets. “Per Share Consideration”
means (i) if the consideration paid to holders of the common stock consists exclusively of cash, the amount of such cash per common stock,
and (ii) in all other cases, the volume weighted average price of the common stock as reported during the ten-trading day period ending
on the trading day prior to the effective date of the Business Combination.
The
Company believes that the adjustments to the exercise price of the warrants is based on a variable that is not an input to the fair value
of a “fixed-for-fixed” option as defined under ASC 815 – 40, and thus the warrants are not eligible for an exception
from derivative accounting. The accounting treatment of derivative financial instruments requires that the Company record a derivative
liability upon the closing of the Initial Public Offering. Accordingly, the Company will classify each warrant as a liability at its fair
value and the warrants will be allocated a portion of the proceeds from the issuance of the Units equal to its fair value determined by
the Monte Carlo simulation. This liability is subject to re-measurement at each balance sheet date. With each such remeasurement, the
warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the
period, the warrants will be reclassified as of the date of the event that causes the reclassification.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE
8. STOCKHOLDER’S EQUITY
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At
December 31, 2021 and 2020, there were no preferred stock issued or outstanding.
Class A
Common Stock — The Company is authorized to issue up to 200,000,000 shares of Class A, $0.0001 par
value common stock. Holders of the Company’s Class A common stock are entitled to one vote for each share. At December 31,
2022 and 2021, there were 1,003,000 shares of Class A common stock issued or outstanding (excluding 1,097,741 and 41,400,000 Class
A shares subject to possible redemption at December 31, 2022 and 2021, respectively).
Class B
Common Stock — The Company is authorized to issue up to 20,000,000 shares of Class B, $0.0001 par
value common stock. Holders of the Company’s Class B common stock are entitled to one vote for each share. On February
4, 2021, the Company effectuated a 1.2 for 1 dividend of our Class B common stock resulting in an aggregate of 10,350,000 shares
of Class B common stock issued and outstanding. At December 31, 2022 and 2021, there were 10,350,000 shares of Class B
common stock issued and outstanding.
Holders
of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders,
except as required by law; provided that only holders of Class B common stock have the right to vote for the election of directors prior
to the Company’s initial Business Combination.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the Business Combination
on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations, and the like. 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 offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B
common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding
shares of Class B common stock agree to waive such 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, 20% of the sum of the total number of all shares of common stock 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 and its underlying securities issued to the Sponsor or its affiliates upon conversion
of loans made to the Company). Holders of Founder Shares may also elect to convert their shares of Class B common stock into
an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time.
The
Company may issue additional common stock or preferred stock to complete its Business Combination or under an employee incentive plan
after completion of its Business Combination.
NOTE
9. FAIR VALUE MEASUREMENTS
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which 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; |
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9. FAIR VALUE
MEASUREMENTS (continued)
|
● |
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.
The
following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at December
31, 2022 and 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| |
| | |
December 31, | |
Description | |
Level | | |
2022 | | |
2021 | |
Assets: | |
| | |
| | |
| |
Cash and marketable securities held in Trust Account | |
| 1 | | |
$ | 12,263,483 | | |
$ | 414,036,755 | |
Liabilities: | |
| | | |
| | | |
| | |
Public Warrants (1) | |
| 1 | | |
$ | 662,400 | | |
$ | 6,872,400 | |
Private Placement Warrants (1) | |
| 2 | | |
| 18,540 | | |
| 175,100 | |
(1) | Measured at fair value on a recurring basis. |
The
Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Condensed
Balance Sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented
within change in fair value of warrant liabilities in the Condensed Statement of Operations.
Initial
Measurement
The
Company established the initial fair value for the Warrants on February 10, 2021, the date of the Company’s Initial Public Offering,
using a Monte Carlo simulation and Black-Scholes Merton formula for the Private Placement Warrants and the Public Warrants. The Company
allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-fifth of one
Public Warrant), and (ii) the sale of Private Placement Units, first to the Warrants based on their fair values as determined at initial
measurement, with the remaining proceeds allocated to shares of Class A common stock subject to possible redemption based on their relative
fair values at the initial measurement date. The Private Placement Warrants were classified as Level 3 at the initial measurement date
due to the use of unobservable inputs.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9. FAIR VALUE
MEASUREMENTS (continued)
Initial Measurement
(continued)
The
key inputs into the Monte Carlo simulation model for the Private Placement Warrants and Public Warrants were as follows at initial measurement:
| |
February 10, | |
Input | |
2021 | |
Risk-free interest rate | |
| 74.00 | % |
Expected term (years) | |
| 6.5 | |
Expected Volatility | |
| 15 | % |
Exercise Price | |
$ | 11.50 | |
Stock price | |
$ | 9.80 | |
The
Company’s use of a Monte Carlo simulation and Black-Scholes Merton formula required the use of subjective assumptions:
| ● | The risk-free interest rate assumption was based on the 6.5 year yield the yield on the U.S. Treasury notes as of the Valuation Date that matched the time period to DeSPAC as of each Valuation Date. |
|
● |
The expected term was simulated out daily over the expected remaining life of the Public Warrants. The specific remaining life was based on Management’s estimated time to DeSPAC as well as the five-year contractual period that begins once the transaction closes. |
|
● |
The expected volatility assumption was based on the implied volatility from a set of comparable publicly-traded warrants as determined based on the size and proximity of other similar business combinations. An increase in the expected volatility, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa. |
| ● | The fair value of the Units, which each consist of one share of Class A common stock and one-fifth of one Public Warrant, represents the closing price on the measurement date as observed from the ticker TBCP. Based on the applied volatility assumption and the expected term to a business combination noted above, the Company determined that the risk neutral probability of exceeding the $18.00 redemption value by the start of the exercise period for the Warrants resulted in a nominal difference in value between the Public Warrants and Private Placement Warrants across the valuation dates utilized in the Monte Carlo simulation model. |
Therefore,
the resulting valuations for the two classes of warrants were determined to be equal. On February 10, 2021, the Private Placement Warrants
and Public Warrants were determined to be $1.57 per warrant for aggregate values of $12.6 million and $31.6 million, respectively.
Subsequent
Measurement
The
Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 31, 2022 and
2021 is classified as Level 1 due to the use of an observable market quote in an active market under the ticker TBCPW. As the transfer
of Private Placement Warrants to anyone outside of a small group of individuals who are permitted transferees would result in the Private
Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private
Placement Warrant is classified as Level 2, due to the use of observable inputs.
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9. FAIR VALUE
MEASUREMENTS (continued)
Subsequent Measurement (continued)
The key inputs into the Monte
Carlo simulation model for the Private Placement Warrants were as follows at the subsequent measurement date:
| |
December 31, | |
Input | |
2022 | | |
2021 | |
Risk-free interest rate | |
| 3.99 | % | |
| 1.31 | % |
Expected term (years) | |
| 5 | | |
| 5 | |
Expected term to de-SPAC (years) | |
| 0.58 | | |
| 0.60 | |
Expected Volatility | |
| 25.6 | % | |
| 13.1 | % |
Exercise Price | |
$ | 11.50 | | |
$ | 11.50 | |
Stock price | |
$ | 9.75 | | |
$ | 9.76 | |
As
of December 31, 2022 and 2021, the aggregate values of the Private Placement Warrants and Public Warrants were approximately $0.681 million
and $7.047 million, respectively.
The
following table presents the changes in the fair value of warrant liabilities:
| |
Private | | |
| | |
Warrant | |
| |
Placement | | |
Public | | |
Liabilities | |
Fair value as of January 1, 2021 | |
$ | - | | |
$ | - | | |
$ | - | |
Initial Measurement on February 10, 2021 | |
| 208,075 | | |
| 8,280,000 | | |
| 8,488,075 | |
Change in valuation inputs or other assumptions (1) | |
| (32,975 | ) | |
| (1,407,600 | ) | |
| (1,440,575 | ) |
Fair value as of December 31, 2021 | |
| 175,100 | | |
| 6,872,400 | | |
| 7,047,500 | |
Change in valuation inputs or other assumptions (1) | |
| (156,560 | ) | |
| (6,210,000 | ) | |
| (6,366,560 | ) |
Fair value as of December 31, 2022 | |
$ | 18,540 | | |
$ | 662,400 | | |
$ | 680,940 | |
(1) | Changes in valuation inputs or other assumptions are recognized in change in fair value of warrant liabilities in the Statements of Operations. |
THUNDER BRIDGE CAPITAL
PARTNERS III, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 9. FAIR VALUE
MEASUREMENTS (continued)
Subsequent Measurement (continued)
The following table present
the changes in fair value of the Level 3 Working Capital Loan- related party:
Fair value as of January 1, 2022 | |
$ | - | |
Proceeds received through Working Capital Loan - Related Party | |
| 475,000 | |
Change in fair value | |
| - | |
Fair value as of December 31, 2022 | |
$ | 475,000 | |
There were no transfers in
or out of Level 3 from other levels in the fair value hierarchy during the nine months ended September 30, 2022 for the Working Capital
Loan.
NOTE
10. INCOME TAXES
As
of December 31, 2022 and December 31, 2021, the Company’s net deferred tax assets are as follows:
| |
2022 | | |
2021 | |
Deferred tax asset: | |
| | |
| |
Organizational costs/Startup expenses | |
$ | 386,136 | | |
$ | 155,539 | |
Net operating loss carryover | |
| - | | |
| 34,281 | |
Total deferred tax asset | |
| 386,136 | | |
| 189,820 | |
Valuation allowance | |
| (386,136 | ) | |
| (189,820 | ) |
Deferred tax asset, net of allowance | |
$ | - | | |
$ | - | |
The
income tax benefit for the years ended December 31, 2022 and 2021, consists of the following:
| |
2022 | | |
2021 | |
Federal: | |
| | |
| |
Current | |
$ | 1,111,143 | | |
| - | |
| |
| | | |
| | |
State: | |
| | | |
| | |
Current | |
$ | - | | |
| - | |
Income tax provision | |
$ | 1,111,143 | | |
| - | |
A
reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and December 31, 2021, consists
of the following:
| |
12/31/2022 | | |
12/31/2021 | |
Statutory federal income tax rate | |
| 21.0 | % | |
| 21.0 | % |
Change in fair value of warrant liabilities | |
| (59.4 | )% | |
| (1977.9 | )% |
Change in valuation allowance | |
| 48.8 | % | |
| 1,956.9 | % |
Effective Tax Rate | |
| 10.4 | % | |
| 0.0 | % |
The
Company will file taxes in the U.S. Federal jurisdiction.
We have $0 and $197,146 in net operating loss carryovers
at 2022 and 2021, respectively.
We are subject to taxation in the United States.
As of December 31, 2022, we have no tax years under examination by the IRS. The U.S. federal tax returns for tax years 2021 and 2020
remain open to examination by the tax authorities.
We have established a full valuation allowance for
our deferred tax assets for the years ended December 31, 2022 and 2021, as it is more likely than not that these assets will not be realized
in the foreseeable future. Our valuation allowance increased by $196,316 from 2021 to 2022.