SEC Filing Summary
Entity note: The supplied filing is for Cartesian Growth Corporation (Nasdaq: GLBL), not Alti Global, Inc. It is a SPAC 10-Q for the quarter ended June 30, 2022, signed August 15, 2022.
Business context and reporting period
Cartesian had not begun operating activities and had no operating revenue. Its purpose was to complete a business combination. It had a proposed combination with Tiedemann Wealth Management, TIG entities and Alvarium, structured through Alvarium Tiedemann Capital, LLC. Management expected the transaction to close in the third quarter of 2022, subject to shareholder approval, an effective Form S-4, regulatory approvals and other customary conditions.
Financial highlights
| Metric | Three months ended June 30, 2022 | Six months ended June 30, 2022 |
|---|---|---|
| Operating revenue | None | None |
| Operating costs / loss from operations | $171,272 | $649,845 |
| Net income (loss) | $(259,121) | $9,661,765 |
| Net income (loss) per share, Class A and B | $(0.01) | $0.22 |
| Net cash used in operating activities | Not stated for quarter | $486,085 |
Six-month net income mainly reflected a $9.75 million noncash gain from the change in warrant-liability fair value and $556,742 of trust-account interest; it is not operating performance. Second-quarter results included a $513,158 warrant-liability fair-value loss, partly offset by $436,747 of trust interest. Conventional operating margins are not meaningful because the company had no operating revenue.
At June 30, 2022, total assets were $346.17 million, including $345.57 million in the trust account, and cash outside the trust was $565,173. Working capital was $289,699. Total liabilities were $26.20 million, including a $12.075 million deferred underwriting fee, $13.35 million of warrant liabilities, and a related-party convertible promissory note with $463,261 net carrying value. Shareholders’ deficit was $25.60 million. Six-month ending cash was $565,173, versus $831,388 at June 30, 2021; operating cash use was $486,085 versus $628,552 in the prior-year half.
Material changes versus comparable periods
- Second-quarter net results shifted from $9.25 million income in 2021 to a $259,121 loss in 2022, primarily reflecting the reversal in warrant fair-value movements; trust interest increased to $436,747 from $12,426.
- Six-month net income rose to $9.66 million from $4.34 million. Warrant fair-value gains were $9.75 million versus $8.57 million; prior-year results also included IPO warrant-related offering and private-warrant costs.
- Cash outside the trust increased modestly from $551,258 at December 31, 2021. The company drew $500,000 under a sponsor working-capital note in May; its June 30 carrying value was $463,261 after debt discount.
- The business-combination agreement was amended in February and May 2022, including extending the outside date to July 29, 2022 and revising transaction definitions and schedules. Bank of America resigned as financial and capital-markets adviser in May and waived its contingent $3 million M&A advisory fee.
Outlook, risks and unusual items
- The company had until February 26, 2023 to complete a business combination or redeem public shares and liquidate. Management anticipated a third-quarter 2022 closing, but stated that failure to complete the deal raised substantial doubt about the company’s ability to continue as a going concern through one year after issuance of the financial statements.
- Proposed PIPE financing totaled approximately $165.0 million for 16,836,715 shares at $9.80 per share, contingent on transaction closing and other conditions. The filing does not establish that this financing had closed.
- All 34.5 million public Class A shares were redeemable and carried at approximately $10.02 per share at quarter-end. The $345.57 million trust balance was restricted for the business combination, redemptions and permitted uses; it was not ordinary operating cash.
- COVID-19 effects and the Russia-Ukraine conflict could affect markets, financing availability and the ability to complete the transaction; specific impacts were not determinable. The filing also noted proposed SEC rules that could increase SPAC transaction disclosure, costs and timing burdens.
- Disclosure controls were concluded to be ineffective due to a material weakness in accounting for complex financial instruments, including the classification of redeemable Class A shares. Management reported additional review and planned remediation, but gave no assurance it would be effective.
- The $12.075 million deferred underwriting commission was payable only upon a completed business combination and would be waived if no combination occurred. No legal proceedings or off-balance-sheet arrangements were reported.
Most important facts for investors to verify
- Confirm the filing applies to the intended issuer: this document identifies Cartesian Growth Corporation, not Alti Global, Inc.
- Check subsequent filings for whether the proposed combination and PIPE financing closed, and for final transaction terms, regulatory approvals, shareholder vote and redemptions.
- Verify the company’s liquidation deadline and any extension, redemption or trust-account developments after June 30, 2022.
- Assess the material weakness, remediation progress and any restatements or further control disclosures.
- Separate noncash warrant fair-value gains and losses from operating cash needs when evaluating reported net income.