Filing summary
Issuer and period: The supplied filing is Chavant Capital Acquisition Corp.’s Form 10-Q for the quarter ended June 30, 2021, not a filing identified as MOBIX LABS, INC. Chavant was a newly formed, pre-business-combination SPAC and reported results from its March 19, 2021 inception. It had not commenced operations by June 30.
Financial results and position
- Revenue and profit: No operating revenue. Net loss was $46,205 for the three months ended June 30 and $47,987 from inception through June 30, consisting of formation and operating costs. Basic and diluted loss per share was $0.02 for each presented period.
- Cash flow: Cash at June 30 was $23,218. From inception, operating activities used $47,987; financing activities provided $71,205; and net cash increased by $23,218.
- Balance sheet and liquidity: Total assets were $106,615, including $23,218 cash, $22,401 prepaid expenses, and $60,996 deferred offering costs. Current liabilities were $129,602, entirely a sponsor promissory note. Shareholders’ deficit was $22,987. No revenue-generating operations or meaningful operating margins were reported.
- Debt: No long-term debt was reported. The $129,602 non-interest-bearing sponsor note outstanding at June 30 was repaid July 22, 2021. The company reported no working-capital loans outstanding at June 30.
Material developments and comparison
There is no prior-year comparable period because the company was incorporated in March 2021. After quarter-end, on July 22, 2021, Chavant completed an IPO of 8,000,000 units at $10 each, raising $80 million gross, and a private placement of 3,400,000 warrants for $3.4 million gross. It placed $80 million in the trust account and reported $1,693,616 outside the trust for working capital after IPO costs. Total IPO transaction costs were $2,836,524. The sponsor repaid the June 30 promissory-note balance on July 22.
On July 19, 575,000 founder shares were surrendered for cancellation; the filing retroactively presents 2,300,000 founder shares outstanding at June 30. Up to 300,000 remain subject to forfeiture depending on exercise of the underwriters’ over-allotment option, which had not been exercised as of the filing’s disclosure.
Outlook, risks and contingencies
- Chavant intends to find and complete a business combination, with a 12-month deadline after the IPO closing. If it does not complete a combination within that period, it must redeem public shares and liquidate, subject to applicable requirements; warrants may expire worthless.
- Management expected available working capital and borrowing capacity to meet needs through a business combination or one year from the filing, but noted that actual search and transaction costs could exceed estimates and additional financing might be needed.
- The sponsor may provide working-capital loans but is not obligated to do so; up to $1.5 million of such loans could be converted into warrants at the lender’s option.
- The filing describes COVID-19 as a potential negative factor for the company’s financial position, IPO and target search, but says the impact was not readily determinable. Management reported no material changes to previously disclosed risk factors.
- The company agreed to pay the sponsor $10,000 per month for administrative services beginning after its securities were first listed. No legal proceedings were reported. Management stated disclosure controls were effective at June 30 and reported no material change in internal control over financial reporting.
Most important facts to verify
- Confirm issuer identity: this source is Chavant Capital Acquisition Corp., not MOBIX LABS, INC.
- Confirm the post-quarter IPO date and figures; the filing principally reports July 22, though one MD&A passage refers to July 19.
- Verify cash available outside the trust, the trust balance, and outstanding offering-related liabilities after the IPO.
- Track the over-allotment option and potential forfeiture of up to 300,000 founder shares.
- Monitor the business-combination deadline, financing needs, redemption activity, and any target transaction.