Filing summary
Entity and period: This is Semper Paratus Acquisition Corporation’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2023, filed November 13, 2023. Although the request identifies Tevogen Inc., the filing reports the SPAC’s financial position and proposed merger with Tevogen Bio Inc.; it does not provide Tevogen Bio’s operating results.
Business context
Semper Paratus is a special purpose acquisition company (SPAC) that had not commenced operating activities. Its activity through the reporting date related to formation, its IPO, and seeking a business combination. It had agreed to merge with Tevogen Bio, subject to closing conditions; an S-4 registration statement was filed in September and amended in October 2023.
Financial results and liquidity
| Metric | Three months ended September 30, 2023 | Nine months ended September 30, 2023 |
|---|---|---|
| Revenue | No operating revenue | No operating revenue |
| General and administrative expenses | $606,000 | $1.63 million |
| Trust investment gain | $334,000 | $2.42 million |
| Net income (loss) | $(279,000) | $762,000 |
| Net cash used in operating activities | Not separately presented | $(683,000) |
Quarterly results compared with $1.61 million of net income in Q3 2022; nine-month net income declined from $1.79 million in 2022. Earnings were driven by unrealized gains on Trust Account investments, not operating revenue. Profit margins are not meaningful for this pre-combination SPAC.
At September 30, 2023, cash outside the Trust Account was $348,000; Trust Account cash and marketable securities totaled $26.01 million, down from $356.86 million at December 31, 2022, principally following approximately $332 million of shareholder redemptions. The company reported a $1.43 million working capital deficit, current liabilities of $1.83 million, and total liabilities of $16.56 million, including a $625,694 convertible note payable net of discount and $14.7 million of deferred underwriting fees payable. Shareholders’ deficit was $16.16 million. The filing reports no long-term debt.
Nine-month operating cash outflow was $683,000. Cash increased by $218,000 to $348,000, with $901,000 of convertible-note proceeds offset by operating outflows and redemptions. No operating cash-flow, revenue, or margin figures for Tevogen Bio are provided.
Transaction, changes, and outlook
- In February 2023, the SPAC extended its business-combination deadline to December 15, 2023. Approximately 32.1 million public shares were redeemed for about $332 million; 2.38 million redeemable public shares remained at September 30.
- The proposed transaction values the merger consideration at $1.2 billion in aggregate shares, with up to 20 million additional shares for Tevogen Bio holders if specified post-closing stock-price thresholds are met. The Sponsor would receive 1.5 million additional shares for each earnout payment.
- Tevogen Bio’s closing conditions include at least $25 million of cash and cash equivalents after redemptions and specified expenses. Other conditions include shareholder approvals, SEC effectiveness of the registration statement, regulatory approvals, NYSE listing approval, and a minimum net tangible asset test. The transaction was not assured to close.
- The underwriter agreed to reduce its deferred fee from $14.7 million to $5 million, payable in surviving-company shares, only if the Tevogen Bio transaction closes. If that transaction does not close, the original deferred fee applies to another completed business combination.
- Management cited substantial doubt about the SPAC’s ability to continue as a going concern if it cannot complete a business combination by the deadline. It may need additional financing; Sponsor funding is not committed. Failure to complete a transaction could lead to liquidation and redemption of public shares, while warrants could expire worthless.
Risks and unusual items
The SPAC reported prior Nasdaq fee and market-value listing deficiencies; it said both had been cured by September 2023. It disclosed no pending or contemplated litigation known to management. The filing also notes general risks from geopolitical conflicts and possible regulatory changes, including uncertainty around proposed SEC rules and Investment Company Act treatment of SPACs. A $29,000 warrant fair-value change affected nine-month results; the associated private-placement warrant liability was $36,250 at quarter-end.
Investor facts to verify
- Confirm the merger’s current status, closing conditions, shareholder approvals, and the eventual post-redemption cash available against the $25 million closing requirement.
- Review the S-4 and definitive transaction materials for the $1.2 billion share consideration, earnout terms, dilution, and Sponsor-related share issuances.
- Verify how the deferred underwriting fee and convertible-note balances would be settled if the Tevogen transaction closes or fails.
- Check whether the December 15, 2023 deadline was extended and whether the SPAC completed a business combination or entered liquidation.
- Obtain Tevogen Bio’s own financial statements and risk disclosures; this 10-Q does not establish its revenue, profitability, cash flow, debt, or liquidity.