Filing summary: Colombier Acquisition Corp. Form 10-Q
Entity and period: The supplied filing is Colombier Acquisition Corp.’s unaudited quarterly report for the three and six months ended June 30, 2022—not a PSQ Holdings, Inc. 10-Q. Colombier was a blank-check company seeking a business combination; it had not begun operating activities and had no operating revenue. The filing does not provide PSQ Holdings’ financial results.
Financial results and position
| Metric | Three months ended June 30, 2022 | Six months ended June 30, 2022 |
|---|---|---|
| Operating and formation costs | $248,757 | $541,117 |
| Trust-account interest income | $225,971 | $237,106 |
| Gain from change in warrant-liability fair value | $1,980,664 | $4,846,916 |
| Net income | $1,944,526 | $4,529,553 |
| Basic and diluted earnings per share, Class A and Class B | $0.09 | $0.21 |
- Net income primarily reflected non-cash gains from remeasuring warrant liabilities, plus trust interest; it was not generated by business operations.
- At June 30, 2022, cash outside the trust was $281,258; trust-account marketable securities were $172,743,618. The trust assets were invested primarily in U.S. Treasury securities through money market funds.
- Total liabilities were $7,575,282, including $6,037,500 of deferred underwriting fees payable only if a business combination is completed. The filing reports no long-term debt.
- Stockholders’ deficit was $6,622,425. Class A shares subject to possible redemption were presented separately as temporary equity at $172.5 million.
- Cash used in operating activities was $559,968 for the six months. The company reported working capital of $651,657 in the notes; the MD&A states $651,675, and also contains a cash figure with an apparent transcription error. The balance sheet clearly reports cash of $281,258.
- No revenue or operating margin is meaningful for this pre-combination SPAC. The filing does not give business-operating guidance.
Changes versus the comparable period
- For the three months ended June 30, 2021, the company reported a net loss of $988,113; for the period from inception on February 12, 2021 through June 30, 2021, it reported a net loss of $989,113. The 2021 periods are not fully comparable to 2022 because the company was newly formed and its IPO occurred in June 2021.
- The 2022 net income contrasts with 2021 losses largely because warrant-liability fair-value changes shifted from expense to income. The six-month 2022 gain on that remeasurement was $4,846,916, compared with a $615,000 loss in the 2021 inception-to-date period.
- Cash declined from $841,226 at December 31, 2021 to $281,258 at June 30, 2022. Trust-account securities increased from $172,506,512 to $172,743,618.
Outlook, risks and notable matters
- The company had until June 11, 2023 to complete a business combination. If unsuccessful, it was required to cease operations, redeem public shares from the trust, and liquidate. Management said this uncertainty and the liquidity condition raised substantial doubt about the company’s ability to continue as a going concern.
- Management said additional capital could be needed if the transaction was not completed; the sponsor and affiliates were not obligated to provide loans. Failure to obtain funding could require reduced spending or suspension of transaction efforts.
- The company reported no off-balance-sheet arrangements. It incurred a $10,000 monthly fee for sponsor-affiliate administrative services and had a $6,037,500 deferred underwriting fee contingent on completing a business combination.
- Management disclosed ineffective disclosure controls due to a material weakness in accounting for complex financial instruments. It described planned remediation, including stronger review processes, accounting resources and consultation with third-party professionals.
- Risks discussed include uncertainty in completing a transaction, COVID-19 and market disruption, Russia-Ukraine-related volatility, and possible effects of proposed SEC rules for SPAC transactions. Management stated there were no material changes to previously disclosed risk factors apart from the updates in this filing.
- The filing names no completed business combination or specific target in the supplied text and provides no transaction timetable beyond the June 11, 2023 deadline.
Investor verification points
- Confirm the intended issuer: the source filing is for Colombier Acquisition Corp., not PSQ Holdings, Inc.
- Check the working-capital discrepancy ($651,657 in the notes versus $651,675 in MD&A) and the apparent MD&A cash transcription error against the filed financial statements.
- Assess the likelihood, financing and terms of any proposed business combination, redemption levels, and the June 11, 2023 deadline.
- Separate recurring cash needs from reported earnings: 2022 net income was substantially affected by warrant fair-value gains, while operating activities used cash.
- Review remediation of the disclosed material weakness and subsequent filings for any changes in controls, liquidity, target status or transaction terms.