XPAXU XPAC Acquisition Corporation

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

Commission file number: 001-40686

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The accompanying notes are an integral part of these unaudited condensed financial statements.

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The accompanying notes are an integral part of these unaudited condensed financial statements.

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The accompanying notes are an integral part of these unaudited condensed financial statements.

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XPAC ACQUISITION CORP.

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The Company will provide its public shareholders with the opportunity to redeem all or a portion of the Class A ordinary shares included in the units (the “Units”) sold in the Initial Public Offering (the “Public Shares”) upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, subject to the limitations described herein.

The amount deposited in the Trust Account as a result of the Initial Public Offering and subsequent partial exercise of the over-allotment option was an aggregate of $219,611,310, or $10.00 per public share. The per-share amount the Company will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the completion of the Business Combination with respect to the warrants. The initial shareholders, directors and officers have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and Public Shares held by them in connection with the completion of the Business Combination.

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its amended and restated memorandum and articles of association, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.

Notwithstanding the above, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated memorandum and articles of association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the amended and restated memorandum and articles of association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to shareholders rights or pre-initial Business Combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

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The Company will have until 24 months from the closing of the Initial Public Offering to complete a Business Combination (i.e., August 3, 2023) (the “Original Termination Date”) (subject to any extension in the amount of time that the Company has to consummate a Business Combination beyond 24 months as a result of a shareholder vote to amend the Company’s amended and restated memorandum and articles of association) (the “Combination Period”). If the Company is unable to complete a Business Combination within 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, originally offered together with Public Warrants (as defined in “Note 3”) as Units in the Initial Public Offering, 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 the Company to pay its tax obligations (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 shareholders rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed to waive it right to its deferred underwriting commission (see Note 8) 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 other 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).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to 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 discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay franchise and income taxes. This liability will not apply with respect to claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. 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 (except the Company’s independent registered public accounting firm), prospective target businesses and 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.

Terminated Business Combination

On April 25, 2022, the Company entered into a Business Combination Agreement (the “ Business Combination Agreement”) with (i) SUPERBAC PubCo Holdings Inc, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“ PubCo”), (ii) BAC1 Holdings Inc., an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of PubCo (“ Merger Sub 1”), (iii) BAC2 Holdings Inc., an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of PubCo (“ Merger Sub 2”), and (iv) SuperBac Biotechnology Solutions S.A., a corporation incorporated under the laws of the Federative Republic of Brazil (“ SuperBac”), pursuant to which the Company agreed to combine with SuperBac in a series of transactions that would result in PubCo becoming a publicly-traded company and listed on the Nasdaq Capital Market (the “Nasdaq”), with PubCo indirectly owning at least ninety-five percent (95%), but potentially less than one hundred percent (100%) of the equity interests in SuperBac (on a fully-diluted basis).

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Consummation of the transactions contemplated by the Business Combination Agreement or any of the other Transaction Documents (as defined in the Business Combination Agreement) (the “Transactions”) was subject to customary conditions, including (i) approval by the Company’s and SuperBac’s shareholders (certain of which SuperBac shareholder approvals were obtained on May 12, 2022, with other approvals remaining outstanding), (ii) the absence of any law or governmental order which has the effect of making consummation of the Transactions illegal or which otherwise prevents or prohibits consummation of the Transactions, (ii) the effectiveness of the registration statement filed in connection with the proposed SuperBac Business Combination, (iii) PubCo’s initial listing application with Nasdaq in connection with the Transactions shall have been conditionally approved and Class A ordinary shares of PubCo to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject to official notice of issuance, and (iv) material accuracy of representations and warranties, and material compliance with covenants, in the Business Combination Agreement.

In addition, the obligations of SuperBac to consummate the Transactions were subject, among others, to: (i) the condition that the Post-Redemption Trust Account Balance (as defined in the Business Combination Agreement), plus the PIPE Gross Proceeds (as defined in the Business Combination Agreement) (minus any unreimbursed Excess of Company Transaction Expenses (as defined in the Business Combination Agreement)), in each case, to be made available to PubCo at the Acquisition Closing (as defined in the Business Combination Agreement), shall be at least $150,000,000, and (ii) at the Acquisition Closing (as defined in the Business Combination Agreement), the Company having at least $5,000,001 in tangible net assets after giving effect to the XPAC Share Redemptions (as defined in the Business Combination Agreement).

On December 2, 2022, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco BAC Holdings, Inc. (“Newco”) and SuperBac, entered into the First Amendment Agreement to the Business Combination Agreement, pursuant to which the parties thereto amended the Business Combination Agreement to extend the date by which either the Company or SuperBac could terminate the Business Combination Agreement if the transactions contemplated thereby have not been consummated by such date from November 21, 2022 to January 31, 2023 (and if such date is not a business day, then the next following business day).

On February 9, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac, entered into the Second Amendment Agreement to the Business Combination Agreement, pursuant to which the parties thereto amended the Business Combination Agreement to extend the date by which either the Company or SuperBac could terminate the Business Combination Agreement if the transactions contemplated thereby have not been consummated by such date from January 31, 2023 to February 28, 2023 (and if such date is not a business day, then the next following business day).

On May 2, 2023, SuperBac informed the Company that it had decided to terminate the Business Combination Agreement, which SuperBac is entitled to do pursuant to Section 10.1(i) of the Business Combination Agreement. Effective as of May 3, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac mutually agreed to terminate the Business Combination Agreement pursuant to a Termination of the Business Combination Agreement dated May 3, 2023 by and between the Parties (the “Termination Agreement”). Upon the termination of the Business Combination Agreement, each of the (i) Sponsor Support Agreement, (ii) Voting and Support Agreement, (iii) Lock-up Agreements, and (iv) Investment Agreement (each as defined in the Business Combination Agreement) were automatically terminated in accordance with their respective terms. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Terminated SuperBac Business Combination.”

Proposed Extraordinary General Meeting to Consider the Accelerated Shareholder Termination Matters

In connection with the termination of the Business Combination, on May 3, 2023, the Company’s board of directors held a video conference meeting that was also attended by the Company’s management team. In that meeting, the Company’s board of directors: (i) resolved to approve the entry into of the Termination Agreement by the Company; (ii) determined that it is very unlikely that the Company would able to complete an initial business combination with a target other than SuperBac before the Original Termination Date; (iii) determined that it is in the best interests of the Company and its shareholders to accelerate the Original Termination Date to a date to be determined in due course.  See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Proposed Extraordinary General Meeting to Consider the Accelerated Shareholder Termination Matters.” As described in that section, the Accelerated Termination Shareholder Matters (as defined below) will be submitted to the shareholders of the Company for their consideration. On May 8, 2023, we filed a preliminary Accelerated Liquidation Proxy Statement with the SEC and the Company expects that that a definitive Accelerated Liquidation Proxy Statement would be distributed to the Company’s shareholders in due course in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the Accelerated Termination Shareholder Matters.

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Going Concern Consideration

At March 31, 2023, the Company had $10,640 in cash and working capital deficit of $5,706,324. The Company has incurred significant costs in pursuit of its acquisition plans, and the Company currently expects to incur significant costs in connection with the preparation of the Accelerated Liquidation Proxy Statement in preliminary and definitive form and in connection with the Extraordinary General Meeting. In order to meet the Company’s financial needs after March 31, 2023, the Company’s Sponsor or its affiliates can, but are not obligated to, provide funding through Working Capital Loans (as defined below) (Note 5). These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

If the Company is not able to consummate a Business Combination before August 3, 2023 (or by any extension in such time period as a result of a shareholder vote to amend the Company’s amended and restated memorandum and articles of association), the Company will commence an automatic winding up, dissolution and liquidation. Effective as of May 3, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac mutually agreed to terminate the Business Combination Agreement pursuant to the Termination Agreement dated May 3, 2023.  On May 3, 2023, the Company’s board of directors determined that it is very unlikely that the Company would able to complete an initial business combination with a target other than SuperBac (with which the proposed Business Combination has been terminated) before the Original Termination Date and that it is in the best interests of the Company and its shareholders to accelerate the Original Termination Date to a date to be determined in due course. On May 8, 2023, the Company filed a preliminary proxy statement (the “Accelerated Liquidation Proxy Statement”) with the SEC in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the proposed acceleration of the Original Termination Date to a date to be determined in due course. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Terminated SuperBac Business Combination.” No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after August 3, 2023 or, any accelerated liquidation date that may be approved by the shareholders of the Company in an extraordinary general meeting.

Risks and Uncertainties

Management is currently evaluating the impact of the COVID-19 pandemic and Russia-Ukraine war and has concluded that while it is reasonably possible that the virus and war 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 these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the period ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.

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 shareholder approval of any golden parachute payments not previously approved.

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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 the Company’s 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.

Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under the asset and liability method, as required by this accounting standard, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to the period when assets are realized or liabilities are settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in the operation of statement in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.

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Offering Costs

The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) 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 Initial Public Offering. Offering costs are charged to shareholders’ equity or the statement of operations based on the relative value of the Public Warrants and the Private Warrants to the proceeds received from the Units sold upon the completion of the Initial Public Offering and any over-allotment exercised. Accordingly, on August 3, 2021, offering costs totaling $11,761,739 (consisting of $4,000,000 of underwriting fee, $7,000,000 of deferred underwriting fee and $761,739 of other offering costs) were recognized with $477,711 included in accumulated deficit as an allocation for the Public Warrants and the Private Warrants, and $11,284,028 included in additional paid-in capital.

On August 16, 2021, the underwriter partially exercised the over-allotment option and, on August 19, 2021, purchased an additional 1,961,131 Units (the “Over-Allotment Units”) from the Company, generating gross proceeds of $19,611,310. As a result of the partial exercise of the over-allotment option, the incremental increase in offering costs was $1,078,624 (consisting of $392,228 of underwriting fee and $686,396 of deferred underwriting fee) with $41,786 included in accumulated deficit as allocation for the Public Warrants and the Private Warrants, and $1,036,838 included in additional paid-in capital.

Net Income (Loss) Per Ordinary Share

The Company’s statements of operations include a presentation of net income (loss) per share for ordinary shares subject to possible redemption and applies the two-class method in calculating net income (loss) per share. Net income (loss) per ordinary share, basic and diluted, is calculated by dividing the pro-rata allocation of net income (loss) for each class, by the weighted average number of Class A and Class B non-redeemable ordinary shares outstanding for the period. Net income (loss) is allocated pro-rata between Class A redeemable and Class B non-redeemable shares based on their respective weighted average shares outstanding for the period.

The following tables reflect the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):

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Fair Value of Financial Instruments

The fair value of the Company’s assets held in the Trust Account which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

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The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

Warrant Liabilities

The Company accounts for warrants for the Company’s ordinary shares that are not indexed to its own shares as liabilities at fair value on the balance sheet. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations. The Company will continue to adjust the liabilities for changes in fair value until the earlier of the exercise or expiration of the ordinary share warrants. At that time, the portion of the warrant liabilities related to the ordinary share warrants will be reclassified to additional paid-in capital.

Related Parties

Parties, which can be a corporation or individual, are considered related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

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 had cash of $10,640 and $44,659 and no cash equivalents as of March 31, 2023 and December 31, 2022, respectively.

Investments Held in Trust Account

As of March 31, 2023 and December 31, 2022, $225,085,692 and $222,726,270, respectively, held in the Trust Account was held in money market funds, which are invested in U.S. Treasury securities. The investments held in the Trust Account are presented at fair value at the end of each reporting period. Gains or losses resulting from the change in fair value of these securities are included in gains (losses) on investments held in the Trust Account on the accompanying statement of operations. The estimated fair value of investments held in the Trust Account are determined using available market information.

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Class A Ordinary Shares Subject to Possible Redemption

The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares 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) are classified as temporary equity. At all other times, ordinary shares are classified as shareholder’s equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholder’s equity section of the Company’s balance sheet.

Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to redemption amount. Increases or decreases in the carrying amount of redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.

As of March 31, 2023 and December 31, 2022, the Class A ordinary shares subject to possible redemption reflected in the balance sheet is reconciled in the following table:

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Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. This guidance is effective as of January 1, 2024 for smaller reporting companies (early adoption is permitted effective January 1, 2021). The Company is currently evaluating the effect the updated standard will have on its financial position, results of operations or financial statement disclosure.

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently assessing what impact, if any, that ASU 2022-03 would have on its financial position, results of operations or cash flows.

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on the results of operations, financial condition, or cash flows, based on the current information.

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NOTE 3 — INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering on August 3, 2021, the Company sold 20,000,000 Units at a price of $10.00 per Unit. Each Unit consisted of one Class A ordinary share and one-third of one warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7).

On August 16, 2021, the underwriter partially exercised the over-allotment option and on August 19, 2021, purchased an additional 1,961,131 Units from the Company (the “Over-Allotment Units”), generating gross proceeds of $19,611,310. In connection with the Underwriter’s partial exercise of their over-allotment option, the Sponsor purchased an additional 261,485 Private Warrants (the “Additional Private Warrants”), generating gross proceeds to the Company of approximately $392,228.

An aggregate of $10.00 per Unit sold in the Initial Public Offering was held 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 money market funds investing solely in U.S. Treasuries and meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company.

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NOTE 4 — PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 4,000,000 Private Warrants, at a price of $1.50 per Private Warrant, for an aggregate of $6,000,000, in a private placement. Simultaneously, with the closing of the exercise of the over-allotment option, the Company completed the sale of an additional 261,485 Private Warrants to the Sponsor, at a purchase price of $1.50 per Private Warrant, generating additional gross proceeds of $392,228. A portion of the proceeds from the sale of Private Warrants were added to the proceeds from the Initial Public Offering and partial over-allotment exercise held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Warrants will expire worthless.

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NOTE 5 — RELATED PARTY TRANSACTIONS

Founder Shares

In March 2021, the Sponsor purchased 5,750,000 shares of the Company’s Class B ordinary shares (the “Founder Shares”) for an aggregate purchase price of $25,000. This amount was paid on behalf of the Company to cover certain expenses. The Founder Shares included an aggregate of up to 750,000 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s overallotment was not exercised in full or in part, so that the number of Founder Shares collectively represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. Since the underwriter did not exercise the over-allotment option in full, the Sponsor surrendered 259,717 Class B ordinary shares, which were forfeited by the Company. As a result of such forfeiture, there are currently 5,490,283 Class B ordinary shares issued and outstanding.

The Sponsor and the Company’s directors and executive officers have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, stock exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their shares of Class A ordinary shares for cash, securities or other property.

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Director Shares

On May 12, 2021, the Sponsor transferred 90,000 Founder Shares in the aggregate to independent directors (“Director Shares”) at a price of $0.004 per share for gross proceeds of $390. The fair value of the Director Shares was approximately $8.01 per share or $720,459 in total as of May 12, 2021, which was calculated using a valuation model that takes into account various assumptions such as the probability of successfully completing the Business Combination among other factors. The excess fair value over the purchase price of $720,068 is deemed to be a benefit to the Company under SAB Topic 5A. However, as the assignment agreement underlying the Director Shares contains a performance obligation contingent upon consummation of the Business Combination, the expense will not be recognized until such time as the Business Combination is considered probable. A liquidity event such as a change in control or a Business Combination is not considered probable under ASC Topic 718, “Compensation – Stock Compensation,” and as such this will not be recorded until consummation of the Company’s Business Combination.

Promissory Note — Related Party

In March 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing. On December 27, 2021, the Promissory Note was amended to be payable upon consummation of the Business Combination. As of December 31, 2022 and March 31, 2023, the Company had $300,000 outstanding under the Promissory Note.

Related Party Loans

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor may, but is not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. 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. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. At the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Warrants. As of March 31, 2023 and December 31, 2022, the Company had no outstanding borrowings under the Working Capital Loans.

Due to Sponsor

The Sponsor has paid certain expenses on the Company’s behalf for which the Company will reimburse them upon consummation of the Business Combination.

Administrative Services Agreement

Pursuant to an administrative services agreement entered into with the Sponsor on July 29, 2021, the Sponsor may charge the Company a $10,000 per month fee for office space, administrative and support services. As of March 31, 2023, the Sponsor has not charged, and does not intend to charge in the future, any amount in relation to the provision of these services. As a result, the Company has not incurred or accrued for any expense related to this agreement.

Advisory Services

The Company engaged XP Investimentos Corretora de Câmbio, Títulos e Valores Mobiliários S.A. (“XP Investimentos”), an indirect, wholly-owned subsidiary of XP, Inc. and an affiliate of the Sponsor, to provide financial consulting services, consisting of a review of deal structure and terms and related advice in connection with the Initial Public Offering, for which it received a fee of $1,725,443 of the cash underwriting paid to the Underwriter. See Note 8 below for further discussion of the Underwriting Agreement.

Additionally, XP Investimentos is entitled to $2,690,239 if a Business Combination were to be consummated. This amount is included in “Deferred advisory fee – related party” as of March 31, 2023 and December 31, 2022.

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Capital Contribution – Related Party

The Company’s Sponsor engaged a third-party professional services provider on behalf of the Company to conduct business due diligence services in 2021. The $0.5 million payment of such fees was deemed to be a benefit to the Company under SAB Topic 5A and was recorded to accumulated deficit and formation and operating expenses.

NOTE 6 — SHAREHOLDERS’ DEFICIT

Preference shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2023 and December 31, 2022, there were no preference shares issued or outstanding.

Class A ordinary shares — The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. As of March 31, 2023 and December 31, 2022, there were 21,961,131 Class A ordinary shares issued and no shares outstanding, excluding 21,961,131 shares subject to possible redemption.

Class B ordinary shares — The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001 per share. As of March 31, 2023 and December 31, 2022, there were 5,490,283 Class B ordinary shares issued and outstanding. The shares collectively represent 20% of the Company’s issued and outstanding ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all matters submitted to a vote of shareholders except as required by law.

The Class B ordinary shares (Founder Shares) will automatically convert into Class A ordinary shares at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares, 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 Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all ordinary shares outstanding upon the completion of the Initial Public Offering plus all Class A ordinary shares 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).

Refer to Note 3 for discussion of the Initial Public Offering that occurred on August 3, 2021.

NOTE 7 — WARRANT LIABILITIES

Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 12 months from the closing of the Initial Public Offering and (b) 30 days after the completion of a Business Combination.

The Company will not be obligated to deliver any shares of Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue any shares of Class A ordinary shares upon exercise of a warrant unless the share of Class A ordinary shares issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

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The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary shares is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Class A ordinary shares 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, but the Company will use its commercially reasonably efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:

If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:

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In addition, if (x) the Company issues additional shares of Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A ordinary shares (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 a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, then 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 and the “Redemption of Warrants when the price per share of Class A ordinary shares equals or exceeds $10.00” described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described above.

The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the shares of Class A ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees (except for a number of shares of Class A ordinary shares as described above under Redemption of warrants for Class A ordinary shares). If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.

As of March 31, 2023 and December 31, 2022, there were 7,320,377 Public Warrants and 4,261,485 Private Warrants outstanding. The Company accounts for the Public Warrants and Private Warrants in accordance with the guidance contained in ASC 815-40. Such guidance provides that because an event that is not within the entity’s control could require net cash settlement the warrants do not meet the criteria for equity classification and as a result each warrant must be recorded as a derivative liability.

The accounting treatment of derivative financial instruments required that the Company record a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company classified each warrant as a liability at its fair value and the warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. These liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities 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

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Registration and Shareholder Rights

The holders of the Founder Shares and Private Warrants (and any shares of Class A ordinary shares issuable upon the exercise of the Private Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights and shareholder agreement signed on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A ordinary shares). The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders will 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 and shareholder 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.

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Underwriting Agreement

In connection with the Initial Public Offering, the underwriter was granted a 45-day option from the date of the prospectus to purchase up to 3,000,000 additional Units to cover over-allotments. On August 16, 2021, the underwriter partially exercised the over-allotment option and on August 19, 2021, purchased an additional 1,961,131 Units at an offering price of $10.00 per Unit, generating gross proceeds of $19,611,310 to the Company.

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The underwriter was paid a cash underwriting discount of $0.20 per Unit, or $4,392,226 in the aggregate upon the closing of the Initial Public Offering and the partial exercise of the over-allotment option. In addition, the underwriter will be entitled to a deferred fee of $0.35 per Unit, or $7,686,396 in the aggregate. Of this amount, $2,690,239 will be paid to XP Investimentos as an advisory fee (see Note 5). Subject to the terms of the underwriting agreement, (i) the deferred fee will be placed in the Trust Account and released to the underwriter only upon the completion of a Business Combination and (ii) the deferred fee will be waived by the underwriter in the event that the Company does not complete a Business Combination.

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NOTE 9 — RECURRING FAIR VALUE MEASUREMENTS

As of March 31, 2023 and December 31, 2022, the Company’s warrant liabilities were valued at $1,058,083 and $1,874,437, respectively.

Under the guidance in ASC 815-40, the Public Warrants and the Private Warrants do not meet the criteria for equity treatment. As such, the Public Warrants and the Private Warrants must be recorded on the balance sheet at fair value. This valuation is subject to re-measurement at each balance sheet date. With each re-measurement, the valuations will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.

The following tables present fair value information as of March 31, 2023 and December 31, 2022 of the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

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The Company’s private warrant liabilities are based on a valuation model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value.

The fair value of the Private Warrant liabilities is classified within Level 3 of the fair value hierarchy at the initial measurement date. On September 20, 2021, the Public Warrants started trading separately from the Public Shares underlying the Units that were sold in the Initial Public Offering and partial exercise of the over-allotment. Accordingly, as of September 30, 2021, the Public Warrants were reclassified from a Level 3 to a Level 1 classification due to use of the observed trading price of the separated Public Warrants.

Transfers between Levels are recorded at the end of each reporting period. For the period ended March 31, 2023, there were no transfers between levels.

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Measurement

The Company established the initial fair value for the warrants on August 3, 2021, the date of the consummation of the Company’s Initial Public Offering, using a Black-Scholes-Merton formula model. At the date of the Initial Public Offering, the Company allocated the proceeds received from (i) the sale of Units (which were inclusive of one Class A ordinary share and one-third of one Public Warrant), and (ii) the sale of Private Warrants, first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to Class A ordinary shares subject to possible redemption (temporary equity), based on their relative fair values at the initial measurement date.

As of March 31, 2023, the Public Warrants were publicly traded and their fair value was based on the market trade price on that date. The fair value for the Private Warrants was estimated using a Monte Carlo simulation model.

The following table presents a summary of the changes in the fair value of the Warrants liabilities classified as Level 3, measured on a recurring basis.

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The key inputs into the Monte Carlo formula model were as follows for March 31, 2023 and December 31, 2022 and December 31, 2021:

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Our management has broad discretion with respect to the specific application of the net proceeds of Initial Public Offering and the Private Placement, although substantially all of the net proceeds were intended to be applied generally towards consummating a Business Combination.

Recent Developments

Terminated SuperBac Business Combination

On April 25, 2022, the Company entered into a Business Combination Agreement (as amended from time to time, the “Business Combination Agreement”) with (i) SUPERBAC PubCo Holdings Inc. (“PubCo”), (ii) BAC1 Holdings Inc., a direct wholly owned subsidiary of PubCo (“Merger Sub 1”), (iii) BAC2 Holdings Inc., a direct wholly owned subsidiary of PubCo (“Merger Sub 2”), and (iv) SuperBac Biotechnology Solutions S.A., a corporation incorporated under the laws of the Federative Republic of Brazil (“SuperBac”).

Consummation of the Transactions was subject to customary conditions, including (i) approval by the Company’s and SuperBac’s shareholders (certain of which SuperBac shareholder approvals were obtained on May 12, 2022, with other approvals remaining outstanding), (ii) the absence of any law or governmental order which has the effect of making consummation of the Transactions illegal or which otherwise prevents or prohibits consummation of the Transactions, (ii) the effectiveness of the Registration Statement filed in connection with the proposed SuperBac Business Combination, (iii) PubCo’s initial listing application with Nasdaq in connection with the Transactions shall have been conditionally approved and Class A ordinary shares of PubCo to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject to official notice of issuance, and (iv) material accuracy of representations and warranties, and material compliance with covenants, in the Business Combination Agreement.

In addition, the obligations of SuperBac to consummate the Transactions were subject, among others, to: (i) the condition that the Post-Redemption Trust Account Balance (as defined in the Business Combination Agreement), plus the PIPE Gross Proceeds (as defined in the Business Combination Agreement) (minus any unreimbursed Excess of Company Transaction Expenses (as defined in the Business Combination Agreement)), in each case, to be made available to PubCo at the Acquisition Closing, shall be at least $150,000,000 (the “Minimum Cash Condition”), and (ii) at the Acquisition Closing, the Company having at least $5,000,001 in tangible net assets after giving effect to the XPAC Share Redemptions (as defined in the Business Combination Agreement).

On December 2, 2022, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac entered into the First Amendment Agreement to the Business Combination Agreement (“First BCA Amendment”), pursuant to which the parties thereto amended the Business Combination Agreement to extend the date by which either the Company or SuperBac could terminate the Business Combination Agreement if the transactions contemplated thereby have not been consummated by such date from November 21, 2022 to January 31, 2023 (and if such date is not a business day, then the next following business day). The First BCA Amendment is filed as an exhibit to this Quarterly Report on Form 10-Q and the foregoing description of the First BCA Amendment is qualified in its entirety by reference thereto.

On December 19, 2022, SuperBac held an ordinary and extraordinary general meeting of its shareholders (the “December 2022 Shareholder Meeting”) for the purposes of (i) approving in an ordinary general meeting of its shareholders, SuperBac’s financial statements for the year ended December 31, 2021 and the total remuneration of SuperBac’s directors for the 2022 fiscal year, and (ii) approving in an extraordinary general meeting of its shareholders, the entry into of the First BCA Amendment, and the terms and conditions of a proposed issuance of non-convertible debt by Superbac Indústria e Comércio de Fertilizantes S.A. (a wholly-owned subsidiary of SuperBac) (including the collateral and/or guarantees of such debt) in an aggregate principal amount not to exceed the equivalent in Brazilian reais of US$ 50.0 million. Each of the matters to be approved by SuperBac’s shareholders in the December 2022 Shareholder Meetings was duly approved.

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On February 9, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac entered into the Second Amendment Agreement to the Business Combination Agreement (“Second BCA Amendment”), pursuant to which the parties thereto amended the Business Combination Agreement to extend the date by which either the Company or SuperBac could terminate the Business Combination Agreement if the transactions contemplated thereby have not been consummated by such date from January 31, 2023 to February 28, 2023 (and if such date is not a business day, then the next following business day). Accordingly, pursuant to the terms of the Business Combination Agreement, as from February 28, 2023, the Business Combination Agreement was subject to termination by the Company or SuperBac. The Second BCA Amendment is filed as an exhibit to this Quarterly Report on Form 10-Q and the foregoing description of the Second BCA Amendment is qualified in its entirety by reference thereto.

In connection with the proposed SuperBac Business Combination, PubCo filed the Registration Statement on Form F-4 (File No. 333-266094) with the SEC, which included a preliminary proxy statement with respect to our extraordinary general meeting of shareholders that would approve the proposed SuperBac Business Combination, among other matters and a preliminary prospectus of PubCo with respect to the securities to be issued in the proposed SuperBac Business Combination (the “PubCo Regsitration Statement”).

On May 2, 2023, SuperBac informed the Company that it had decided to terminate the Business Combination Agreement, which SuperBac is entitled to do pursuant to Section 10.1(i) of the Business Combination Agreement. SuperBac informed the Company that it had based its decision to terminate the Business Combination Agreement on a number of factors including: (i) the prevailing unfavorable public market conditions and trends in the share price performance of companies that have completed de-SPAC transactions; (ii) a balancing of the benefits and drawbacks of becoming a publicly traded company under current circumstances, including heightened volatility and share price performance risks for companies operating businesses in challenging market conditions; and (iii) the fact that no PIPE investments had been entered into that would provide PubCo with proceeds from the issuance of ordinary shares, it being noted that the Modal PIPE Financing and the Yorkville PIPE Financing (each as defined in the PubCo Registration Statement), if entered into and consummated, would have comprised the issuance of debt, warrants and convertible debentures raising gross proceeds at a level significantly lower than the Minimum Cash Condition (as defined in the Business Combination Agreement).

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Effective as of May 3, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac mutually agreed to terminate the Business Combination Agreement pursuant to a Termination of the Business Combination Agreement dated May 3, 2023 by and between the Parties (the “Termination Agreement”). Pursuant to the Termination Agreement, among other provisions (i) the Company acquits, releases and discharges each of the Company, PubCo, Merger Sub 1, Merger Sub 2 and Newco and its representatives from all the Company Released Claims (as defined in the Termination Agreement); and (ii) each of the Company, PubCo, Merger Sub 1, Merger Sub 2 and Newco acquits, releases and discharges the Company and its representatives from all Company Released Claims, in each case with respect to the Business Combination Agreement, the other Transaction Documents and the transactions contemplated by the Business Combination Agreement and the other Transaction Documents, in each case except for any claims, if any, based upon a breach of the Termination Agreement or a breach of the NDA (as defined in the Business Combination Agreement). Upon the termination of the Business Combination Agreement, each of the (i) Sponsor Support Agreement, (ii) Voting and Support Agreement, (iii) Lock-up Agreements, and (iv) Investment Agreement were automatically terminated in accordance with their respective terms. The Termination Agreement is filed as an exhibit to this Quarterly Report on Form 10-Q and the foregoing description of the Termination Agreement is qualified in its entirety by reference thereto.

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In connection with the termination of the SuperBac Business Combination, on May 4, 2023, PubCo requested, pursuant to Rule 477 under the Securities Act, that the SEC consent to the immediate withdrawal of the PubCo Registration Statement.

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Proposed Extraordinary General Meeting to Consider the Accelerated Shareholder Termination Matters

In connection with the termination of the Business Combination, on May 3, 2023, the Company’s board of directors held a video conference meeting that was also attended by the Company’s management team. In that meeting, the Company’s board of directors: (i) resolved to approve the entry into of the Termination Agreement by the Company; (ii) determined that it is very unlikely that the Company would able to complete an initial business combination with a target other than SuperBac before the Original Termination Date; (iii) determined that it is in the best interests of the Company and its shareholders to accelerate the Original Termination Date to a date to be determined in due course (the “Amended Termination Date”); and (iv) resolved that the Company take all actions that are necessary and advisable in order to convene an extraordinary general meeting of the Company’s shareholders (an

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“Extraordinary General Meeting”) in order to consider and vote upon, among other matters, the following (together, the “Accelerated Termination Shareholder Matters”):

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If the Accelerated Termination Shareholder Matters are approved by the Company’s shareholders in an Extraordinary General Meeting expected to be held in due course and are implemented, and because the Company would not be able to complete an initial business combination by the Amended Termination Date, the Company would (i) immediately after the Extraordinary General Meeting, cease all operations, except for the purpose of winding up; (ii) as promptly as reasonably possible, complete the redemption of the Public Shares held by shareholders who elect to redeem all or a portion of their Public Shares in exchange for their pro rata portion of the funds held in the Trust Account in connection with the approval of the Accelerated Termination Shareholder Matters (the “Voluntary Redemption”); (iii) as promptly as reasonably possible but not more than ten business days thereafter, complete the redemption of all remaining issued and outstanding Public Shares not redeemed in the Voluntary Redemption, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (after taking into account the Voluntary Redemption), including interest earned on the funds held in the Trust Account and not previously released to the Company (less taxes payable and up to $100,000 of interest to pay dissolution expenses and which interest shall be net of any taxes payable), divided by the number of the then-outstanding Public Shares (the “Post-Amendment Share Redemption”); and (iv) as promptly as reasonably possible following such redemption and subject to the approval of the Company’s remaining shareholders after completion of the Post-Amendment Share Redemption and the Company’s board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In addition, if the Accelerated Termination Shareholder Matters are approved by the Company’s shareholders in an Extraordinary General Meeting expected to be held in due course and are implemented, the Company plans to voluntarily delist the Company’s Class A ordinary shares, Public Warrants and Units from the Nasdaq as soon as practicable after completion of the redemption of all Public Shares, subject to the rules of Nasdaq and the Company’s amended and restated memorandum and articles of association. As a result of the liquidation process, all Public Warrants and Private Warrants would expire worthless.

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If the Accelerated Termination Shareholder Matters are not approved by the Company’s shareholders in an Extraordinary General Meeting expected to be held in due course or are not implemented, and a business combination is not completed on or before the Original Termination Date, then as contemplated by and in accordance with the Company’s amended and restated memorandum and articles of association, the Company would (i) on the Original Termination Date, cease all operations, except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, complete the redemption of all issued and outstanding 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 the Company (less taxes payable and up to $100,000 of interest to pay dissolution expenses and which interest shall be net of any taxes payable), divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption and subject to the approval of the Company’s remaining shareholders after such redemption and the Company’s board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

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The Accelerated Termination Shareholder Matters will be submitted to the shareholders of the Company for their consideration. On May 8, 2023, we filed a preliminary Accelerated Liquidation Proxy Statement with the SEC and the Company expects that that a definitive Accelerated Liquidation Proxy Statement would be distributed to the Company’s shareholders in due course in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the Accelerated Termination Shareholder Matters.

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SuperBac and the private equity business of XP Inc. and its subsidiaries (“XP Private Equity”) currently intend to pursue a private investment into SuperBac in order to support SuperBac’s continued growth as a privately-held company. The Sponsor, is wholly-owned by XP Inc., and as such, the Company and the Sponsor are affiliates of XP Private Equity. In addition, members of the Company’s management team are also investment professionals within XP Private Equity and serve as investment managers for funds managed by XP Private Equity.

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Additional Information and Where to Find It

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The Accelerated Termination Shareholder Matters will be submitted to the shareholders of the Company for their consideration. On May 8, 2023, we filed a preliminary Accelerated Liquidation Proxy Statement with the SEC and the Company expects that that a definitive Accelerated Liquidation Proxy Statement would be distributed to the Company’s shareholders in due course in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the Accelerated Termination Shareholder Matters. In due course, the Company expects to mail a definitive Accelerated Liquidation Proxy Statement and other relevant documents to its shareholders as of the record date to be established in due course for voting on the Accelerated Termination Shareholder Matters. THE COMPANY’S SHAREHOLDERS AND OTHER INTERESTED PERSONS ARE URGED TO READ, ONCE AVAILABLE, THE PRELIMINARY ACCELERATED LIQUIDATION PROXY STATEMENT AND ANY AMENDMENTS THERETO AND, ONCE AVAILABLE, THE DEFINITIVE ACCELERATED LIQUIDATION PROXY STATEMENT IN CONNECTION WITH THE COMPANY’S SOLICITATION OF PROXIES FOR ITS EXTRAORDINARY GENERAL MEETING TO BE HELD TO APPROVE, AMONG OTHER THINGS, THE ACCELERATED TERMINATION SHAREHOLDER MATTERS, BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE MATTERS REFERRED TO HEREIN. Shareholders may also obtain a copy of the preliminary Accelerated Liquidation Proxy Statement or, once available, the definitive Accelerated Liquidation Proxy Statement, as well as other documents filed with the SEC regarding the Accelerated Termination Shareholder Matters and other documents filed with the SEC by the Company, without charge, at the SEC’s website located at www.sec.gov or by written request sent to the Company, 55 West 46th Street, 30th Floor, New York, NY 10036, United States.

Results of Operations

We have neither engaged in any significant business operations nor generated any revenues to date. All activities to date relate to our formation and Initial Public Offering and since then to the search for a target business. We will not generate any operating revenues until after the completion of a Business Combination, if any, at the earliest. We will generate non-operating income in the form of interest income from the proceeds derived from our Initial Public Offering and will recognize other income and expense related to the change in fair value of our warrant liabilities. We incur expenses as a result of being a public company for legal, financial reporting, accounting and auditing compliance, as well as for due diligence expenses. We have selected December 31 as our fiscal year end.

For the three months ended March 31, 2023, we had a net loss of $2,545,037, which consisted primarily of a $816,354 gain on fair value of warrant liabilities and a $2,359,422 gain on securities held in trust, partially offset by a $22,366 foreign exchange loss and $608,385 in operating, general and administrative expenses.

For the three months ended March 31, 2022, we had a net loss of $208,504, which consisted of $1,255,542 in formation and operating costs and $30,033 in foreign exchange loss, partially offset by a $1,062,617 gain on the fair value of warrant liabilities and a $14,424 gain on investments held in the Trust Account.

Liquidity, Capital Resources and Going Concern

As of March 31, 2023, we had cash outside the Trust Account of $10,640, available for working capital needs. All remaining cash was held in the Trust Account and is generally unavailable for our use, prior to our initial Business Combination.

On August 3, 2021, we completed the sale of 20,000,000 Units at $10.00 per Unit, generating gross proceeds of $200,000,000.

Simultaneous with the closing of our Initial Public Offering, we completed the sale of 4,000,000 Private Warrants at a price of $1.50 per Private Unit in a private placement to XPAC Sponsor, LLC, generating gross proceeds of $6,000,000.

On August 19, 2021, the underwriter purchased an additional 1,961,131 of our Units at $10.00 per Unit, generating additional gross proceeds of $19,611,310 to us. In addition, we sold an additional 261,485 Private Warrants to the Sponsor.

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Our liquidity needs had been satisfied prior to the completion of the Initial Public Offering through the payment by our initial shareholders of $25,000 to cover certain of our offering costs in consideration for the issuance of Founder Shares to our initial shareholders and up to $300,000 in loans available from our Sponsor. On December 27, 2021, the Promissory Note was amended to be payable upon consummation of the Business Combination. As of March 31, 2023, we had $300,000 outstanding under the Promissory Note. Subsequent to the consummation of our Initial Public Offering, our liquidity needs have been satisfied through the net proceeds from the consummation of our Initial Public Offering and our private placement held outside of the Trust Account.

The Company has incurred significant costs in pursuit of its acquisition plans, and the Company currently expects to incur significant costs in connection with the preparation of the Accelerated Liquidation Proxy Statement in preliminary and definitive form and in connection with the Extraordinary General Meeting. In order to meet the Company’s financial needs after March 31, 2023, the Company’s Sponsor or its affiliates can, but are not obligated to, provide funding through a working capital loan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Prior to our initial Business Combination, we will be using the funds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable (if any) and deferred underwriting commissions), to complete our initial Business Combination. We may withdraw interest income (if any) to pay income taxes, if any. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

In order to fund working capital deficiencies or finance transaction costs in connection with an initial Business Combination, our Sponsor, an affiliate of our Sponsor or certain of our directors and officers may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. Otherwise, such loans may be repaid only out of funds held outside the Trust Account. In the event that we do not complete an initial Business Combination, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Warrants issued to our Sponsor. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. As of March 31, 2023, there was no amount outstanding under any Working Capital Loans.

We expected our primary liquidity requirements prior to our initial Business Combination to include approximately $350,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting a Business Combination; $150,000 for legal and accounting fees related to regulatory reporting requirements; $58,000 for Nasdaq continued listing fees; and $442,000 for general working capital that will be used for miscellaneous expenses and reserves.

These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific Business Combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in us not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.

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As of March 31, 2023, we had $10,640 in cash and working capital deficit of $5,706,324. The Company has incurred significant costs in pursuit of its acquisition plans, and the Company currently expects to incur significant costs in connection with the preparation of the Accelerated Liquidation Proxy Statement in preliminary and definitive form and in connection with the Extraordinary General Meeting. In order to meet our financial needs after March 31, 2023, our Sponsor or its affiliates can, but are not obligated to, provide funding through Working Capital Loans. These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

If the Company is not able to consummate a Business Combination before August 3, 2023 (or by any extension in such time period as a result of a shareholder vote to amend the Company’s amended and restated memorandum and articles of association), the Company will commence an automatic winding up, dissolution and liquidation. Effective as of May 3, 2023, the Company, PubCo, Merger Sub 1, Merger Sub 2, Newco and SuperBac mutually agreed to terminate the Business Combination Agreement pursuant to the Termination Agreement dated May 3, 2023.  On May 3, 2023, the Company’s board of directors determined that it is very unlikely that the Company would able to complete an initial business combination with a target other than SuperBac (with which the proposed Business Combination has been terminated) before the Original Termination Date and that it is in the best interests of the Company and its shareholders to accelerate the Original Termination Date to a date to be determined in due course. On May 8, 2023, the Company filed a preliminary Accelerated Liquidation Proxy Statement with the SEC in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the proposed acceleration of the Original Termination Date to a date to be determined in due course. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Terminated SuperBac Business Combination.” No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after August 3, 2023 or, any accelerated liquidation date that may be approved by the shareholders of the Company in an extraordinary general meeting.

Off-Balance Sheet Financing Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2023 as defined in Item 303(a)(4)(ii) of Regulation S-K.

Contractual Obligations

As of March 31, 2023, we did not have any long-term debt, capital or operating lease obligations.

We entered into an administrative services agreement pursuant to which our Sponsor may charge us a $10,000 per month fee for office space, administrative and support services. As of March 31, 2023, our Sponsor has not charged us, and does not intend to charge us in the future, any amount in relation to the provision of these services.

Critical Accounting Policies

Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed financial statements. We describe our significant accounting policies in Note 2 – Summary of Significant Accounting Policies of the Notes to Financial Statements included in this report. Our unaudited condensed financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.

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Recent Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. This guidance is effective as of January 1, 2024 for smaller reporting companies (early adoption is permitted effective January 1, 2021). The Company is currently evaluating the effect the updated standard will have on its financial position, results of operations or financial statement disclosure.

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently assessing what impact, if any, that ASU 2022-03 would have on its financial position, results of operations or cash flows.

We have considered all new accounting pronouncements and have concluded that there are no new pronouncements that may have a material impact on our results of operations, financial condition, or cash flows, based on the current information.

JOBS Act

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal control over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

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As a result of the material weakness in our internal control over financial reporting described in the paragraph above, our management and the audit committee of the board of directors of the Company concluded that the Company’s previously issued (i) audited financial statements as of December 31, 2021 and for the period from March 11, 2021 (inception) through December 31, 2021, included in its Annual Report on Form 10-K as filed with the SEC on March 30, 2022; and (ii) unaudited condensed financial statements as of and for the three months ended March 31, 2022, included in its Quarterly Report on Form 10-Q filed with the SEC on May 13, 2022, should no longer be relied upon and, in each case, should be restated to recognize the Business Combination Costs as liabilities and, correspondingly, as income statement expenses for the relevant periods based on when such costs were incurred irrespective of whether such Business Combination Costs may be reimbursable in the future.

To respond to these material weaknesses, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the complex accounting standards that apply to our financial statements as well as the application of those that apply to nuances in blank check companies in the process of a Business Combination such as ours. Our remediation plan at this time includes providing enhanced access to accounting literature, research materials and documents, industry best practices and increased communication among our personnel and third-party accounting professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We will continue to monitor the effectiveness of these controls and will make any further changes management determines appropriate.

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If the Accelerated Termination Shareholder Matters are not approved by the Company’s shareholders in an Extraordinary General Meeting expected to be held in due course or are not implemented, and a business combination is not completed on or before the Original Termination Date, then as contemplated by and in accordance with the Company’s amended and restated memorandum and articles of association, the Company would (i) on the Original Termination Date, cease all operations, except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, complete the redemption of all issued and outstanding 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 the Company (less taxes payable and up to $100,000 of interest to pay dissolution expenses and which interest shall be net of any taxes payable), divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption and subject to the approval of the Company’s remaining shareholders after such redemption and the Company board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

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*Filed herewith.

** Furnished herewith

† The schedules and exhibits to this Exhibit have been omitted in accordance with Item 601(b)(2) of Regulation S-K.

XPAC Acquisition Corp. agrees to furnish supplementally a copy of such schedules and exhibits to the SEC upon its

request.

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