References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Plum Acquisition Corp. I. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Plum Partners, LLC. The following discussion and analysis of
the Company's financial condition and results of operations should be read in
conjunction with the condensed financial statements and the notes thereto
contained elsewhere in this Quarterly Report. Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act that are not historical
facts, and involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. All statements other than
statements of historical fact included in this Form
10-Q
including statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" regarding the Company's financial position,
business strategy and the plans and objectives of management for future
operations, are forward-looking statements. Words such as "expect," "believe,"
"anticipate," "intend," "estimate," "seek" and variations and similar words and
expressions are intended to identify such forward-looking statements. Such
forward-looking statements relate to future events or future performance, but
reflect management's current beliefs, based on information currently available.
A number of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. The Company's securities filings can be accessed on
the EDGAR section of the SEC's website at www.sec.gov. Except as expressly
required by applicable securities law, the Company disclaims any intention or
obligation to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on January 11, 2021 and formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses. We intend to consummate an
initial business combination using cash from the proceeds of our Public Offering
(the "Public Offering") that closed on March 18, 2021 (the "Closing Date") and
the Private Placement, and from additional issuances of, if any, our equity and
our debt, or a combination of cash, equity and debt.

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Results of Operations
For the three months ended June 30, 2021 and for period from January 11, 2021
(inception) to June 30, 2021, we incurred a loss from operations of $822,896 and
$912,461, respectively. In addition to the loss from operations, we recognized
other income of $2,901,733 and $3,333,854, respectively consisting of an
unrealized gain on our warrant liability of $2,907,325 and $3,867,325,
respectively and interest income of $4,803, and $5,304, respectively partially
offset by transaction costs related to our IPO of $10,395 and $538,777,
respectively. Through June 30, 2021, our efforts have been limited to
organizational activities, activities relating to identifying and evaluating
prospective acquisition candidates and activities relating to general corporate
matters. We have not generated any realized income, other than interest income.
The unrealized gain on the warrant liability resulted from the change in fair
value of our warrant liability and had no impact on cash. As of June 30, 2021,
$319,221,644 was held in the Trust Account. We had cash outside of trust of
$704,019 in June 30, 2021 and $103,027 accounts payable and accrued expenses as
of June 30, 2021.
Except with respect to interest earned on the funds held in the Trust Account
that may be released to us to pay taxes, if any, the proceeds in the Trust will
not be released from the Trust Account (1) to us, until the completion of our
initial Business Combination, or (2) to the Public Shareholders, until the
earliest of (i) the completion of our initial Business Combination, and then
only in connection with those Class A ordinary shares that such shareholders
properly elected to redeem, subject to the limitations, (ii) the redemption of
any public shares properly tendered in connection with a shareholder vote to
amend our amended and restated memorandum and articles of association (A) to
modify the substance or timing of our obligation to provide holders of our
Class A ordinary shares the right to have their shares redeemed in connection
with our initial Business Combination or to redeem 100% of the public shares if
we do not complete an initial Business Combination within 24 months from the
closing of the IPO (the "Combination Period") or (B) with respect to any other
provision relating to the rights of holders of the Class A ordinary shares, and
(iii) the redemption of the public shares if we have not consummated a Business
Combination within the Combination Period, subject to applicable law.
Liquidity and Capital Resources
As of June 30, 2021, we had cash outside our Trust Account of $704,019,
available for working capital needs. We intend to use the funds held outside the
Trust Account for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective target businesses, traveling to
and from the offices, plants or similar locations of prospective target
businesses, reviewing corporate documents and material agreements of prospective
target businesses, selecting the target business to acquire and structuring,
negotiating and consummating the Business Combination.
In March and April 2021, we sold of 31,921,634 units (the "Units" and, with
respect to the shares of Class A ordinary shares included in the Units being
offered, the "Public Shares") at $10.00 per Unit, generating gross proceeds of
$319,216,340.
Additionally, we sold of 6,256,218 warrants (the "Private Warrants"), at a price
of $1.50 per Private Warrant, generating gross proceeds of $9,384,327.
Following the sale of our Units and the sale of the Private Warrants, a total of
$319,216,340 ($10.00 per Unit) was placed in the Trust Account. We incurred
$18,336,269 in Initial Public Offering related costs, including $6,384,327 of
underwriting fees, $11,172,572 of deferred underwriting discount and $779,370 of
other costs with $538,777 which was allocated to the Public Warrants and Private
Warrants, included in the statement of operations and $17,797,492 included in
stockholders' equity.
As of June 30, 2021, we had marketable securities held in the Trust Account of
$319,221,644 (including approximately $5,304 of income) consisting of money
market funds. Income on the balance in the Trust Account may be used to pay
taxes. Through June 30, 2021, we did not withdraw any interest earned on the
Trust Account to pay our taxes.

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For six months ended June 30, 2021, cash used in operating activities was
$1,541,611. Net income of $2,421,393 was primarily offset by an unrealized gain
on the change in the fair value of our warrant liability of $3,867,325 and
payments generating prepaid assets of $779,293. Partially offsetting the net
income was $538,777 from IPO related transaction costs. Other operational
activities including amounts due to related party generated $150,141.
We intend to use substantially all of the funds held in the Trust Account, to
acquire a target business and to pay our expenses relating thereto. 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.
Further, our sponsor, officers and directors or their respective affiliates may,
but are not obligated to, loan us funds as may be required (the "Working Capital
Loans"). If we complete a business combination, we would repay the Working
Capital Loans. In the event that a business combination does not close, we 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. Such Working Capital Loans would be evidenced by
promissory notes. The notes would either be repaid upon consummation of a
business combination, without interest, or, at the lender's discretion, or
converted upon consummation of a business combination into additional Private
Warrants at a price of $1.50 per Private Warrant. As of June 30, 2021, no
Working Capital Loans have been issued.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a business combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our business combination. Moreover, in addition to the
access to the Working Capital Loans, we may need to obtain other financing
either to complete our business combination or because we become obligated to
redeem a significant number of our public shares upon consummation of our
business combination, in which case we may issue additional securities or incur
debt in connection with such business combination. Subject to compliance with
applicable securities laws, we would only complete such financing simultaneously
with the completion of our business combination. If we are unable to complete
our business combination because we do not have sufficient funds available to
us, we will be forced to cease operations and liquidate the Trust Account. In
addition, following our business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities which would be considered
off-balance
sheet arrangements as of June 30, 2021. We do not participate in transactions
that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating
off-balance
sheet arrangements.
We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or entered into any
non-financial
agreements involving assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires our management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the condensed financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have identified the following as our critical
accounting policies:
Warrant Liabilities
We account for the Warrants as either equity-classified or liability-classified
instruments based on an assessment of the specific terms of the Warrants and
applicable authoritative guidance in Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") 480, Distinguishing
Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC
815"). The assessment considers whether the Warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and meet all of the requirements for equity classification under ASC
815, including whether the Warrants are indexed to the Company's own ordinary
shares and whether the holders of the Warrants could potentially require "net
cash settlement" in a circumstance outside of the Company's control, among other
conditions for equity classification. This assessment, which requires the use of
professional judgment, is conducted at the time of issuance of the Warrants and
as of each subsequent quarterly period end date while the Warrants are
outstanding. For issued or modified warrants that meet all of the criteria for
equity classification, such warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification,
liability-classified warrants are required to be recorded at their initial fair
value on the date of issuance, and each balance sheet date thereafter. Changes
in the estimated fair value of such warrants are recognized as a non-cash gain
or loss on the statements of operations. We account for the Public and Private
warrants in accordance with guidance contained in ASC 815-40. Such guidance
provides that because the warrants do not meet the criteria for equity treatment
thereunder, each warrant must be recorded as a liability.

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Redeemable Shares of Class A Ordinary shares
All of the 30,000,000 shares of Class A ordinary shares included in the Units
sold as part of the Public Offering contain a redemption feature as described in
the prospectus for the Public Offering. In accordance with FASB ASC 480,
"Distinguishing Liabilities from Equity", redemption provisions not solely
within the control of the Company require the security to be classified outside
of permanent equity. The Charter provides a minimum net tangible asset threshold
of $5,000,001. The Company recognizes changes in redemption value immediately as
they occur and will adjust the carrying value of the security at the end of each
reporting period. Increases or decreases in the carrying amount of redeemable
shares will be affected by charges against additional
paid-in
capital.
Net Income Per Ordinary Share
Net income per ordinary share is computed by dividing net income by the weighted
average number of ordinary shares outstanding for each of the periods. The
calculation of diluted net income per ordinary shares does not consider the
effect of the warrants issued in connection with the (i) IPO, (ii) exercise of
over-allotment and (iii) Private Placement since the exercise of the warrants
are contingent upon the occurrence of future events and the inclusion of such
warrants would be anti-dilutive. The warrants are exercisable to purchase
12,000,000 shares of Class A ordinary shares in the aggregate.
Our statement of operations include a presentation of net income per share for
Class A ordinary shares subject to possible redemption in a manner similar to
the
two-class
method of income per ordinary share. Net income per Class A ordinary share,
basic and diluted, for redeemable Class A ordinary share is calculated by
dividing the interest income earned on the Trust Account, by the weighted
average number of redeemable Class A ordinary shares outstanding since original
issuance. Net income per ordinary share, basic and diluted, for
non-redeemable
Class A and Class B ordinary shares is calculated by dividing the net income,
adjusted for income attributable to redeemable Class A ordinary share, by the
weighted average number of
non-redeemable
Class A and Class B Ordinary share outstanding for the periods.
Non-redeemable
Class B ordinary share include the Founder Shares as these ordinary shares do
not have any redemption features and do not participate in the income earned on
the Trust Account.
Recent accounting standards
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the
Exchange Act and are not required to provide the information otherwise required
under this item.
Item 4. Controls and Procedures
On April 12, 2021, the staff at the Securities and Exchange Commission (the
"SEC") issued a statement on Accounting and Reporting Considerations for
Warrants Issued by Special Purpose Acquisition Companies ("SPACs") (the "SEC
Statement"). In the SEC Statement, the SEC staff noted that certain provisions
in the typical SPAC warrant agreement may require that the warrants be
classified as a liability measured at fair value, with changes in fair value
reported each period in earnings, as compared to the historical treatment of the
warrants as equity, which has been the practice of most SPACs, including us. We
had previously classified our private placement warrants and public warrants as
equity (for a full description of our private placement warrants and public
warrants, refer to the registration statement on Amendment No.1 to Form
S-1
(File
No. 333-
253331), filed in connection with the Company's initial public offering,
declared effective by the SEC on March 15, 2021).
After considering the SEC Statement, we concluded that there were misstatements
in the March 18, 2021 audited closing balance sheet we filed with the SEC on
Form
8-K
on March 24, 2021. Based on the guidance in Accounting Standards Codification
("ASC")
815-40,
"Derivatives and Hedging-Contracts in Entity's Own Equity", we concluded that
provisions in the warrant agreement preclude the warrants from being accounted
for as components of equity. As the warrants meet the definition of a derivative
as contemplated in ASC 815, the warrants should have been recorded as derivative
liabilities on the balance sheet and measured at fair value at inception and at
each reporting date in accordance with ASC 820, "Fair Value Measurement", with
changes in fair value recognized in the statement of operations in the period of
change. Further, ASC 815 requires that upfront costs and fees related to items
for which the fair value option is elected (our warrant liabilities) should have
been recognized as expense as incurred.

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Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim financial
statements will not be prevented, or detected and corrected on a timely basis.
We became aware of the need to change the classification of our warrants when
the SEC issued a statement entitled "Staff Statement on Accounting and Reporting
Considerations for Warrants Issued by Special Purpose Acquisition Companies
("SPACs")" on April 12, 2021. As a result, our principal executive officer and
principal financial concluded that there was a material weakness in internal
control over financial reporting as of June 30, 2021. In light of the material
weakness, we performed additional analysis as deemed necessary to ensure that
our financial statements in this Quarterly Report on Form
10-Q
were prepared in accordance with U.S. generally accepted accounting principles.
Our management evaluated, with the participation of our principal executive
officer and principal financial and accounting officer (our "Certifying
Officers"), the effectiveness of our disclosure controls and procedures as of
June 30, 2021, pursuant to Rule
13a-15(b)
under the Exchange Act and determined that, due solely to the material weakness
in our internal control over financial reporting, our disclosure controls and
procedures were not effective as of June 30, 2021. In light of this material
weakness, we performed additional analysis as deemed necessary to ensure that
our financial statements were prepared in accordance with U.S. generally
accepted accounting principles. Management is implementing remediation steps to
address the material weakness and to improve our internal control over financial
reporting. Specifically, we are expanding and improving our review process for
complex securities and related accounting standards.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such
term is defined in Rules
13a-15(f)
and
15d-15(f)
under the Exchange Act) during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting, as the circumstances that led to the
restatement of our previously filed financial statements described above had not
yet been identified. In light of the restatement of the previously filed
financial statements, we plan to enhance our processes to identify and
appropriately apply applicable accounting requirements to better evaluate and
understand the nuances of the complex accounting standards that apply to our
financial statements. Our plans at this time include providing enhanced access
to accounting literature, research materials and documents and increased
communication among our personnel and third-party 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.

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