Spark I Acquisition Corp secures $1.9M promissory note

PALO ALTO, CA – Spark I Acquisition Corp ("Spark" or "the Company"), a $175.39 million market cap special purpose acquisition company, has entered into a financial agreement with its Sponsor, SPAC Fund LLC, by issuing a promissory note that allows the company to borrow up to $1.9 million. As of Monday, Spark has drawn $840,000 from this facility. According to InvestingPro data, the company’s current ratio of 0.45 indicates tight liquidity conditions, potentially explaining the need for additional funding.

This unsecured note, dated January 28, 2025, carries no interest and is repayable upon the successful completion of the Company’s initial business combination. If Spark fails to achieve a business combination, the outstanding amount will be forgiven. The Sponsor, however, has the option to convert up to $1.5 million of the note into warrants at $1.00 per warrant, upon the consummation of a business combination. These warrants would be identical to those issued in a private placement concurrent with Spark’s initial public offering.

The establishment of the note is a strategic move by Spark to secure additional working capital as it seeks a suitable business combination target. The note includes standard default provisions which, if triggered, would require immediate repayment of the principal and any other payable amounts. InvestingPro analysis reveals the company maintains a GOOD financial health score despite these arrangements, with 7 additional key insights available to subscribers.

The relationship between Spark and its Sponsor is further detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. This filing with the Securities and Exchange Commission (SEC) underscores Spark’s ongoing efforts to finance its operations leading up to a pivotal business combination.

The issuance of this promissory note is an unregistered securities transaction exempt under Section 4(a)(2) of the Securities Act of 1933. This strategic financial maneuver is disclosed in Spark’s recent 8-K filing and is part of the Company’s broader efforts to establish a solid financial foundation for its future endeavors.

Investors and interested parties can refer to the full text of the promissory note filed as Exhibit 10.1 with the SEC for a complete understanding of the terms and conditions. Trading near its 52-week low of $10.13, Spark I Acquisition Corp continues to evaluate potential business combinations that align with its strategic objectives. InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value, a crucial consideration for investors monitoring SPAC opportunities.

In other recent news, Spark I Acquisition Corp, a Cayman Islands exempted company, has announced significant developments. The company has reported the unanimous re-election of three directors to its board, who will serve until the 2027 annual meeting. In addition to this, Spark I Acquisition Corp’s shareholders have ratified the appointment of Marcum LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024.

The company has also disclosed its intent to merge with Kneron Holding Corporation, a provider of edge artificial intelligence solutions. This potential business combination could result in Kneron’s equity holders rolling their shares into the publicly traded entity. While Spark I Acquisition Corp has expressed interest in a business combination with a company in the hospitality software space, it is currently prioritizing the Kneron deal.

The merger’s completion hinges on due diligence, negotiation of a definitive agreement, and approval by the boards and shareholders of both companies. If a definitive agreement is reached, Spark I Acquisition Corp plans to file relevant documentation with the U.S. Securities and Exchange Commission.

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