Surf Air (URF, Santa Monica) and Tuscan Holdings Corp.II, a special purpose acquisition company, have mutually agreed to call off plans to merge, with the California-based electric aviation company choosing to list directly instead.

The decision was approved by the boards of both companies and became effective on November 15, 2022, according to a securities filing.

The termination agreement obligates Surf Air parent Surf Air Mobility Inc. (SAM) to file a registration statement covering the sale of shares with the Securities and Exchange Commission (SEC). In a statement, Surf Air Mobility Inc. announced its confidential submission of draft registration with the SEC for a proposed direct listing of its common stock. The registration statement was expected to become effective after the SEC completes its review process, subject to market and other conditions, it said.

The termination of the merger agreement became effective upon SAM's confidential submission on November 15, 2022, of the draft registration statement with the SEC.

In consideration for the termination, if SAM completes the direct listing, an Initial Public Offering (IPO), a special purpose acquisition company (SPAC) transaction, or a sale transaction on or before November 14, 2025, SAM will issue to Tuscan 600,000 shares of common stock (or an equivalent number of shares of common equity), according to the SEC filing. In addition, as reimbursement of Tuscan's expenses, at such time, SAM will either issue Tuscan an additional 35,000 shares of common stock or pay Tuscan USD700,000 in cash.

"Because Tuscan will not be able to consummate a business combination within the remaining time available to it under its amended and restated certificate of incorporation, Tuscan will now commence the process of dissolving and liquidating its assets," the SEC filing read.

The companies announced the merger plans in May 2022.