| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 87-1088814 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
2201 Broadway, Suite 705, Oakland, CA | 94612 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common Stock, par value $0.0001 per share | PBAX | Nasdaq Global Market | ||
Warrants to purchase one share of Class A Common Stock | PBAXW | Nasdaq Global Market | ||
Units, each consisting of one share of Class A Common Stock and one-half of one Warrant | PBAXU | Nasdaq Global Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ | |||||
Auditor Firm ID: | Auditor Name: | Auditor Location: | ||
| Citrin Cooperman & Company, LLP | New York, NY | |||
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GLOSSARY OF TERMS
Unless otherwise provided in this Annual Report on Form references to “we,” “us,” “company” or “our company” refer to Phoenix Biotech Acquisition Corp.; References to “Cantor Fitzgerald” or “Cantor” are to Cantor Fitzgerald & Co., the representative of the underwriters of the initial public offering; references to “CCM” are to Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC whom we engaged to provide consulting and advisory services in connection with the initial public offering; references to “initial holders” or “initial stockholders” are to our sponsor and any other holders of our founder shares immediately prior to our initial public offering; references to “founder shares” are to 4,596,250 shares of our Class B common stock issued by us to our initial stockholders; references to our “initial public offering” means the initial public offering of 17,500,000 of our units, each unit consisting of one share of our Class A common stock and one-half of one warrant, where each whole warrant entitles the holder to purchase one share of our Class A common stock, which was consummated on October 8, 2021; references to our “management” or our “management team” refer to our officers; references to our “public shares” are to shares of our Class A common stock sold as part of the units in our initial public offering (whether they were purchased in the initial public offering or thereafter in the open market); references to “public stockholders” refer to the holders of our public shares, which may include our initial holders and members of our management team if and to the extent they have purchased public shares, provided that any such holder’s status as a “public stockholder” shall only exist with respect to such public shares; references to “private placement” refer to the private placement of 885,000 units purchased by our sponsor, Cantor Fitzgerald and CCM, which was consummated simultaneously with the completion of our initial public offering, at a purchase price of $10.00 per unit for a total purchase price of $8.85 million; references to “placement units” are to the 885,000 units purchased by our sponsor, Cantor Fitzgerald and CCM in the private placement, each placement unit consisting of one placement share and one-half of one placement warrant; references to “placement shares” are to an aggregate of 885,000 shares of our Class A common stock included within the placement units purchased by our sponsor, Cantor Fitzgerald and CCM in the private placement; references to “placement warrants” are to warrants to purchase an aggregate of 442,500 shares of our Class A common stock included within the placement units purchased by our sponsor, Cantor Fitzgerald and CCM in the private placement; references to our “sponsor” and to “Phoenix Biotech Sponsor” are to Phoenix Biotech Sponsor, LLC, a Delaware limited liability company. The manager of our sponsor is Chris Ehrlich; and references to “trust account” are to the trust account into which $178,500,000 of the net proceeds of the initial public offering and private placement were deposited for the benefit of the public stockholders. ii• • • • • • • • • • • • • • •
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report, which reflect our current views with respect to future events and financial performance, and any other statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report may include, for example, statements about:
the ability of our officers and directors to generate potential investment opportunities;
our ability to complete our initial business combination;
our success in retaining or recruiting, or changes required in, officers, key employees or directors following our initial business combination;
the allocation by our officers and directors of their time to other businesses and their potential conflicts of interest with our business or in approving our initial business combination;
our potential ability to obtain additional financing to complete our initial business combination;
our pool of prospective target businesses;
failure to maintain the listing on, or the delisting of our securities from, NASDAQ or an inability to have our securities listed on NASDAQ or another national securities exchange following our initial business combination;
potential changes in control if we acquire one or more target businesses for stock;
our public securities’ potential liquidity and trading;
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or
our financial performance.
The forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors”. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Summary of Risk Factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section title “Risk Factors,” that represent challenges that we face in connection with the successful implementation of our strategy. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability to
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effect a business combination, and may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:
newly formed company without an operating history;
delay in receiving distributions from the trust account;
lack of opportunity to vote on our proposed business combination;
lack of protections afforded to investors of blank check companies;
deviation from acquisition criteria;
issuance of equity and/or debt securities to complete a business combination;
lack of working capital;
| • | third-party claims reducing the per-share redemption price; |
our stockholders being held liable for claims by third parties against us;
failure to enforce our sponsor’s indemnification obligations;
warrant holders limited to exercising warrants only on a “cashless basis;”
the ability of warrant holders to obtain a favorable judicial forum for disputes with our company;
dependence on key personnel;
conflicts of interest of our sponsor, officers and directors;
the delisting of our securities by NASDAQ;
dependence on a single target business with a limited number of products or services;
our stockholders’ inability to vote or redeem their shares in connection with our extensions;
shares being redeemed and warrants becoming worthless;
our competitors with advantages over us in seeking business combinations;
ability to obtain additional financing;
our initial stockholders controlling a substantial interest in us;
warrants adverse effect on the market price of our common stock;
disadvantageous timing for redeeming warrants;
registration rights’ adverse effect on the market price of our common stock;
| • | impact of COVID-19 and related risks; |
business combination with a company located in a foreign jurisdiction;
changes in laws or regulations;
tax consequences to business combinations; and
exclusive forum provisions in our amended and restated certificate of incorporation.
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PART I
Item 1. | BUSINESS |
General
We are a blank check company incorporated as a Delaware corporation formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Annual Report as our initial business combination or our business combination. We have generated no operating revenues to date, and we do not expect that we will generate operating revenues until we consummate our initial business combination.
While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries that complement our management team’s background, and to capitalize on the ability of our management team to identify and acquire a business, focusing on the healthcare or healthcare related industries in the United States and Europe. In particular, we intend to prioritize companies in the life sciences sector where our management team and board of directors has extensive experience.
At December 31, 2021,2022, we had not yet commenced operations. All activity through December 31, 20212022 relates to the Company’s formation, its initial public offering and identifying a target company for our initial business combination.
The registration statement for our initial public offering was declared effective on October 5, 2021. On October 8, 2021, we consummated the initial public offering of 17,500,000 units, which included the partial exercise by the underwriter of its over-allotment option in the amount of 2,000,000 units, generating gross proceeds of $175,000,000.
Simultaneously with the closing of the initial public offering, we consummated the sale of 885,000 placement units at a price of $10.00 per unit in a private placement to our sponsor, Cantor Fitzgerald and CCM, generating gross proceeds of $8,850,000.
Following the closing of the initial public offering on October 8, 2021, an amount of $178,500,000 ($10.20 per unit) from the net proceeds of the sale of the units in the initial public offering and the placement units was placed in a trust account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
On December 16, 2022, we held a special meeting of our stockholders (the “Special Meeting”). At the Special Meeting, our stockholders approved an amendment (the “IMTA Amendment”) to the Company’s Investment Management Trust Agreement (the “IMTA”), dated October 5, 2021, with Continental Stock Transfer & Trust Company (“CST”), as trustee, and an amendment to the Company’s amended and restated certificate of incorporation, to extend the date by which we must consummate a business combination transaction by three months from January 8, 2023 to April 8, 2023, and provide our board of directors the ability to further extend the date by which we have to consummate a business combination up to three additional times for one month each time, for a maximum of six additional months (the “Charter Amendment”).
In connection with the Special Meeting, our sponsor agreed that if the Charter Amendment and the IMTA Amendment were approved at the Special Meeting, our sponsor, or one or more of its affiliates, members or
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third-party designees (in such capacity, the “Lender”), would lend to the Company up to $1,500,000 to be deposited into the trust account established in connection with the initial public offering. Accordingly, on December 20, 2022, the Company issued an unsecured promissory note in the principal amount of $1,500,000 (the “Promissory Note”) to the Lender, pursuant to which the Lender agreed to loan to the Company up to $1,500,000 in connection with the extension of the date by which the Company has to consummate an initial business combination. The Company deposited $325,000 into the trust account in connection with the first drawdown under the Promissory Note in order to effect the extension of the business combination period to April 8, 2023 and will deposit additional funds into the trust account for any subsequent extensions that are needed by the Company to complete an initial business combination.
In connection with the approval extension, the holders of 16,211,702 shares of our Class A common stock exercised their right to redeem their shares for cash. Following such redemptions, 2,173,298 shares of Class A common stock remain outstanding
Termination of Business Combination Agreement
As previously announced, on October 30, 2022, the Company entered into a business combination agreement (the “Business Combination Agreement”) by and among the Company, OM Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Intrinsic Medicine, Inc., a Delaware corporation (“Intrinsic”). The Business Combination Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub was to merge with and into Intrinsic, with Intrinsic surviving as a wholly-owned subsidiary of the Company (the “Merger”).
On December 6, 2022, the Company, Merger Sub and Intrinsic entered into a Termination Agreement, which among other things provides for the mutual termination of the Business Combination Agreement pursuant to Section 7.1(a) of the Business Combination Agreement (the “Termination”). No termination fee or other payment is due to any party to the Business Combination Agreement from any of the other parties as a result of the Termination.
As a result of the Termination, the Business Combination Agreement will be of no further force and effect, and none of the parties thereto shall have any further liability thereunder, with the exception of (i) the agreements contained in Section 5.3(a) (Confidentiality and Access to Information), Section 7.2 (Effect of Termination), Article VIII (Miscellaneous) and any corresponding definitions set forth in Article I of the Business Combination Agreement, and (ii) the Confidential Disclosure Agreement, dated as of July 5, 2022, by and between the Company and Intrinsic, each of which shall each survive the termination of the Business Combination Agreement and continue in full force and effect in accordance with their respective terms.
In addition, certain transaction agreements entered into in connection with the Business Combination Agreement, including, but not limited to, (i) the Sponsor Support Agreement, dated as of October 30, 2022, by and among the Company, Intrinsic, the sponsor and each of the Company’s officers and directors (the “Sponsor Support Agreement”), and (ii) the support agreements, dated as of October 30, 2022, by and among the Company, Intrinsic and certain Intrinsic stockholders (the “Intrinsic Support Agreements”), were automatically terminated in accordance with their terms upon the termination of the Business Combination Agreement.
The foregoing descriptions of the Business Combination Agreement, the Termination Agreement, the Sponsor Support Agreement and the Intrinsic Support Agreements do not purport to be complete and are qualified in their entirety by the terms and conditions of the full text of such agreements, which are filed as exhibits hereto, and are incorporated by reference herein.
Our Management Team
Experienced SPAC Management Team with Business Combination Success.
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Chief Executive Officer, Douglas Fisher, our President and Daniel Geffken, our Chief Financial Officer. Our Board of Directors provides valuable guidance, technical domain expertise, value-added input regarding senior team leadership capabilities of prospective business combination targets, and access to differentiated ideas and opportunities through complementary networks.
Messrs. Ehrlich, Geffken and Atwood, and Mses. Loewy and Kosacz, served as executive officers and/or directors of Locust Walk Acquisition Corp. (“LWAC”), a blank check company that raised $175.0 million in its initial public offering in January 2021. On May 26, 2021, LWAC entered into an Agreement and Plan of Merger (the “Locust Walk Merger Agreement”) by and among LWAC, Locust Walk Merger Sub Inc. (“Merger Sub”), and eFFECTOR Therapeutics, Inc. (“eFFECTOR”), which provided for a business combination between LWAC and eFFECTOR through the merger of Merger Sub with and into eFFECTOR, with eFFECTOR surviving the merger as a wholly owned subsidiary of LWAC (the “Locust Walk Merger”). The Locust Walk Merger was consummated on August 25, 2021, at which time the
Brian Atwood serves as a Managing Director for Versant Ventures, a healthcare-focused venture capital firm that he
Chris Ehrlich served as the Chief Executive Officer of LWAC from January 2021 to August 2021. He is currently the Principal of Ehrlich Bioventures, LLC, a consultancy working with emerging biopharma companies. He previously served as Senior Managing Director and the Global Head of Strategic Transactions at Locust Walk Partners from 2013 to 2021. He brings significant biotechnology industry, andbusiness development, venture capital experience, investment banking and SPAC experience. Since joiningWhile at Locust Walk Partners, in 2013, Mr. Ehrlich has beenwas involved with sourcing and leading multiple transactions for emerging biopharmaceutical companies, including the sale of Xyphos Biosciences, Inc. to Astellas in 2019 and the sale of Thar Pharmaceuticals to Grunenthal in 2018. Prior to Locust Walk Partners, he was a Managing Director at InterWest Partners, or InterWest, a venture capital firm. At InterWest, he served on the boards of KAI Pharmaceuticals, a privately held pharmaceutical company (acquired by Amgen in 2012), Biomimetic Therapeutics, Inc., a biotechnology company (acquired by Wright Medical Technologies in 2013), InvuitY, Inc., a medical technology company acquired by Stryker in 2018) and Xenon Pharmaceuticals, a biopharmaceutical company (NASDAQ: XENE). Prior to joining InterWest, Mr. Ehrlich worked as the Director of Licensing and Business Development at Purdue Pharma, in business development at Genentech, in venture capital at the U.S. Russia Investment Fund, and in biotechnology strategy development at L.E.K. Consulting. Mr. Ehrlich currently serves on the BoardBoards of Directors of eFFECTOR and Prostate Management Diagnostics, Inc., on the Advisory Board of the Peter Michael Foundation, where he is a Senior Advisor, and on the Healthcare at Kellogg Advisory Board at Northwestern University. Mr. Ehrlich has a B.A. in Government from Dartmouth College and a M.B.A. from the Kellogg Graduate School of Management at Northwestern University.
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Douglas Fisher, MD is currently a Venture Partner at Revelation Partners, which he joined in 2020, and an Executive in Residence at InterWest Partners. Dr. Fisher joined InterWest’s healthcare team in 2009, focusing on biopharmaceutical, diagnostic and medical device investments. He is a board member of Gynesonics, Indi Molecular, Precipio Diagnostics (NASDAQ: PRPO), and WeavR Health. He is also actively involved in InterWest’s investments in PMV Pharma, Potenza Therapeutics, Sera Prognostics (NASDAQ: SERA, where he
Daniel Geffken is a founder and Managing Director of Danforth Advisors, LLC, or Danforth, a strategic, financial and thought partner to public and private life science companies across all stages of the corporate life cycle. He also served as the Chief Financial Officer of LWAC from January 2021 to August 2021. Mr. Geffken brings more than 30 years of experience to his work with Danforth clients, ranging from
Barbara Kosacz has served as the Chief Operating Officer and General Counsel of Kronos Bio, Inc. (NASDAQ: KRON), a clinical-stage biopharmaceutical company, since July 2020. She also served as a director of LWAC from January 2021 to August 2021. Prior to that, Ms. Kosacz was a Partner at the international law firm Cooley LLP from January 1997 to December 2000, and from February 2002 until July 2020, where she led the international Life Sciences Practice. Ms. Kosacz has more than 25 years of experience in counseling clients in the life sciences arena, ranging from early stage startups to larger public companies, venture funds, investment banks, and
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the board of directors of XOMA Corp. (NASDAQ: XOMA), a royalty-aggregator company and a member of the board of directors of Xoma Corp.Athira Pharma, Inc. (NASDAQ: XOMA)ATHA), a clinical-staged biotechnology company. Ms. Kosacz received a B.A. in Classics from Stanford University and a J.D. from the University of California, Berkeley School of Law.
Kathleen LaPorte is an experienced executive, founder and board member, focused on life sciences.
Caroline Loewy serves or has served on public company boards, including LWAC, provides strategic advisory services to life science companies, and has more than 25 years of experience in the biopharmaceutical industry.
Ryan Gilbert serves as an advisor to the company. Mr. Gilbert brings over 20 years of global financial services expertise as an entrepreneur, angel investor, venture investor, and advisor. His public company exits include Square and Eventbrite. Mr. Gilbert previously served as an advisor to LWAC and President and Chief Executive Officer of FTAC Parnassus Acquisition Corp. (NASDAQ: FTPA), and currently serves as an advisor to Newcourt Acquisition Corp., the President and Chief Executive Officer of FTAC Parnassus Acquisition Corp. (NASDAQ: FTPA) and of FTAC Zeus Acquisition Corp. (NASDAQ: ZING), each a blank check company formed for the purpose of effecting its own initial business combination. He was most recently President and Chief Executive Officer of FTAC Olympus Acquisition Corp., or FTAC Olympus, a blank check company which raised $754.0 million in its initial public offering in August 2020 and that merged with Payoneer (NASDAQ: PAYO) in June 2021. Mr. Gilbert is founder and General Partner of Launchpad Capital, a venture capital fund. He was most recently a General Partner at Propel Venture Partners, a venture capital fund backed by BBVA Group. He currently serves on the boards of directors of Propel Venture Partners portfolio companies Charlie Finance Co., Guideline, Inc., Grabango Co. and Steady Platform Inc. Mr. Gilbert serves as the executive chairman of SmartBizLoans, a small business lending marketplace that he
Shami Patel also serves as an advisor to the company. Mr. Patel is a Managing Director of the Asset Management Group of Cohen & Company Inc., a financial services company. He previously served as an advisor to LWAC and as an advisor to FinServ Acquisition Corp., or Finserv, (NASDAQ: FSRV), a blank check company which raised $250.0 million in its IPO in November 2019 and consummated its business combination in June 2021. Mr. Patel previously served as Chief Operating Officer of FTAC Olympus. Mr. Patel was also active in all aspects of the
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IPO and business combination process of FinTech Acquisition Corp., or FinTech I and FinTech Acquisition Corp. II, or FinTech II, including origination, due diligence and execution. He served as a Director, Chair of the Audit Committee and member of the Compensation Committee of FinTech I and FinTech II. FinTech I raised $100.0 million in its IPO in February 2015 and completed its initial business combination when it acquired FTS Holding Corporation in July 2016, in connection with which FinTech I changed its name to CardConnect Corp. The common stock of CardConnect Corp. was traded on the Nasdaq Capital Market under the symbol “CCN” until CardConnect Corp. was acquired by First Data Corporation in July 2017. FinTech II raised $175.0 million in its IPO in January 2017 and completed its initial business combination when it acquired
The past performance of our management team, our advisors, our board, is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical record of our management teams’, our advisors’, or our board’s performance as indicative of our future performance.
Industry Opportunity
While we may acquire a business in any industry, we will focus on the healthcare and healthcare related industries in the United States and Europe. The large overall size of the healthcare industry, the continued investment in innovative technologies, the broad universe of acquisition targets, the favorable public market conditions for healthcare, and our expertise in the healthcare sector support our ability to identify an attractive opportunity and execute a high-value business combination in the healthcare industry, specifically in the life sciences sector.
The healthcare industry represents a large target market with constant innovation and high levels of investment in innovative technologies
The life sciences sector is a large and fast-growing subsector of the healthcare industry. According to the IQVIA Institute for Human Data Science (“IQVIA”), U.S. life sciences venture capital deal volume reached approximately $20 billion in 2019, with average deal values growing at a 12% compound annual growth rate, or CAGR, from 2014 to 2019. Furthermore, biopharma’s investment into research and development, or R&D, to fuel future innovation is evident: according to Evaluate Pharma, global biopharmaceutical R&D expenditure reached $186 billion in 2019 and, according to Pharma Intelligence, there is a pipeline of approximately 17,700 assets in 2020 in all stages of development, ranging from preclinical product candidates to approved therapies. Additionally, according to IQVIA, in the period from 2014 to 2019, the 15 largest pharmaceutical companies increased annual R&D spending from approximately $87 billion to approximately $110 billion with a 5% CAGR. This increase in R&D investment has been matched by an increase in the commercialization of therapeutics: the U.S. Food and Drug Administration (the “FDA”), has approved an average of 51 novel drugs
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annually in each of the last three years from 2016 through 2019 as compared to about 32 novel drugs annually in each of the prior seven years from 2010 through 2016. We believe this pace of innovation in the life sciences sector is robust due to several factors including high unmet medical needs, time-limited patent protection of drugs, and global healthcare cost pressures.
An abundance of private life science companies seeking capital suggests ample business combination opportunities.
In addition, according to a 2020 study by IQVIA, the total volume of Phase 1 and Phase 2 clinical trials increased by 35% from 2014 through 2019, which we believe indicates an increased number of biopharmaceutical companies entering clinical studies, which are likely to require capital to advance their programs. The main focus areas for development focus appear to be oncology, neurology, infectious and autoimmune disorders which well aligns with our board and management team’s experience. Of particular note, there has been a 76% increase in oncology products advancing to late stage clinical trials between 2014-2019. In 2019, products in development for oncology represented
SPACs becoming an increasingly well accepted model for biotechnology companies.
Advantages of SPAC Model.
| • | Potentially reduced management time and distraction: Getting ready for an IPO requires boards and management teams to devote considerable time and attention to the lengthy process. It includes, among other activities, document drafting, underwriter selection and extensive investor engagement. In addition, private biotech companies often have to spend significant time in advance of the IPO to secure private “crossover funding.” So, in effect, there is a two-step process. The significant commitment of time and resources can distract management teams from focusing on advancing a company’s product pipeline, a particularly challenging dynamic for high-growth biotechnology company executives. SPACs may offer a more streamlined and efficient path to becoming a publicly-held company. |
| • | Improved access to more diverse capital: There is a limited number of dedicated biotechnology funds with the ability to perform thorough due diligence on biotechnology companies. Many of these firms work together in close-knit relationships. As a result, private biotechnology companies are often beholden to the same limited set of investors to help anchor an IPO. Furthermore, as it is advantageous to them, these investors often attempt to encourage private biotech companies to pursue crossover funding ahead of the IPO. Failure to capture the attention and support of these investors can negatively |
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impact the execution of the IPO. Moreover, a biotechnology IPO that produces a relatively narrow investor base can lead to material longer-term negative impacts including stockholder base turnover and increased share price volatility. These dynamics can impair a management team’s ability to focus on long-term value creation. We believe that SPACs offer private biotech companies the ability to bypass the crossover round before going public and potentially access a more diverse stockholder base. |
| • | Improved price discovery: The process for biotechnology IPO demand generation often leads to deals that, while significantly oversubscribed, do not achieve the best price possible for biotechnology companies. As previously mentioned, IPO valuations are often closely related to private crossover valuations. This limited process of true price discovery can frustrate the ability of biotechnology companies to maximize proceeds at IPO and lead to outsized trading fluctuations post-IPO pricing. SPACs may offer greater price and valuation certainty to management teams. |
| • | Risk of IPO Window Closing: A biotechnology company’s ability to access the public markets is contingent on a constructive macroeconomic backdrop, but can also be impacted by fluctuating investor sentiment due to exogenous events, which can cause financing windows to close quickly and unexpectedly. SPACs may offer a more predictable alternative to the public market. |
We believe that biotechnology companies at a certain stage in their development will see material benefits from being publicly traded, including greater company and product awareness, a more liquid acquisition currency and diversified funding sources and access to capital. An acquisition by a blank check company with a management team that is well known and respected by biotechnology company founders, investors and management teams can provide a more transparent and efficient mechanism to bring a private biotechnology company to the public markets.
We have significant domain expertise that we believe will position us uniquely for a successful business combination.
Acquisition Strategy
We believe our management team, with the assistance of our board and advisors, is well positioned to identify unique opportunities within the life sciences industry. Each member of our management team and board has spent significant portions of their careers working with businesses in the life sciences industry and have developed a wide network of professional services contacts and business relationships in that industry. Our selection process leverages our relationships with venture capitalists and growth equity funds, executives of private and public companies, as well as investment banking firms, which we believe should provide us with a key advantage in sourcing potential business combination targets. Given our profile and industry expertise, we anticipate that target business combination candidates may be brought to our attention from various unaffiliated sources, including investors in and managers of other private and public companies in our networks.
We also deploy a proactive sourcing strategy to focus on unique opportunities that are best positioned for our initial business combination. We leverage our collective deep industry expertise and analytical capabilities to identify characteristics of life science companies historically correlating with outperforming publicly traded peers. We also leverage our significant operating, corporate strategy, and business development expertise to
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efficiently triage opportunities to focus on those opportunities that we believe present the highest risk-adjusted return potential for our stockholders. We will attempt to use these insights to identify attractive acquisition targets for our initial business combination. We believe the combination of the relationships, capital markets expertise, and operating experience of our advisors can help accelerate the process and make us a preferred partner for these potential targets. We will initially focus on emerging growth healthcare companies in healthcare niches including, but not limited to, biotechnology, medical technology and digital health.
Acquisition Criteria
We have identified the following criteria to evaluate prospective target businesses. We may, however, decide to enter into our initial business combination with a target business that does not meet these specific criteria. We currently intend to seek companies that we believe:
are developing products, technologies, or services that are differentiated or will be differentiated from competitors based on scientific rationale, preclinical and/or clinical data, and address unmet needs, suggesting favorable growth opportunities in the markets in which they operate or intend to operate;
have developed or are developing products, technologies, or services that have progressed sufficiently to evaluate and reduce risk in the investment while having a well-defined path toward value creating milestones;
offer unrecognized or underrecognized value within the investment community;
are led by exceptional management teams and have strong corporate governance and reporting policies in place; and
can benefit from our industry expertise and relationships as well as access to the public capital markets and are expected to be well received by public investors.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which would be in the form of tender offer documents or proxy solicitation materials that we would file with the Securities and Exchange Commission.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors or their respective affiliates. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, or their respective affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, or FINRA, or a qualified independent accounting firm that our initial business combination is fair to our company from a financial point of view. Additionally, pursuant to NASDAQ rules, any initial business combination must be approved by a majority of our independent directors.
Initial Business Combination
Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment
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banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. Our stockholders may not be provided with a copy of such opinion, nor will they be able to rely on it.
We may, at our option, pursue an acquisition opportunity jointly with one or more entities or funds affiliated with our sponsor or management team or their respective affiliates, which we refer to as an affiliated joint acquisition. Any such parties may
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not engage in, any operations until completion of our initial business combination. We intend to effectuate our initial business combination using cash from the proceeds of the initial public offering and the private placement, our capital stock, debt or a combination of these as the consideration to be paid in our initial business combination.
If we pay for our initial business combination using stock or debt securities, or we do not use all of the funds released from the trust account for payment of the purchase price in connection with our business combination or for redemptions of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.
There is no current basis for stockholders to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
NASDAQ rules require that our initial business combination be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination. However, if our securities are not listed on NASDAQ or another securities exchange, we will no longer be subject to that requirement.
We may seek to raise additional funds through a private offering of debt or equity securities to finance our initial business combination, and we may effectuate an initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would consummate such financing only simultaneously with the consummation of our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the initial business combination would disclose the terms of the financing and, only if required by law or NASDAQ, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
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Sources of Acquisition Candidates
Target business candidates will beare brought to our attention from various unaffiliated sources, including investment bankers, attorneys, accountants, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds, brokers and other members of the financial community and corporate executives. These target candidates may present solicited or unsolicited proposals. Such sources became aware that we were seeking a business combination candidate by a variety of means, including publicly available information relating to the initial public offering, public relations and marketing efforts or direct contact by management following the completion of the initial public offering.
Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates of which they become aware through their contacts. While we do not presently anticipate engagingWe may engage the services of professional firms or other individuals that specialize in business acquisitions, on any formal basis, we
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers, directors or their affiliates. Additionally, we are not prohibited from partnering, submitting joint bids, or entering into any similar transaction with such persons in the pursuit of an initial business combination. If we seek to complete an initial business combination with such a company or we partner with such persons in our pursuit of an initial business combination, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm, that such an initial business combination is fair to our stockholders from a financial point of view. Generally, such opinion is rendered to a company’s board of directors and investment banking firms may take the view that stockholders may not rely on the opinion. Such view will not impact our decision on which investment banking firm to hire. Additionally, pursuant to NASDAQ rules, any initial business combination must be approved by a majority of our independent directors.
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Unless we consummate our initial business combination with an affiliated entity, we are not required to obtain a financial fairness opinion from an independent investment banking firm. If we do not obtain such an opinion, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value and fairness based on standards generally accepted by the financial community. The application of such standards would involve a comparison, from a valuation standpoint, of our business combination target to comparable public companies, as applicable, and a comparison of our contemplated transaction with such business combination target to other then-recently announced comparable private and public company transactions, as applicable. The application of such standards and the basis of our board of directors’ determination will be discussed and disclosed in our tender offer or proxy solicitation materials, as applicable, related to our initial business combination.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Selection of a target business and structuring of our initial business combination
NASDAQ rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
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In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of NASDAQ’s 80% fair market value test. There is no basis for stockholders to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks inherent in such
In evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that will be made available to us.
The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after consummation of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business combination in a single industry. By consummating a business combination with only a single entity, our lack of diversification may:
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
cause us to depend on the marketing and sale of a single product or limited number of products or services.
Limited ability to evaluate the target’s management team
Although we closely scrutinize the management of a prospective target business when evaluating a target business, our assessment of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. The future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following a business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to a business combination. Moreover, we cannot assure you that members of our management team will have experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
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Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders may not have the ability to approve a business combination
We may not seek stockholder approval before we effect our initial business combination as not all business combinations require stockholder approval under applicable state law. However, we will seek stockholder
Type of Transaction | Whether Stockholder Approval is Required | |
Purchase of assets | No | |
Purchase of stock of target not involving a merger with the company | No | |
Merger of target into a subsidiary of the company | No | |
Merger of the company with a target | Yes |
So long as we obtain and maintain a listing for our securities on NASDAQ, stockholder approval would be required for our initial business combination if, for example:
we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding (other than in a public offering);
any of our directors, officers or substantial stockholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or
the issuance or potential issuance of common stock will result in our undergoing a change of control.
Permitted purchases of our securities
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers or their respective affiliates may purchase public securities in the open market or in privately negotiated transactions either prior to or following the consummation of our initial business combination, although as of the date of this Annual Report they have no commitments, plans or intentions to engage in such transactions. If they do effect such purchases, we anticipate that they would approach a limited number of large holders of our securities that have voted against the business combination or sought redemption of their shares, or that have indicated an intention to do so, and engage in direct negotiations for the purchase of such holders’ positions. All holders approached in this manner would be institutional or sophisticated holders. There is no limit on the number of shares they may acquire. Our sponsor, directors, officers, advisors or their affiliates will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act or in transactions that would violate Section 9(a)(2) or Rule
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The purpose of such purchases of public securities would be to (i) increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to warrantholders for approval in connection with our initial business combination. This may result in the consummation of a business combination that may not otherwise have been possible.
As a consequence of any such purchases by our sponsor, directors, officers or their affiliates, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to obtain the continued listing of our securities on NASDAQ or another national securities exchange in connection with our initial business combination.
Our sponsor, officers, directors and/or their respective affiliates anticipate that they will identify the public stockholders with whom they may pursue privately negotiated purchases through either direct contact by the public stockholders or by our receipt of redemption requests or votes against the business combination submitted by such public stockholders following our mailing of proxy materials in connection with our initial business combination. The sellers of any shares so purchased by our sponsor, officers, advisors, directors and/or their affiliates would, as part of the sale arrangement, revoke their election to redeem such shares and withdraw their vote against the business combination. The terms of such purchases would operate to facilitate our ability to consummate a proposed business combination by potentially reducing the number of shares redeemed for cash.
Any purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule
Redemption rights for public stockholders upon consummation of our initial business combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the consummation of our initial business combination at a
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Manner of Conducting Redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either in connection with a stockholder meeting called to approve the business combination or by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
We currently intend to conduct redemptions pursuant to a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
| • | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business combination, and |
file tender offer documents with the SEC prior to consummating our initial business combination that will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate any plan established in accordance with
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule
If, however, stockholder approval of the transaction is required by law or Nasdaq,NASDAQ, or we decide to obtain stockholder approval for business or other reasons, we will:
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
file proxy materials with the SEC.
We expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in
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conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our NASDAQ listing or Exchange Act registration.
If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of
Our amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination after payment of deferred underwriting commissions (so that we are not subject to the SEC’s “penny stock” rules), and, in any event, the terms of the proposed business combination may require our net tangible assets to be greater than $5,000,001. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed business combination. If the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly tendered plus the amount of any cash payments required pursuant to the terms of the proposed business combination exceeds the aggregate amount of cash available to us, taking into consideration the requirement that we maintain net tangible assets of at least $5,000,001 or such greater amount depending on the terms of our potential business combination, we will not consummate the business combination and any shares of Class A common stock tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer.
Limitation on redemption upon consummation of a business combination if we seek stockholder approval
Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to an aggregate of more than 20.0% of the shares sold in the initial public offering without our prior consent. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights as a means to force us or our sponsor or its affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 20.0% of the shares sold in the initial public offering could threaten to exercise its redemption rights against a business combination if such holder’s shares are not purchased by us or our sponsor or its affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to
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redeem to no more than 20.0% of the shares sold in the initial public offering, we believe we will limit the ability of a small number of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including all shares held by those stockholders that hold more than 20.0% of the shares sold in the initial public offering) for or against our initial business combination.
Tendering stock certificates in connection with redemption rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve our initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on the initial business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder was seeking to exercise his redemption rights. After the initial business combination was approved, the company would contact such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an “option window” after the consummation of the business combination during which he could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the consummation of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may, with our consent, be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivers its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is
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anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of an initial business combination.
If the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our proposed initial business combination is not consummated, we may continue to try to consummate a business combination with a different target until JanuaryJuly 8, 2023.
Redemption of public shares and liquidation if no initial business combination
Our amended and restated certificate of incorporation provides that we have only until JanuaryJuly 8, 2023 to complete our initial business combination. If we are unable to consummate our initial business combination by Januarythe end July 8, 2023, we will distribute the aggregate amount then on deposit in the trust account, pro rata to our public stockholders by way of redemption and cease all operations except for the purposes of winding up of our affairs. If we have not consummated a business combination by JanuaryJuly 8, 2023, we 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 all public shares then outstanding at a
The initial holders, our officers and directors have agreed to waive their redemption rights with respect to their founder shares and placement shares, as applicable, (i) in connection with the consummation of a business combination, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023 and (iii) if we fail to consummate a business combination by JanuaryJuly 8, 2023 or if we liquidate prior to JanuaryJuly 8, 2023. The initial holders and our officers and directors have also agreed to waive their redemption rights with respect to public shares in connection with the consummation of a business combination and in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023. However, the initial holders and our officers and directors will be entitled to redemption rights with respect to any public shares held by them if we fail to consummate a business combination by JanuaryJuly 8, 2023.
The representative has agreed to waive its rights to deferred underwriting commissions held in the trust account if we do not consummate a business combination and subsequently liquidate and, in such event, the deferred underwriting commissions held in the trust account will be available to fund the redemption of our public shares.
Our initial stockholders, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023 unless we provide our public stockholders with the opportunity to
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redeem their shares of Class A common stock upon approval of any such amendment at a
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of the initial public offering and the private placement, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the
Although we will seek to have all vendors, service providers (except our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. If we do not obtain a waiver from a third party, we will obtain the written consent of our sponsor before our entering into an agreement with such third party. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver and where our sponsor executes a written consent. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, pursuant to a written agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a definitive transaction agreement, reduce the amounts in the trust account to below $10.20 per share, except as to any claims
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by a third party who executed a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We cannot assure you, however, that our sponsor will be able to satisfy those obligations. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations, we have not asked our sponsor to reserve for such obligations and we believe that its only assets are securities of our company. Therefore, we cannot assure you that our sponsor will be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all
If the proceeds in the trust account are reduced below $10.20 per public share and our sponsor asserts that it is unable to satisfy any applicable obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in a particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the
We will have access to the net proceeds from the initial public offering and the private placement held out of trust with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares if we do not consummate our initial business combination by Januarythe end July 8, 2023 may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a
Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination by JanuaryJuly 8, 2023 is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we have not consummated a business combination by JanuaryJuly 8, 2023, or earlier at the discretion of our board, we 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 all public shares then outstanding at a
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possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following JanuaryJuly 8, 2023 and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims
As a result of this obligation and our sponsor’s indemnification of the trust account against certain claims as previously described in this section, we believe that the claims that could be made against us will be significantly limited and that the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below $10.20 per public share, and will not be liable as to any claims under our indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.20 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not consummate a business combination by JanuaryJuly 8, 2023, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023 or (iii) if they redeem their respective shares for cash upon the consummation of the initial business combination. Also, our management may cease to pursue a business combination prior to JanuaryJuly 8, 2023 (our board of directors may determine to liquidate the trust account prior to such expiration if it determines, in its business judgment, that it is improbable within the remaining time to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate a business combination). In no other circumstances will a stockholder have any right or interest of
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any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Competition
In identifying, evaluating and selecting a target business for our initial business combination, we encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds and operating businesses seeking strategic
Facilities
We currently maintain our executive offices at 2201 Broadway, Suite 705, Oakland, CA 94612. We have agreed to pay our sponsor or its affiliate or designee a total of $20,000 per month for office space, utilities and secretarial and shared support services. A portion of such payment is paid by our sponsor to an affiliate of a member of our sponsor for additional office space and certain support services. We consider our current office space adequate for our current operations.
Employees
We currently have three executive officers. These individuals are not obligated to devote any specific number of hours to our affairs but they devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they devote in any time period varies based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation of our initial business combination.
Periodic Reporting and Financial Information
We have registered our units, Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports contain financial statements audited and reported on by our independent registered public accountants. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with U.S. GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to
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provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial statements prepared in accordance with the above requirements or that the potential target business will be able to prepare its financial statements in accordance with the above requirements. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
We are required to evaluate and report on our internal control procedures over financial reporting for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only in the event we are deemed
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by
Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation
Item 1A. | RISK FACTORS |
You should consider carefully all of the risks described below, which we believe are the principal risks that we face and of which we are currently aware, and all of the other information contained in this Annual Report. If any of the events or developments described below occur, our business, financial condition or results of operations could be negatively affected.
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Risks Relating to our Search for, Consummation of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks
Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, unless such vote is required by law or NASDAQ, which means we may consummate our initial business combination even though a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable state law or the rules of NASDAQ or if we decide to hold a stockholder vote for business or other reasons. For example, NASDAQ rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we structure a business combination that requires us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by law or NASDAQ rules, the decision as to whether we will seek stockholder approval of a proposed business combination will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, where we are not required but elect to seek stockholder approval, we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of the business combination we consummate.
If we seek stockholder approval of our initial business combination, our sponsor, directors and officers have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our sponsor, officers and directors have agreed to vote their founder shares and any placement shares and public shares they hold in favor of our initial business combination. If we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case if holders of founder shares agreed to vote their founder shares, placement shares and public shares in accordance with the majority of the votes cast by our public stockholders.
Because our sponsor, officers and directors have agreed to vote their aggregate 4,596,250 outstanding Class B Common Stock in favor of a business combination, such business combination will be approved even if none of the outstanding Class A Common Stock is voted in favor of such business combination.
Your ability to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Since our board of directors may consummate a business combination without seeking stockholder approval, public stockholders may not have the right to vote on the business combination unless we seek such stockholder vote. Accordingly, your ability to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights with respect to a proposed business combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
We may enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. Our amended and restated certificate of incorporation requires us to provide all of our stockholders with an opportunity to redeem all of
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their shares in connection with the consummation of any initial business combination, although our sponsor, directors and officers and each holder of placement units has agreed to waive his, her or its respective redemption rights with respect to founder shares and placement shares, and in the case of the initial holders, public shares held by him, her or it in connection with the consummation of our initial business combination. If too many
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to consummate the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B common stock results in the issuance of Class A shares on a greater than
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful increases. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
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The requirement that we complete a business combination by JanuaryJuly 8, 2023 may give potential target businesses leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to consummate a business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate a business combination by JanuaryJuly 8, 2023. Consequently, such target
We may not be able to consummate a business combination by JanuaryJuly 8, 2023, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We must complete our initial business combination by JanuaryJuly 8, 2023. We may not be able to find a suitable target business and consummate a business combination within that time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. If we have not consummated a business combination by JanuaryJuly 8, 2023, or earlier, at the discretion of our board pursuant to the expiration of a tender offer conducted in connection with a failed business combination, we 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 all public shares then outstanding at a
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus
The
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers and their affiliates may elect to purchase shares of common stock from public stockholders, in which case they may influence a vote in favor of a proposed business combination that you do not support and reduce the public “float” of our Class A common stock or public warrants.
If we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers or their respective affiliates may purchase shares or warrants in the open market or in privately negotiated transactions either prior to or following the consummation of our initial business combination. Our sponsor,
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed. Please see “Business — Tendering stock certificates in connection with redemption rights.”
You will not have any rights to or interest in funds from the trust account, except under limited circumstances. To liquidate your investment, therefore, you may be forced to sell your shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the consummation of our initial business combination; (ii) the redemption of our public shares if we are unable to consummate a business combination by JanuaryJuly 8, 2023, subject to applicable law; (iii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023; or (iv) otherwise upon our
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liquidation or in the event our board of directors resolves to liquidate the trust account and ceases to pursue the consummation of a business combination prior to JanuaryJuly 8, 2023 (our board of directors may determine to liquidate the trust account prior to such date if it determines, in its business judgment, that it is improbable within the remaining time that we will be able to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate a business combination). In addition, if our plan to redeem our public shares if we are unable to consummate an initial business combination by JanuaryJuly 8, 2023 is not consummated for any reason, Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond JanuaryJuly 8, 2023 before they receive
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since we intend to use the net proceeds of the initial public offering and the private placement to complete an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States securities laws. However, because we had net tangible assets in excess of $5.0 million upon the completion of the initial public offering and the private placement and we filed a Current Report on Form
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete a business combination. If we are unable to complete our initial business combination, you may receive only $10.20 per share from our redemption of your shares, and our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources, or more industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only $10.20 per share (based on the trust account balance as of December 31, 2021) from our redemption of our shares, and our warrants will expire worthless.
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If the net proceeds from the initial public offering and the private placementfunds not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor to fund our search for an initial business combination, to pay our taxes and to complete our initial business combination.
As of the initial public offering and the private placement, $1,098,573December 31, 2022, $475,870 was available to us as of December 31, 2021 outside the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. None of our sponsor, members of our management team nor any of their
Subsequent to consummation of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this examination will uncover all material risks that may be presented by a particular target business, or that factors outside of the target business and outside of our control will not later arise. Even if our due diligence successfully identifies the principal risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. As a result, from time to time following our initial business combination, we may be forced to write-down or
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the
Placing funds in the trust account may not protect those funds from third party claims against us. Although we seek to have all vendors, service providers (except our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements or, even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, claims for fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver. If any third party refuses to execute an agreement waiving claims to the monies
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held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement without a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any available alternative. If we do not obtain a waiver from a third party, we will obtain the written consent of our sponsor before entering into an agreement with such third party.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills management believes to be
Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
If proceeds in the trust account are reduced below $10.20 per public share and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.20 per share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
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If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, by making distributions to public stockholders before making provision for creditors, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims for punitive damages.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination by JanuaryJuly 8, 2023 may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers or investment bankers) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot
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assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares if we do not consummate our initial business combination by JanuaryJuly 8, 2023 is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.
We may not hold an annual meeting of stockholders until after we consummate a business combination.
We may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by NASDAQ), and thus may not be in compliance with Section 211(b) of the DGCL, which requires that an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless directors are elected by written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Even if an annual meeting was held for the purpose of electing directors prior to the consummation of a business combination, only holders of Class B common stock would be entitled to notice of such meeting and to vote at such meeting.
Because we have not selected a particular business within the healthcare industry or any other industry or any specific target businesses with which to pursue a business combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
We will seek to consummate a business combination with an operating company in the healthcare industry, with a focus on the life sciences sector, but may also pursue acquisition opportunities in other business sectors or geographic regions, except that we are not, under our amended and restated certificate of incorporation, permitted to effectuate a business combination with another blank check company or similar company with nominal operations. Because we have not yet identified any specific target business with respect to a business combination,At this time, you have no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. If we consummate our initial business combination, we may be affected by numerous risks inherent in the business operations of the entity with which we combine. Because we will seek to acquire businesses that potentially need financial, operational, strategic or managerial redirection, we may be affected by the risks inherent in the business and operations of a financially or operationally unstable entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. Accordingly, any securityholders who choose to remain securityholders following the initial business combination could suffer a reduction in the value of their securities. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition target.
We may seek investment opportunities in sectors outside of our industry focus (which may or may not be outside of our management’s area of expertise).
Although we currently intend to consummate a business combination in the healthcare industry, with a focus on the life sciences sector, we will consider a business combination outside this industry if a business combination candidate is presented to us and we determine that such candidate offers an attractive investment opportunity for our company. If we elect to pursue an investment outside of the healthcare industry, our management’s expertise in that industry would not be directly applicable to its evaluation or operation, and the
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Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into a business combination with a target that does not meet such criteria and guidelines and, as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into a business combination will not have all of these positive attributes. If we consummate a business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in an initial business combination candidate. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law or NASDAQ, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to obtain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share (based on the trust account balance as of December 31, 2021) on our redemption, and our warrants will expire worthless.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject us to volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
To the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent investment banking firm and, consequently, you may have no assurance from an independent source that the price we are paying for the target in our initial business combination is fair to our stockholders from a financial point of view.
Unless we consummate our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of the target business, we are not required to obtain an opinion from an independent investment banking firm that the price we are paying is fair to our stockholders from a financial point of view. If we do not obtain an opinion, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
If we hold a stockholder vote and must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
If we hold a stockholder vote to approve our initial business combination, the federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
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tests include historical and/or pro forma financial statement disclosure. If we make a tender offer for our public shares, we will include the same financial statement disclosure in our tender offer documents whether or not they are required under the tender offer rules. These financial statements must be prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), or international financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances, and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and consummate our initial business combination by January 8,July 23, 2023.
The requirement that we maintain a minimum net worth or retain a certain amount of cash could increase the probability that we will be unable to complete a proposed business combination and that you would have to wait for liquidation in order to redeem your stock.
If, pursuant to the terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate the business combination, the ability of our public stockholders to cause us to redeem their shares in connection with such proposed transaction will increase the risk that we will not meet that condition and, accordingly, that we will not be able to complete the proposed transaction. If we do not complete a proposed business combination, you would not receive your pro rata portion of the trust account until we liquidate or you are able to sell your stock in the open market. If you were to attempt to sell your stock in the open market at that time, the price you receive could represent a discount to the pro rata amount in our trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
The Sarbanes-Oxley Act requires that we maintain a system of internal controls and beginning with our annual report on Form
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate a business combination with which a substantial number of our stockholders do not agree.
Our amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business
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are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders of a majority of the then outstanding warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023 or (B) with respect to any other provision relating to stockholders’ rights or
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting a business combination with a prospective target business, our ability to assess the target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we expected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
The provisions of our amended and restated certificate of incorporation that relate to our
Our amended and restated certificate of incorporation provides that any of its provisions related to
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provide redemption rights to public stockholders as described herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote with common stockholders on matters related to our
Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by JanuaryJuly 8, 2023, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share on our redemption.
Because of the size of our initial business combination, the obligation to repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination, or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We may be unable to obtain any necessary financing on acceptable terms, if at all. The current economic environment has
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Our initial stockholders will control the election of our board of directors until consummation of our initial business combination and will hold a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial business combination and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own approximately 23.0%78.2% of our outstanding common stock, including placement shares. In addition, the founder shares, all of which are held by our initial stockholders, entitle the holders to elect all of our directors prior to the consummation of our initial business combination. Holders of our public shares have no right to vote on the election of directors during such time. These provisions of our amended and restated certificate of incorporation may only be amended by a majority of at least 90% of our common stock voting at a stockholder meeting. As a result, you will not have any influence over the election of directors prior to our initial business combination.
Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, as a result of their substantial ownership in our company, our initial stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, our initial stockholders will exert significant influence over actions requiring a stockholder vote.
Holders of founder shares and purchasers of placement units will control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Holders of founder shares and placement units (other than Cantor Fitzgerald and CCM) own 23.0%78.2% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. Holders of founder shares are not restricted from purchasing Class A common stock in the aftermarket or in privately negotiated transactions, which would increase their control. The holders of founder shares do not have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our common stock. In addition, our board of directors, whose members were elected by the initial holders, is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a
Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate another target business and consummate our initial business combination. If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share from our redemption of our shares and our warrants will expire worthless.
The investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
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Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business due to a reduction in the funds available for expenses relating to such efforts. If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share (based on the trust account balance as of December 31, 2021) from our redemption of their shares and our warrants will expire worthless.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with our initial business combination. These agreements may provide for them to receive compensation following our initial business combination and, as a result, may cause them to have conflicts of interest in determining whether a particular business combination would be advantageous to us.
Our key personnel may decide to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the consummation of our initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business and cause them to have conflicts of interest in determining whether a particular business combination would be advantageous to us. However, we believe the ability of such individuals to remain with us after the consummation of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the consummation of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We may attempt to consummate business combinations with multiple prospective targets simultaneously, which may hinder our ability to consummate an initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to acquire several businesses simultaneously that are owned by different sellers, we will need each seller to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, we may be unable to operate the combined business successfully, and you could lose some or all of your investment in us.
We may attempt to consummate our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we expected, or at all.
In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of the information developed during our due diligence examination, which may be limited. As a result, we could acquire a company that is not as profitable as we expected, or at all. Furthermore, the relative lack of information about a private company may hinder our ability to properly assess the value of such a company which could result in our overpaying for that company.
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If we effect our initial business combination with a business located outside of the United States, the laws applicable to such business will likely govern all of our material agreements and we may not be able to enforce our legal rights.
If we effect our initial business combination with a business located outside of the United States, the laws of the country in which such business operates will govern almost all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements or enforce remedies for breaches of those agreements in that jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a business located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States’ courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.
If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
costs and difficulties inherent in managing cross-border business operations;
rules and regulations regarding currency redemption;
complex corporate withholding taxes on individuals;
laws governing the manner in which future business combinations may be effected;
exchange listing and/or delisting requirements;
tariffs and trade barriers;
regulations related to customs and import/export matters;
local or regional economic policies and market conditions;
unexpected changes in regulatory requirements;
challenges in managing and staffing international operations;
longer payment cycles;
tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
rates of inflation;
challenges in collecting accounts receivable;
cultural and language differences;
employment regulations;
underdeveloped or unpredictable legal or regulatory systems;
corruption;
protection of intellectual property;
social unrest, crime, strikes, riots and civil disturbances;
regime changes and political upheaval;
terrorist attacks and wars; and
deterioration of political relations with the United States.
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
We may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses. However, we may structure our initial business combination to acquire less than 100% of the equity interest or assets of the target business, but only if we (or any entity that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or assets of the target. Even if we own a majority interest in the target, our stockholders prior to the initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of the target business.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our financial condition and the value of our stockholders’ investment in us.
We may choose to incur substantial debt in order to complete our initial business combination. The incurrence of debt could have a variety of negative effects, including:
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to meet our debt service obligations;
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acceleration of our obligations to repay the indebtedness, even if we make all principal and interest payments when due, if we breach covenants that require the maintenance of financial ratios or reserves without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand and the lender demands payment;
our inability to obtain necessary additional financing if any debt we incur contains covenants restricting our ability to obtain additional financing while the debt is outstanding;
prohibitions of, or limitations on, our ability to pay dividends on our common stock;
use of a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, as well as for expenses, capital expenditures, acquisitions and other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of growth strategies and other purposes and other disadvantages compared to our competitors who have less debt.
We do not have a policy with respect to how much debt we may incur. To the extent that the amount of our debt increases, the impact of the effects listed above may also increase.
We may complete a business combination with only one business, which would result in our success being dependent solely on a single business which may have a limited number of products or services. This lack of diversification may harm our operations and profitability.
We are not limited as to the number of businesses we may acquire in our initial business combination. However, we may not be able to effectuate a business combination with more than one target business because of various factors, including the limited amount of the net proceeds of the initial public offering, the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By consummating an initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks particular to the industry area in which the acquired business operates. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may:
solely depend upon the performance of a single business, property or asset, or
depend upon the development or market acceptance of a single or limited number of products, processes or services.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
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The officers and directors of an acquisition candidate may resign upon consummation of a business combination. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with us following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.
We may partner, submit a joint bid or enter into a similar transaction with holders of founder shares or an affiliate in connection with our pursuit of, or in connection with, a business combination.
We are not prohibited from partnering, submitting a joint bid or entering into any similar transaction with holders of founder shares or their affiliates in our pursuit of a business combination. Although we currently have no plans to do so, we could pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and the transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our stockholders from a financial point of view of a business combination with any holder of founder shares or its affiliates, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest. Additionally, were we successful in consummating such a transaction, conflicts could invariably arise from the interest of the holder of founder shares or its affiliate in maximizing its returns, which may be at odds with the strategy of the post-business combination company or not in the best interests of the public stockholders of the post-business combination company. Any or all of such conflicts could materially reduce the value of your investment, whether before or after our initial business combination.
A failure to comply with privacy regulations could adversely affect relations with customers and have a negative impact on business.
Depending upon the type of business we acquire, in the course of providing services to our customers we may collect, process and retain sensitive and confidential information on our customers and their clients. A failure of our systems due to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other causes could result in the misappropriation, loss or other unauthorized disclosure of confidential customer information. Any such failure could result in damage to our reputation with our customers, expose us to the risk of litigation and liability, disrupt our operations, and impair our ability to operate profitably.
We may not be able to protect a target’s intellectual property and we may be subject to infringement claims.
We expect to rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect any proprietary technology of a target business. Although we intend to protect vigorously any intellectual property we acquire, third parties may infringe or misappropriate our intellectual property or may develop competitive technology. Our competitors may independently develop similar technology, duplicate our products or services or design around our intellectual property rights. We may have to litigate to enforce and protect our intellectual property rights, trade secrets and
We also may be subject to claims by third parties for infringement of another party’s proprietary rights, or for breach of copyright, trademark or license usage rights. Any such claims and any resulting litigation could
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subject us to significant liability for damages. An adverse determination in any litigation of this type could require us to design around a third party’s intellectual property, obtain a license for that technology or license alternative technology from another party. None of these alternatives may be available to us at a price which would allow us to operate profitably. In addition, litigation is time consuming and expensive to defend and could result in the diversion of the time and attention of management and employees. Any claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims.
As the number of Special Purpose Acquisition Companies increases, there may be more competition to find an attractive target for an initial business combination. This could increase the costs associated with completing our initial business combination and may result in our inability to find a suitable target for our initial business combination.
In recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many companies have entered into business combinations with special purpose acquisition companies, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many additional special purpose acquisition companies currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to identify a suitable target for an initial business combination.
In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find a suitable target for and/or complete our initial business combination.
Changes in the market for director and officer liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors and officers liability insurance for SPACs has changed. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of director and officer liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination. In order to obtain director and officer liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate director and officer liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to any such
We may engage one or more of the underwriters of the initial public offering or one of their respective affiliates to provide additional services to us, which may include acting as financial advisor in connection with an initial business combination or as placement agent in connection with a related financing transaction. The
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underwriters are entitled to receive deferred underwriting commissions that will be released from the trust account only upon a completion of an initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services to us, including, for example, in connection with the sourcing and consummation of an initial business combination.
We may engage one or more of the underwriters of the initial public offering or one of their respective affiliates to provide additional services to us, including, for example, identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging debt financing transactions. We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined at that time in an arm’s length negotiation. The underwriters are also entitled to receive deferred underwriting commissions that are conditioned on the completion of an initial business combination. The underwriters’ or their respective affiliates’ financial interests tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing any such additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial business combination.
Risks Relating to our Sponsor and Management Team
We are dependent upon our officers and directors; the loss of any one or more of them could adversely affect our ability to complete a business combination.
Our operations depend upon the background, experience and contacts of our officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have consummated a business combination. We do not have an employment agreement with, or
Our success following our initial business combination likely will depend upon the efforts of management of the target business. The loss of any of the key personnel of the target’s management team could make it more difficult to operate the target profitably.
Although some of our key personnel may remain with the target business in senior management or advisory positions following a business combination, we can offer no assurance that any will do so. Moreover, as a result of the existing commitments of our key personnel, it is likely that we will retain some or all of the management of the target business to conduct its operations. The departure of any key members of the target’s management team could thus make it more difficult to operate the post-combination business profitably. Moreover, to the extent that we will rely upon the target’s management team to operate the post-combination business, we will be subject to risks regarding their managerial competence. While we intend to closely scrutinize the skills, abilities and qualifications of any individuals we retain after a business combination, our ability to do so may be limited due to a lack of time resources or information. Accordingly, we cannot assure you that our assessment of these individuals will prove to be correct and that they will have the skills, abilities and qualifications we expect.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us, including another blank check company, and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
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Until we consummate our initial business combination, we will engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, and may in the future become, affiliated with entities that are engaged in a similar business. In addition, our sponsor, officers and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved. Although we have no formal policy in place for vetting potential conflicts of interest, our board of directors will review any potential conflicts of interest on
Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation contains a waiver of the corporate opportunity doctrine, which provides that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation. The purpose for the surrender of corporate opportunities is to allow officers, directors or other representatives with multiple business affiliations to continue to serve as an officer of our company or on our board of directors. Our officers and directors may from time to time be presented with opportunities that could benefit both another business affiliation and us. In the absence of the “corporate opportunity” waiver in our charter, certain candidates would not be able to serve as an officer or director. We believe we substantially benefit from having representatives, who bring significant, relevant and valuable experience to our management, and, as a result, the inclusion of the “corporate opportunity” waiver in our amended and restated certificate of incorporation provides us with greater flexibility to attract and retain the officers and directors that we feel are the best candidates.
However, the personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. The different timelines of competing business combinations could cause our directors and officers to prioritize a different business combination over finding a suitable acquisition target for our business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest, which could negatively impact the timing for a business combination.
For a discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see the sections of this prospectus entitled “Certain Relationships and Related Transactions, and Director Independence — Conflicts of Interest.”
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor or its affiliates, executive officers, directors or existing stockholders, which may raise potential conflicts of interest.
We may decide to acquire one or more businesses affiliated with our sponsor, holders of founder shares, or our officers and directors. Our officers and directors also serve as officers and board members of other entities.
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that the targeted affiliated entity met our criteria for a business combination and the transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our stockholders from a financial point of view of a business combination with one or more businesses affiliated with our executive officers, directors or holders of founder shares, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Moreover, we may pursue an affiliated joint acquisition opportunity with one or more affiliates of our sponsor, officers or directors. Any such parties may
Since holders of founder shares and placement units will lose some or all of their investment in us if we do not consummate a business combination, a conflict of interest may arise in determining whether a particular acquisition target is appropriate for our initial business combination.
Our initial holders currently own 4,596,250 founder shares, which will be worthless if we do not consummate our initial business combination. Our sponsor has also purchased 699,996 placement units for an aggregate purchase price of approximately $7.0 million. There will be no redemption rights or liquidating distributions from the trust account with respect to the founder shares, placement shares or placement warrants, which will expire worthless if we do not consummate a business combination by JanuaryJuly 8, 2023. If we do not consummate a business combination, our sponsor will realize a loss on the placement units it purchased. As a result, the personal and financial interests of certain of our officers and directors, directly or as members of our sponsor, in consummating an initial business combination, along with their flexibility in identifying and selecting a prospective acquisition candidate, may influence their motivation in identifying and selecting a target business combination and completing an initial business combination that is not in the best interests of our stockholders. Consequently, the discretion of our officers and directors, in identifying and selecting a suitable target business combination may result in a conflict of interest when determining whether the terms, conditions and timing of a particular initial business combination are appropriate and in the best interest of our public stockholders.
Members of our management team and board of directors have significant experience as founders, board members, officers or executives of other companies. As a result, certain of those persons have been, or may become, involved in proceedings, investigations and litigation relating to the business affairs of the companies with which they were, are, or may be in the future be, affiliated. These activities may have an adverse effect on us, which may impede our ability to consummate an initial business combination.
During the course of their careers, members of our management team and board of directors have had significant experience as founders, board members, officers or executives of other companies. As a result of their involvement and positions in these companies, certain of those persons, are now, or may in the future become, involved in litigation, investigations or other proceedings relating to the business affairs of such companies or transactions entered into by such companies. Any such litigation, investigations or other proceedings may divert the attention and resources of the members of both our management team and our board of directors away from identifying and selecting a target business or businesses for our initial business combination and may negatively affect our reputation, which may impede our ability to complete an initial business combination.
Public shares | 17,500,000 | |||
Founder shares | 4,596,250 | |||
Private placement shares | 885,000 | |||
Total shares | 22,981,250 | |||
Total funds in trust available for initial business combination (less deferred underwriting commissions) | $ | 169,350,000 | ||
Initial implied value per public share | $ | 10.20 | ||
Implied value per share upon consummation of initial business combination | $ | 7.37 |
The value of the founder shares following completion of our initial business combination is likely to be substantially higher than the nominal price paid for them, even if the trading price of our common stock at such time is substantially less than $10.20 per share.
Our sponsor has invested in us an aggregate of $7,024,960, comprised of the $25,000 purchase price for the founder shares and the $6,999,960 purchase price for the placement units. Assuming a trading price of $10.00 per share upon consummation of our initial business combination, the 4,596,250 founder shares would have an
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aggregate implied value of $7.37.$45,962,500. Even if the trading price of our common stock was as low as approximately $1.53 per share, and the placement warrants were worthless, the value of the founder shares would be equal to the sponsor’s initial investment in us. As a result, our sponsor is likely to be able to recoup its investment in us and make a substantial profit on that investment, even if our public shares have lost significant value. Accordingly, our management team, which owns interests in our sponsor, may have an economic incentive that differs from that of the public stockholders to pursue and consummate an initial business combination rather than to liquidate and to return all of the cash in the trust to the public stockholders, even if that business combination were with a riskier or less-established target business. For the foregoing reasons, you should consider our management team’s financial incentive to complete an initial business combination when evaluating whether to redeem your shares prior to or in connection with the initial business combination.
Risks Relating to our Securities
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
restrictions on the nature of our investments; and
restrictions on the issuance of securities; each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including:
registration as an investment company with the SEC;
adoption of a specific form of corporate structure; and
reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule
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(i) the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window;by July 8, 2023; and (iii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.20 per share (based on the trust account balance as of December 31, 2021) on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares. Please see “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the
If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, a stockholder, or a “group” of stockholders, who are deemed to hold an aggregate of more than 20.0% of our common stock may not redeem any shares they hold that exceed such 20.0% amount.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to shares in excess of 20.0% of the shares sold in the initial public offering without our prior written consent. We refer to such shares in excess of 20.0% or more of the shares sold in the initial public offering as “Excess Shares”. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem any Excess Shares will reduce your influence over our ability to consummate a business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we consummate our business combination. As a result, you would continue to hold that number of shares exceeding 20.0% and, in order to dispose of such shares, would be required to sell them in open market transactions, potentially at a loss.
NASDAQ may delist our securities from trading which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We cannot assure you that our securities will continue to be listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain an average global market capitalization and a minimum number of holders of our securities (generally 400 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. For instance, our
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If NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on the
a limited availability of market quotations for our securities;
reduced liquidity for our securities;
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
a limited amount of, or no, news and analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units, Class A common stock and warrants are listed on NASDAQ, our units, Class A common stock and warrants are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state, other than the state of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
Purchases of Class A common stock in the open market or in privately negotiated transactions by our sponsor, directors, officers or their affiliates may make it difficult for us to continue to list our common stock on NasdaqNASDAQ or another national securities exchange.
If our sponsor, directors, officers or their affiliates purchase shares of our Class A common stock in the open market or in privately negotiated transactions, it would reduce the public “float” of our Class A common stock and the number of beneficial holders of our common stock, which may make it difficult to maintain the listing or trading of our common stock on a national securities exchange if we determine to apply for such listing in connection with the business combination. If the number of our public holders falls below 400 or if the total number of shares held by
We may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.
In connection with our initial business combination, we may issue shares to investors in private placement transactions
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We may issue additional common or preferred shares to complete our initial business combination or under an employee incentive plan after consummation of our initial business combination, which would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation authorizes the issuance of up to 60,000,000 shares of Class A common stock, par value $0.0001 per share, and 10,000,000 shares of Class B common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. There are currently 41,615,00032,422,500 and 5,403,750 authorized but unissued shares of Class A and Class B common stock, respectively, available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants but not upon the conversion of the Class B common stock. Shares of Class B common stock are automatically convertible into shares of our Class A common stock at the time of our initial business combination, initially at a
We may issue a substantial number of additional shares of common stock, and may issue shares of preferred stock, in order to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation provides that we may not issue additional securities that can vote with common stockholders on matters related to our
The issuance of additional shares of common or preferred stock:
may significantly dilute the equity interest of investors in the initial public offering;
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
may adversely affect prevailing market prices for our units, common stock and/or warrants.
We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable
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warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our 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 we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our commercially reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in the initial public offering. However, there may be instances in which holders of our public warrants may be unable to exercise such public warrants but holders of our placement warrants may be able to exercise such placement warrants.
If you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
There are circumstances in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First, if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business combination, warrantholders may, until such time as there is an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Second, if our Class A common stock is at any time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our 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 we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. Third, if we call the public warrants for redemption, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (as defined in the next sentence) by (y) the fair market value. The “fair market value” is the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of
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The grant of registration rights to our initial stockholders and purchasers of placement units may make it more difficult to complete our initial business combination, and the future exercise of such rights may reduce the market price of our Class A common stock.
Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in the initial public offering, our initial stockholders and their permitted transferees and purchasers of placement units can demand that we register the founder shares, placement shares, placement warrants and the shares of Class A common stock issuable upon exercise of the placement warrants. This would include the 4,596,250 founder shares, 885,000 placement shares and 442,500 placement warrants. These registration rights will be exercisable at any time commencing upon the date that such shares are released from transfer restrictions. Holders of shares and warrants underlying units that may be issued upon conversion of working capital loans may also demand that we register such Class A common stock, warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may reduce the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders or their permitted transferees are registered.
We may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then outstanding public warrants.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our Class A common stock in the event the shares of our Class A common stock are not traded on any specific trading day) of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) for any 20 trading days within a 30 day trading period ending on the third trading day prior to the date we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants
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Our warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate a business combination.
In the initial public offering, we issued warrants to purchase 8,750,000 shares of our Class A common stock as part of the public units. In addition, on the closing date of the initial public offering, we sold 885,000 placement units to our sponsor, Cantor Fitzgerald and CCM, with each unit consisting of one placement share and
To the extent we issue shares of Class A common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The placement warrants are identical to the warrants sold as part of the units in the initial public offering except that, so long as they are held by the initial purchasers or their permitted transferees, (i) they may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial business combination, and (ii) they will be entitled to registration rights.
Because each unit contains
Each unit contains
A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike most blank check companies, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to
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starting on the trading day prior to the day on which we complete our initial business combination (such price, the “Market Value”) is below $9.20 per share, 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, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation
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provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
General Risk Factors
We are an early stage company with no operating history and no revenue and, accordingly, you have no basis on which to evaluate our ability to achieve our business objective.
We are an early stage company with no operating history and no revenue. We will not commence operations until we consummate our initial business combination. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of acquiring one or more operating businesses in the healthcare industry. We may be unable to complete a business combination. If we fail to complete a business combination, we will never generate any operating revenues.
Changes in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws andor regulations, may adversely affect our business, investmentsincluding our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments, including in particular, reportinggovernments. We are required to comply with certain SEC and other requirements under the Exchange Act.legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could result in fines, injunctive relief or similar remedies which could be costly to us or limithave a material adverse effect on our business, including our ability to negotiate and complete our initial business combination and results of operations.
On March 30, 2022, the SEC issued proposed rules relating to, among other items, disclosures in business combination transactions involving SPACs and private operating companies; the financial statement requirements applicable to transactions involving shell companies; the use of projections in SEC filings in connection with proposed business combination transactions; the potential liability of certain participants in proposed business combination transactions; and the extent to which special purpose acquisition companies (“SPACs”) could become subject to regulation under the Investment Company Act, including a proposed rule that would provide SPACs a safe harbor from treatment as an investment company if they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. These rules, if adopted, whether in the form proposed or in a revised form, may increase the costs of and the time needed to negotiate and complete an initial business combination, and may constrain the circumstances under which we could complete an initial business combination.
Our management concluded that there is substantial doubt about our ability to continue as a “going concern.”
As of December 31, 2022, the Company had $475,870 in its operating bank accounts, $41,665,974 in cash held in the Trust Account (to be used for a business combination or operateto repurchase or redeem its common stock in connection therewith), and working capital of $1,605,546. If the post-combination company successfully.Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a business combination. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. Further, our plans to raise capital and to consummate our initial business combination may not be successful.
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These factors, among others, raise substantial doubt about our ability to continue as a going concern through our liquidation date. The financial statements contained elsewhere in this report do not include any adjustments that might result from our inability to consummate a business combination or our inability to continue as a going concern.
We may be subject to the 1% excise tax instituted under the Inflation Reduction Act of 2022 in connection with redemptions we conduct after December 31, 2022.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. For purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase we conduct after December 31, 2022, in connection with a business combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent we would be subject to the excise tax in connection with a business combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business combination, extension or otherwise, (ii) the structure of a business combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination but issued within the same taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by us and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a business combination or otherwise inhibit our ability to complete a business combination.
Past performance by our management team may not be indicative of future performance of an investment in the Company.
Past performance by our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s performance as indicative of our future performance of an investment in the company or the returns the company will, or is likely to, generate going forward.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to
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may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock held by
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
Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of
The Company may be subject to the excise tax included in the Inflation Reduction Act of 2022 in connection with redemptions of the Company Common Stock on or after January 1, 2023.
On August 16, 2022, President Biden signed into law the IR Act, which, among other things, imposes a 1% excise tax on certain domestic corporations that repurchase their stock on or after January 1, 2023 (the “Excise Tax”). The Excise Tax is imposed on the fair market value of the repurchased stock, with certain exceptions. The Excise Tax is expected to apply to any redemptions of the Company Class A Common Stock occurring on or after January 1, 2023, including redemptions in connection with a business combination, unless an exemption is available. Issuances of securities in connection with a business combination (including a PIPE investment at the time of a business combination) are expected to reduce the amount of the Excise Tax in connection with redemptions occurring in the same calendar year, but the fair market value of securities redeemed may exceed the number of securities issued. In addition, the Company may be required to use funds from sources other than the trust account to pay the Excise Tax, and such amounts could be material.
The requirements of being a public company may strain our resources and divert management’s attention.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (which we refer to as the Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act (which we refer to as the Dodd-Frank Act), the listing requirements of NASDAQ and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal
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and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.
However, for as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that are held by
Item 1B. | UNRESOLVED STAFF COMMENTS. |
None.
Item 2. | PROPERTIES. |
We do not own any real estate or other physical properties. We currently maintain our executive offices at 2201 Broadway, Suite 705, Oakland, CA 94612. We have agreed to pay our sponsor or its affiliate or designee a total of $20,000 per month for office space, utilities and secretarial and shared support services. A portion of such payment is paid by our sponsor to an affiliate of a member of our sponsor for additional office space and certain support services. We consider our current office space adequate for our current operations. The payment of these fees ended on December 31, 2022.
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Item 3. | LEGAL PROCEEDINGS. |
To the knowledge of our management, there is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
Item 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
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PART II
Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Market Information
Our units commenced public trading on October 6, 2021, and our Class A common stock and warrants commenced separate trading on November 26, 2021. Our Class A common stock, warrants and units are each listed on the NASDAQ Global Market under the symbols PBAX, PBAXW and PBAXU, respectively.
Holders
On March 24, 2022,16, 2023, the numbers of record holders of the Company’s Class A common stock, units and warrants were 1, 24 and 1, respectively, not including beneficial holders whose securities are held in street name.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash dividends in the future will depend upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of an initial business combination, and will be at the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with a business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Securities Authorized for Issuance Under Equity Compensation
None.
Recent Sales of Unregistered Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On October 8, 2021, we sold 885,000 placement units in the private placement for an aggregate purchase price of $8,850,000, or $10.00 per unit, to the sponsor, Cantor Fitzgerald and CCM pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act. Each placement unit consists of one share of Class A common stock and one half of a placement warrant. The placement warrants are identical to the warrants included in the units issued in the initial public offering, except that, if held by the initial purchasers or their permitted transferees, (a) they (including the underlying Class A common stock) may not be transferred, assigned or sold until 30 days after the consummation of the Company’s initial business combination, subject to certain limited exceptions, and (c)(b) they are entitled to registration rights.
Use of Proceeds
On October 8, 2021, we sold 17,500,000 units, which included the partial exercise by the underwriter of its over-allotment option in the amount of 2,000,000 units, in our initial public offering at a price of $10.00 per unit, generating gross proceeds of $175,000,000. Each unit consists of one share of our Class A common stock and one half of one warrant, where each whole warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment.
Cantor Fitzgerald served as the sole book-running manager for the initial public offering. The units sold in the initial public offering were registered under the Securities Act on a registration statement on Form
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We incurred a total of $12,729,318 in transaction costs related to the initial public offering. We paid a total of $2,635,000 in underwriting discounts and commissions and $944,318 in other costs and expenses related to the initial public offering. In addition, the underwriter agreed to defer $9,150,000 in underwriting discounts and commissions (which is currently held in the trust account), which will be payable only upon consummation of an initial business combination.
Following the closing of the initial public offering and the private placement, an amount of $178,500,000 ($10.20 per unit) from the net proceeds from the sale of the units in the initial public offering and the placement units in the private placement was placed in the trust account. In addition, as of October 8, 2021, cash of $2,013,672 was held outsideconnection with the approval and implementation of the Charter Amendment, the holders of 16,211,702 shares of our Class A common stock exercised their right to redeem their shares for cash at a redemption price of approximately $10.34 per share, for an aggregate redemption amount of approximately $167.7 million. As of January 27, 2023, an amount of $13.8 million remained in the trust account and available for working capital purposes.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 6. | [RESERVED] |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
All statements other than statements of historical fact included in this Annual Report including, without limitation, statements under “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. When used in this Annual Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report.
Overview
We are a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses. We intend to effectuate our business combination using cash from the proceeds of our initial public offering and the sale of the placement units that occurred simultaneously with the completion of our initial public offering, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Recent Developments
On November 21, 2022, we filed a definitive proxy statement on DEF 14A (“Extension Proxy”) for a special meeting of the Board to be held to approve the (i) Charter Amendment to (a) extend the date by which the
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Company has to consummate the initial business combination for an additional three months, from January 8, 2023 to April 8, 2023 and (b) provide the Board the ability to further extend the date by which the Company has to consummate a business combination up to three additional times for one month each time, for a maximum of six additional months, and (ii) IMTA Amendment to extend the business combination period from January 8, 2023 to April 8, 2023 and up to three times for an additional one month each time from April 8, 2023 to May 8, 2023, June 8, 2023 or July 8, 2023.
In connection with the approval of the Charter Amendment on December 20, 2022, holders of 16,211,702 shares of Class A common stock, par value $0.0001 per share exercised redemption rights. As a result, the Company has 2,173,298 Class A Shares outstanding as of December 31, 2022, of which 1,288,298 are Class A Shares issued to the public in the Company’s initial public offering (the “IPO”), which Class A Shares are entitled to receive a pro rata portion of the remaining funds in the Trust Account, a liquidation or certain other events, and 885,000 are Class A Shares included in the private placement units acquired in the private placement by Phoenix Biotech Sponsor, LLC concurrent with the Company’s IPO, which Class A Shares do not have redemption rights.
On December 20, 2022, the Sponsor deposited $350,000 in the Trust Account in connection with the extension of the business combination deadline.
Results of Operations
As of December 31, 2022, the Company had not commenced any operations nor generated any operating revenues to date. Our only activities from inceptionoperations. All activity through December 31, 2021 were organizational activities and those necessary2022 relates to prepare for the
For the year ended December 31, 2022, we will incur increasedhad a net loss of $667,736, which primarily consists of operating expenses as a result of being a public company (for legal, financial reporting, accounting$2,841,391 and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.
For the period from June 8, 2021 (inception) through December 31, 2021, we had a net loss of $315,547, which primarily consists of operating expenses of $251,706, and accrual of Delaware franchise taxes of $80,324.
Liquidity and Capital Resources
On October 8, 2021, we consummated the Initial Public Offering of 17,500,000 Units, at a price of $10.00 per Unit, which included the partial exercise by the underwriter of its over-allotment option in the amount of 2,000,000 Units, generating gross proceeds of $175,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 885,000 Placement Units to the Sponsor, Cantor Fitzgerald and CCM at a price of $10.00 per Placement Unit generating gross proceeds of $8,850,000.
Following the Initial Public Offering, the partial exercise of the over-allotment option and the sale of the Placement Units, a total of $178,500,000 was placed in the Trust Account ($10.20 per Unit). We incurred $12,729,318 in transaction costs, including $2,635,000 of underwriting fees, $9,150,000 of deferred underwriting fees and $944,318 of other offering costs.
As of December 31, 2021, cash used2022, the Company had $475,870 in its operating activities was $697,109. Netbank accounts, $41,665,974 in Cash used in investing activities was $178,500,000 and Net cash provided by financing activities was $180,295,682 mainly reflecting the proceeds of our IPO and subsequent deposit into the trust account.
As of December 31, 2021, the trust accountCompany had $1,098,573 in its operating bank accounts, $178,499,615 in Cash and marketable securities held in Trust Account to be used for a Business Combination or to repurchase or redeem its Common Stock in connection therewith and working capital of $178,499,615. $1,263,001.
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We intend to use substantially all of the funds held in the trust account,Trust Account, including any amounts representing interest earned on the trust accountTrust Account (less income taxes payable), to complete our business combination.Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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 finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, 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 for such repayment. 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. Up to $1,500,000 of such loans may be converted into units of the post Business Combination entity, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the Placement Units. On December 13, 2022, the Company entered into a promissory note with the Sponsor. In order to fund ongoing operations, the Sponsor will loan up to $1,500,000 to the Company. As of December 31, 2021,2022, there were nowas $650,000 of outstanding borrowings under the working capital loans.
We monitor the adequacy of our working capital in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business,
The Company currently projects that it will not believe we will needhave sufficient funds to cover its expenses over a one-year period from the date the financial statements are available to be issued. If the Company is unable to raise additional funds in ordercapital, it may be required to meettake additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the expenditures requiredpursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for operating our business. However, if our estimatea reasonable period of time, which is considered to be one year from the issuance date of the costs of identifying a target business, undertaking
Off-balance
We have no obligations, assets or liabilities, which would be considered
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor or an affiliate of the Sponsor a monthly fee of $20,000 for
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office space, administrative and shared personnel support services to the Company. We began incurring these fees on October 6, 2021 and will continue to incurincurred these fees monthly until the earlierthrough December 31, 2022. The payment of the completion of the business combination and our liquidation.
The Company entered into an agreement, commencing on the date of its listing on NASDAQ, to pay the spouse of our Chief Executive Officer a monthly consulting fees of $15,000 for assisting the Company in identifying and evaluating potential acquisition targets.
In addition, we have an agreement to pay the underwriter a deferred fee of $9,150,000. The deferred fee will become payable to the representative from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires 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 financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Accounting for Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders 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, was conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock are classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our balance sheets. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Net Loss per Common Share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture by the Sponsor. At
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December 31, 2021,2022, the Company did not have any dilutive securities and/or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard Update (“ASU”)
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company, we are not required to provide the information required by this Item.
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Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
This information appears following Item 15 of this Annual Report and is included herein by reference.
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Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
Item 9A. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2021,2022, pursuant to
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls Over Financial Reporting
As required by SEC rules and regulations implementing Section 404 of management’s assessment regardingthe Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the
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effectiveness of our internal control over financial reporting at December 31, 2022. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting as of December 31, 2022.
This Annual Report on Form 10-K does not include an attestation report of the Company’sour independent registered public accounting firm due to a transition period established byour status as an emerging growth company under the rules of the SEC for newly public companies.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in
Item 9B. | OTHER INFORMATION |
None.
Item 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
None.
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PART III
Item 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. |
Directors and Executive Officers
Our directors and executive officers are as follows:
Name | Age | Title | ||||
Chris Ehrlich | Chief Executive Officer and Director | |||||
Daniel Geffken | 66 | Chief Financial Officer | ||||
Douglas Fisher | 47 | President | ||||
Brian G. Atwood | 70 | Director | ||||
Kathleen LaPorte | 61 | Director | ||||
Barbara Kosacz | 65 | |||||
Caroline Loewy | ||||||
| Director | ||||||
Chris Ehrlich
Daniel Geffken
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Calcimedica Inc., Elicio Therapeutics Inc. and Dermbiont, Inc. Since 2013, he has participated in more than 18 initial public offering, or IPO, filings and has assisted in raising more than $1 billion in debt and equity
Douglas Fisher, MD
Brian G. Atwood
Kathleen LaPorte
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Barbara Kosacz
Caroline Loewy
Advisors
Ryan Gilbert
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serves as the executive chairman of SmartBizLoans, a small business lending marketplace that he
Shami Patel
Our advisors and any additional advisors we may engage (i) assist us in sourcing and negotiating with potential business combination targets, (ii) provide their business insights when we assess potential business combination targets and (iii) upon our request, provide their business insights as we work to create additional value in the businesses that we acquire, which, in the case of (iii), will fulfill some of the same functions as our board members. However, they have no written advisory agreement with us. Additionally, except as otherwise disclosed in this Annual Report, our advisors have no other employment or compensation arrangements with us. Moreover, our advisors are not under any fiduciary obligations to us nor do they perform board or committee functions, nor do they have any voting or decision making capacity on our behalf. They are also not required to devote any specific amount of time to our efforts or be subject to the fiduciary requirements to which our board members are subject. Accordingly, if any of our advisors becomes aware of a business combination opportunity which is suitable for any of the entities to which he has fiduciary or contractual obligations, including other blank check companies, he will honor his fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We may modify or expand our roster of advisors as we source potential business combination targets or create value in businesses that we may acquire.
Number and Terms of Office of Officers and Directors
Our board of directors is divided into two classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a
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Collectively, through their positions described above, our officers and directors have extensive experience in life sciences industries. These individuals play a key role in identifying and evaluating prospective acquisition candidates, selecting the target businesses, and structuring, negotiating and consummating their acquisition.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of any publicly traded class of our equity securities, to file reports of ownership and changes in ownership of equity securities of the Company with the SEC. Officers, directors, and
Based solely upon a review of Forms 3 and Forms 4 furnished to the Company during the most recent fiscal year, and Forms 5 with respect to its most recent fiscal year, we believe that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act were timely filed by the officers, directors, and security holders required to file the same during the fiscal year ended December 31, 2021.
Board Committees
Audit Committee
We have established an audit committee of the board of directors, which consists of Brian Atwood, Kathleen LaPorte and Caroline Loewy, all of whom meet the independent director standard under NASDAQ’s listing standards and under Rule
The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
| • | reviewing and discussing with management and the independent registered public accounting firm our annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K; |
discussing with management and the independent registered public accounting firm significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
discussing with management major risk assessment and risk management policies;
monitoring the independence of the independent registered public accounting firm;
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
reviewing and approving all related-party transactions;
inquiring and discussing with management our compliance with applicable laws and regulations;
| • | pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed; |
appointing or replacing the independent registered public accounting firm;
determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
Financial Expert on Audit Committee
The audit committee will at all times be composed exclusively of independent directors who are “financially literate” as defined under NASDAQ’s listing standards. The NASDAQ listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. We have determined that Ms. Loewy satisfies NASDAQ’s definition of financial sophistication and also qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
Compensation Committee
We have established a compensation committee of the board of directors, which consists of Kathleen LaPorte and Barbara Kosacz, each of whom meets the independent director standard under NASDAQ’s listing standards and under Rule
The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation;
reviewing and approving the compensation of all of our other executive officers;
reviewing our executive compensation policies and plans;
implementing and administering our incentive compensation equity-based remuneration plans;
assisting management in complying with our proxy statement and annual report disclosure requirements;
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
producing a report on executive compensation to be included in our annual proxy statement;
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors; and
monitoring compliance with the requirements under the Sarbanes-Oxley Act relating to loans to directors and officers, and with all other applicable laws affecting employee compensation and benefits.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the
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appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by NASDAQ and the SEC.
Other Board Committees
Our board of directors intends to establish a nominating committee upon consummation of our initial business combination. At that time, our board of directors intends to adopt a charter for this committee. Prior to such time, our independent directors will address any nominations process, as required by NASDAQ.
Code of Conduct and Ethics
We have adopted a code of conduct and ethics applicable to our directors, officers and employees in accordance with applicable federal securities laws, a copy of which is filed as an exhibit to this Annual Report. We will make a printed copy of our code of conduct and ethics available to any stockholder who so requests. Requests for a printed copy may be directed to us as follows: Phoenix Biotech Acquisition Corp., 2201 Broadway, Suite 705, Oakland, CA 94612, Attention: Secretary.
Item 11. | EXECUTIVE COMPENSATION. |
Compensation Discussion and Analysis
None of our executive officers or directors has received any cash compensation for services rendered. No compensation of any kind, including finder’s and consulting fees, will be paid to our sponsor, executive officers and directors, or any entity with which they are affiliated, for services rendered prior to or in connection with the consummation of an initial business combination other than (i) repayment of loans made to us prior to October 8, 2021 by an affiliate of our sponsor to cover offering-related and organization expenses, (ii) repayment of loans that our sponsor, members of our management team or any of their respective affiliates or other third parties may make to finance transaction costs in connection with an intended initial business combination (provided that if we do not consummate an initial business combination, we may use working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment), (iii) payments to our sponsor or its affiliate or designee of a total of $20,000 per month for office space, administrative and shared personnel support services, (iv) $465,000 to CCM at the closing of the initial public offering for financial advisory services provided by CCM in connection with the initial public offering and $1,162,500, which will be paid to CCM upon the closing of our initial business combination, (v) at the closing of our initial business combination, customary advisory fees, including placement agent fees, to an affiliate of our sponsor, in amounts that constitute a market standard fee for comparable transactions and services provided, and (vi) to reimburse for any
After the consummation of our initial business combination, directors or members of our management team who remain in one of those capacities may be paid director, consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, as it will be up to the directors of the post-combination business to determine executive and director compensation.
Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
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We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements may influence our management’s motivation in identifying or selecting a target business although we do not believe that the ability of our management to remain with us after the consummation of an initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Compensation Committee Interlocks and Insider Participation
No member of the compensation committee serves or served during the fiscal year ended December 31, 2021,2022, as a member of the board of directors or compensation committee of a company that has one or more executive officers serving as a member of our Board or compensation committee.
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table sets forth information regarding the beneficial ownership of our common stock as of March 24, 2022,17, 2023, by:
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
each of our named executive officers and directors that beneficially owns shares of our common stock; and
all our executive officers and directors as a group.
The table below represents beneficial ownership of Class A common stock, Class B common stock and Class A common stock and Class B common stock voting together as a single class, and is reported in accordance with the beneficial ownership rules of the SEC under which a person is deemed to be the beneficial owner of a security if that person has or shares voting power or investment power with respect to such security or has the right to acquire such ownership within 60 days. The table does not reflect record or beneficial ownership of any outstanding warrants as no warrants are exercisable within 60 days.
The beneficial ownership of the Company’s voting common stock is based on 18,385,0002,173,298 shares of Class A common stock outstanding and 4,596,250 shares of Class B common stock outstanding, except as otherwise indicated.
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Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
Name and Address of Beneficial Owners | Class A Common Stock | Class B Common Stock | Combined Voting Power (2) | |||||||||||||||||||||
Number | % of class | Number | % of class | Number | % of class | |||||||||||||||||||
Directors and Executive Officers (1) | ||||||||||||||||||||||||
Chris Ehrlich (3) | 699,996 | 3.8 | % | 4,596,250 | 100.0 | % | 5,296,246 | 23.0 | % | |||||||||||||||
Daniel Geffken | — | — | — | — | — | — | ||||||||||||||||||
Douglas Fisher | — | — | — | — | — | — | ||||||||||||||||||
Brian G. Atwood | — | — | — | — | — | — | ||||||||||||||||||
Kathleen LaPorte | — | — | — | — | — | — | ||||||||||||||||||
Barbara Kosacz | — | — | — | — | — | — | ||||||||||||||||||
Caroline Loewy | — | — | — | — | — | — | ||||||||||||||||||
All directors and executive officers as a group (seven individuals) | 699,996 | 3.8 | % | 4,596,250 | 100.0 | % | 5,296,246 | 23.0 | % | |||||||||||||||
5% or Greater Beneficial Owners : | ||||||||||||||||||||||||
Highbridge Capital Management, LLC (4) | 1,037,794 | 5.6 | % | — | — | 1,037,794 | 4.5 | % | ||||||||||||||||
Beryl Capital Management LLC (5) | 1,230,264 | 6.7 | % | — | — | 1,230,264 | 5.4 | % | ||||||||||||||||
Phoenix Biotech Sponsor, LLC (3) | 699,996 | 3.8 | % | 4,596,250 | 100.0 | % | 5,296,246 | 23.0 | % | |||||||||||||||
Name and Address of Beneficial Owners | Class A Common Stock | Class B Common Stock | Combined Voting Power(2) | |||||||||||||||||||||
| Number | % of class | Number | % of class | Number | % of class | |||||||||||||||||||
Directors and Executive Officers:(1) | ||||||||||||||||||||||||
Chris Ehrlich(3) | 699,996 | 32.2 | % | 4,596,250 | 100.0 | % | 5,296,246 | 78.2 | % | |||||||||||||||
Daniel Geffken | — | — | — | — | — | — | ||||||||||||||||||
Douglas Fisher | — | — | — | — | — | — | ||||||||||||||||||
Brian G. Atwood | — | — | — | — | — | — | ||||||||||||||||||
Kathleen LaPorte | — | — | — | — | — | — | ||||||||||||||||||
Barbara Kosacz | — | — | — | — | — | — | ||||||||||||||||||
Caroline Loewy | — | — | — | — | — | — | ||||||||||||||||||
All directors and executive officers as a group (seven individuals) | 699,996 | 32.2 | % | 4,596,250 | 100.0 | % | 5,296,246 | 78.2 | % | |||||||||||||||
5% or Greater Beneficial Owners: | ||||||||||||||||||||||||
Shaolin Capital Management LLC(4) | 748,264 | 34.4 | % | — | — | 748,264 | 11.1 | % | ||||||||||||||||
Saba Capital Management, L.P.(5) | 1,212,426 | 55.8 | % | — | — | 1,212,426 | 17.9 | % | ||||||||||||||||
Phoenix Biotech Sponsor, LLC(3) | 699,996 | 32.2 | % | 4,596,250 | 100.0 | % | 5,296,246 | 78.2 | % | |||||||||||||||
| * | Less than 1 percent. |
| 1. | Unless otherwise noted, the business address of each of the following individuals is c/o Phoenix Biotech Acquisition Corp., 2201 Broadway, Suite 705, Oakland, CA 94612. |
| 2. | Represents the percentage of voting power of our Class A common stock and Class B common stock voting together as a single class. Shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one |
| 3. | Phoenix Biotech Sponsor, LLC, our sponsor, is the record holder of the shares reported herein. Chris Ehrlich, our Chief Executive Officer, is the manager of our sponsor and has voting and investment discretion with respect to the common stock held by our sponsor. Mr. Ehrlich may be deemed to have beneficial ownership of the common stock held directly by our sponsor, and he disclaims such beneficial ownership other than to the extent of his pecuniary interest therein. Each of our officers and directors is, directly or indirectly, a member of our sponsor. |
| 4. | Based on information contained in a Schedule |
| 5. | Based on |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Related Party Policy
We have adopted a code of conduct and ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of the board) or as disclosed in our public filings with the SEC. Under our code of conduct and ethics, conflict of interest situations include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the Company.
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In addition, our audit committee, pursuant to the Audit Committee Charter, is responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. We also require each of our directors and officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors or their respective affiliates unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm, that our initial business combination is fair to our company from a financial point of view.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
Our audit committee reviews on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates.
Founder shares
In June 2021, our sponsor paid $25,000 to cover certain expenses on our behalf in consideration of 4,598,750 founder shares. We effected a 0.0174775754 for 1 stock dividend in September 2021 for each share of Class B common stock outstanding. Also in October 2021, as a result of the underwriter exercising its overallotment option in part, our initial holders forfeited 82,875 founder shares. As a result, our initial stockholders hold 4,596,250 founder shares. The number of founder shares was determined based on the expectation that the founder shares would represent 20% of the aggregate of our founder shares, the placement shares and our issued and outstanding public shares after the initial public offering. The founder shares represent 100% of our issued and outstanding shares of Class B common stock.
Our initial holders, officers and directors have agreed not to transfer, assign or sell any of their founder shares (except to permitted transferees) until the earliest of (a) one year after the completion of our initial business combination, and (b) subsequent to the completion of our initial business combination, (x) if the last reported sale price of our shares of Class A common stock equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any
Private Placement
Simultaneously with the initial public offering, we consummated the issuance and sale of an aggregate of 885,000 placement units at a price of $10.00 per unit for an aggregate purchase price of $8,850,000. The placement units were purchased by Cantor Fitzgerald (155,000 units), CCM (30,004 units) and our sponsor (699,996 units). Each placement unit consists of one placement share and
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The placement warrants are identical to the warrants included in the units sold in the initial public offering, except that if held by the initial purchasers or their permitted transferees, (a) they (including our common stock issuable upon exercise of the placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the consummation of our initial business combination and (b) they are entitled to registration rights. In addition, for as long as placement units are held by Cantor Fitzgerald and/or its designees or affiliates, such placement units will be subject to a
Promissory Note — Related Party
Prior to the closing of the initial public offering, our sponsor loaned us $55,000 for expenses related to our formation and the initial public offering. The loan was
Related Party Loans
In order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, to loan us funds as may be required. If we consummate an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, 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 for such repayment. Up to $1,500,000 of such loans may be convertible into units of the post business combination entity at a price of $10.00 per unit at the option of the lender at the time of the business combination. The units would be identical to the placement units. 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. On December 13, 2022, the Company issued an unsecured promissory note in the principal amount of $1,500,000 (the “Promissory Note”) to our sponsor, pursuant to which the sponsor agreed to loan to the Company up to $1,500,000. The Promissory Note does not bear interest and matures upon the earlier of (a) the closing of an initial business combination and (b) the Company’s liquidation. In the event that the Company does not consummate an initial business combination, the Promissory Note will be repaid only from amounts remaining outside of the trust account, if any. Upon the consummation of an initial business combination, the sponsor may elect to convert any portion or all of the amount outstanding under the Promissory Note into units identical to the placement units. As of December 31, 2022, there was $650,000 of outstanding borrowings under the working capital loan arrangement.
Registration Rights
Pursuant to a registration rights agreement entered into on October 5, 2021, the holders of the founder shares, placement units (including any securities contained therein) and the warrants included in the units that may be issued upon conversion of working capital loans made by our sponsor or one of its affiliates are entitled to registration rights to require us to register a sale of any of our securities held by them (in the case of the founder shares, only after conversion to our Class A common stock). The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed by us and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. Notwithstanding the foregoing, Cantor Fitzgerald may not exercise any demand and “piggyback” registration rights after five (5) and
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seven (7) years after October 5, 2021 and may not exercise any demand rights on more than one occasion. We will bear the costs and expenses incurred in connection with the filing of any such registration statements.
Administrative Services
Commencing on October 6, 2021, we pay an amount equal to $20,000 per month to our sponsor or its affiliate or designee for office space, administrative and shared personnel support services provided to us. The administrative support services ended on December 31, 2022 upon approval of the charter extension.
Advisory Services
We engaged CCM, an affiliate of us, our sponsor and/or certain of our directors and officers, to provide consulting and advisory services in connection with the initial public offering, for which it was entitled to a fee in an amount equal to $465,000, which was paid to CCM upon the closing of the initial public offering, and $1,162,500, which will be paid to CCM upon the closing of our initial business combination. Affiliates of CCM have and manage investment vehicles with a passive investment in our sponsor.
Trust Account Indemnification
Our sponsor has agreed that, if the trust account is liquidated without the consummation of a business combination, it will indemnify us to the extent any claims by a third party for services rendered or products sold to us, or any claims by a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below $10.20 per public share, except for any claims by any third party who executed a waiver of any and all rights to seek access to the trust account, regardless of whether such waiver is enforceable, and except for claims arising from our obligation to indemnify the underwriters of the initial public offering pursuant to the underwriting agreement. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations, we have not asked our sponsor to reserve for such obligations and we believe that its only assets are securities of our company. Therefore, we cannot assure you that our sponsor will be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we endeavor to have all third parties that provide products or services to us and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Conflicts of Interest
In general, officers and directors of a Delaware corporation are required to present business opportunities to the corporation if:
the corporation could financially undertake the opportunity;
the opportunity is within the corporation’s line of business; and
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.
Our amended and restated certificate of incorporation provides, however, that the doctrine of corporate opportunity, or any other analogous doctrine, does not apply to us or any of our officers or directors or in circumstances that would conflict with any current or future fiduciary duties or contractual obligations.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present the opportunity to such entity prior to presenting the opportunity to us or, if he or she is subject to a non-compete obligation that includes business opportunities, he or
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she may be prohibited from referring such opportunity to us. Below is a table summarizing the companies to which our officers and directors owe fiduciary obligations that could conflict with their fiduciary obligations to us, all of which may have to (i) be presented appropriate potential target businesses by our officers or directors, and (ii) reject the opportunity to acquire such potential target business, before the opportunity may be presented to us:
Individual | Entity | Affiliation | ||
Chris Erlich | eFFECTOR, Inc. | Director | ||
| Prostate Management Diagnostics | Director | |||
| Prolynx, Inc. | Director | |||
| Antivir | Senior Advisor | |||
| Dimension, Inc. | Senior Advisor | |||
| Altibio | Senior Advisor | |||
| Peter Michael Foundation | Senior Advisor | |||
Daniel Geffken | Danforth Advisors Windtree Therapeutics Elicio Therapeutics ProMIS Neurosciences Prilenia Therapeutics Development Corp. Apic Bio Inc. Clear Creek Bio, Inc. Dermbiont, Inc. Calcimedica Inc. OPY Acquisition Corp. Myeloid Therapeutics | Founder and Managing Director Director Chief Financial Officer and Director Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer Chief Financial Officer | ||
Douglas Fisher | InterWest Partners Revelation Partners Sera Prognostics Gynesonics Indi Molecular Precipio Diagnostics WeavR Health | Executive in Residence Venture Partner Chief Business Officer Director Director Director Director | ||
Brian Atwood | Versant Ventures Clovis Oncology, Inc. Atreca, Inc. | Managing Director Director Chairman of the Board of Directors | ||
Kathleen LaPorte | Bolt Biotherapeutics D2G Oncology Elysium Therapeutics Precipio Diagnostics Q32 BIO Inc. 89Bio Inc. | Director Director Director Director Director Director | ||
Barbara Kosacz | Kronos Bio, Inc. XOMA Corp. Athira Pharma, Inc. | Chief Operating Officer and General Counsel Director | ||
Caroline Loewy | CymaBay Therapeutics, Inc. Aptose Biosciences Inc. | Director Director | ||
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We do not believe that any of the foregoing pre-existing fiduciary duties will materially affect our ability to consummate our initial business combination.
In addition, each of our sponsor, officers and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to the completion of our initial business combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved. In particular, affiliates of our sponsor are currently sponsoring other blank check companies that are seeking to complete business combinations. Many of our directors and officers serve in similar roles for other blank check companies seeking to complete a business acquisition. Any such companies may present additional conflicts of interest in pursuing an acquisition target. However, we do not believe that any potential conflicts would materially affect our ability to complete our initial business combination.
Director Independence
NASDAQ rules require that a majority of the board of directors of a company listed on NASDAQ must be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. We have determined that Brian G. Atwood, Kathleen LaPorte, Caroline M. Loewy and Barbara A. Kosacz are independent directors under NASDAQ rules and Rule 10A-3 of the Exchange Act.
| Item 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
The firm of Citrin Cooperman & Company, LLP, or Citrin, acted as our independent registered public accounting firm during the period June 8, 2021 (inception) through December 31, 2021 and for the year ended December 31, 2022. The following is a summary of fees paid or to be paid to Citrin for services rendered.
Audit Fees
Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Citrin in connection with regulatory filings. The aggregate fees billed by Citrin for professional services rendered for the audit of our annual financial statements and other required filings with the SEC for the year ended December 31, 2022 and period June 8, 2021 (inception) through December 31, 2021 and for the year ended December 31, 2022 totaled $50,000 and $49,000, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees
Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Citrin for consultations concerning financial accounting and reporting standards for the year ended December 31, 2022 and for the period June 8, 2021 (inception) through December 31, 2021.
Tax Fees
We incurred fees of $5,000 and paid Citrin $5,000 for tax planning and tax advice for the year ended December 31, 2022 and the period June 8, 2021 (inception) through December 31, 2021, respectively.
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All Other Fees
We did not pay Citrin for any other services for the year ended December 31, 2022 and for the period June 8, 2021 (inception) through December 31, 2021, respectively.
Audit Committee Pre-Approval Policies and Procedures
Our audit committee was formed upon the consummation of the initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
84
PART IV
| Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
| (a) | The following documents are filed as part of this Annual Report: |
1. All Consolidated Financial Statements.
The consolidated financial statements of Phoenix Biotech Acquisition Corp., together with the report thereon of Citrin Cooperman & Company, LLC, an independent registered public accounting firm, are included in this Annual Report beginning on Page F-1.
2. Financial Statements Schedules.
All schedules have been omitted because the information required to be set forth therein is not applicable or shown in the consolidated financial statements or note thereto.
3. Exhibits
A list of exhibits is set forth on the Exhibit Index immediately preceding the signature page of this Annual Report and is incorporated herein by reference.
| Item 16. | FORM 10-K SUMMARY |
Not applicable
85
| Page | ||||
Report of Independent Registered Public Accounting Firm PCAOB Firm ID:2468 | F-2 | |||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-7 | ||||
December 31, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Prepaid expenses and other assets | 225,188 | 262,500 | ||||||
Restricted cash held in Trust Account | 41,665,974 | — | ||||||
Total current assets | 42,367,032 | 1,361,073 | ||||||
OTHER ASSETS | ||||||||
Prepaid expenses-noncurrent | — | 200,651 | ||||||
Deferred tax asset | — | 16,868 | ||||||
Investments held in Trust Account | — | 178,499,615 | ||||||
TOTAL ASSETS | $ | 42,367,032 | $ | 180,078,207 | ||||
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | ||||||||
Accounts payable and accrued expenses | $ | 1,653,120 | $ | 14,433 | ||||
Income tax payable | 599,159 | — | ||||||
Shareholder redemption liability | 27,842,747 | — | ||||||
| Working capital loan – related party | 650,000 | — | ||||||
Franchise tax payable | — | 80,324 | ||||||
Due to Affiliate | 3,315 | 3,315 | ||||||
Total current liabilities | 30,748,341 | 98,072 | ||||||
LONG TERM LIABILITIES | ||||||||
Deferred underwriting fee payable | 9,150,000 | 9,150,000 | ||||||
Total liabilities | 39,898,341 | 9,248,072 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE COMMON STOCK | ||||||||
Class A Common stock subject to possible redemption, $0.0001 par value, 1,288,298 and 17,500,000 shares at redemption value of $10.26 and $10.20 per share as of December 31, 2022 and 2021, respectively | 13,224,068 | 178,500,000 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A common stock; $0.0001 par value; 60,000,000 shares authorized; 885,000 shares issued and outstanding as of December 31, 2022 (excluding 1,288,298 shares subject to possible redemption) and 2021 (excluding 17,500,000shares subject to possible redemption) | 88 | 88 | ||||||
Class B common stock; $0.0001 par value; 10,000,000 shares authorized; 4,596,250 shares issued and outstanding | 459 | 459 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (10,755,924 | ) | (7,670,412 | ) | ||||
Total stockholders’ deficit | (10,755,377 | ) | (7,669,865 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 42,367,032 | $ | 180,078,207 | ||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
OPERATING EXPENSES | ||||||||
General and administrative | $ | 2,841,391 | $ | 251,706 | ||||
Franchise tax | 64,050 | 80,324 | ||||||
Total operating expenses | 2,905,441 | 332,030 | ||||||
| OTHER INCOME (LOSS) | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | (385 | ) | |||||
Interest earned on marketable securities held in Trust Account | 2,836,864 | — | ||||||
| LOSS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES | (68,577 | ) | (332,415 | ) | ||||
Income tax expense (benefit) | 599,159 | (16,868 | ) | |||||
NET LOSS | $ | (667,736 | ) | $ | (315,547 | ) | ||
Weighted average shares outstanding of Class A common stock | 17,896,428 | 5,041,048 | ||||||
Basic and diluted net (l oss) per share, Class A | $ | (0.03 | ) | $ | 4.15 | |||
Weighted average shares outstanding of Class B common stock | 4,596,250 | 4,607,658 | ||||||
Basic and diluted net loss per share, Class B | $ | (0.03 | ) | $ | (0.03 | ) | ||
Common stock | Additional paid-in capital | Accumulated deficit | Total Stockholders’ deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, June 08, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Common Stock to initial stockholder | — | — | 4,679,125 | 467 | 24,533 | — | 25,000 | |||||||||||||||||||||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | — | — | — | — | 4,866,687 | — | 4,866,687 | |||||||||||||||||||||
Sale of private placement units | 885,000 | 88 | — | — | 8,849,912 | — | 8,850,000 | |||||||||||||||||||||
Forfeiture of shares | — | — | (82,875 | ) | (8 | ) | 8 | — | — | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | (13,741,140 | ) | (7,354,865 | ) | (21,096,005 | ) | ||||||||||||||||||
Net Loss | — | — | — | — | — | (315,547 | ) | (315,547 | ) | |||||||||||||||||||
| Balance, December 31, 2021 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (7,670,412 | ) | $ | (7,669,865 | ) | ||||||||||||||
Net Loss | — | — | — | — | — | (667,736 | ) | (667,736 | ) | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | — | (2,417,776 | ) | (2,417,776) | ||||||||||||||||||||
| Balance, December 31, 2022 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (10,755,924 | ) | $ | (10,755,377 | ) | ||||||||||||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (667,736 | ) | $ | (315,547 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | 385 | ||||||
Interest earned on marketable securities held in Trust Account | (2,836,864 | ) | ||||||
Income tax benefit | — | (16,868 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 254,831 | (463,151 | ) | |||||
Income tax payable | 599,159 | |||||||
Due to Affiliates | — | 3,315 | ||||||
Accounts payable and accrued expenses | 1,638,687 | 14,433 | ||||||
Franchise tax payable | (80,324 | ) | 80,324 | |||||
Net cash flows used in operating activities | (1,092,247 | ) | (697,109 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash deposited to Trust Account | (325,000 | ) | (178,500,000 | ) | ||||
Cash withdrawn from Trust Account for taxes | 144,544 | — | ||||||
Cash withdrawn from Trust Account in connection with redemption | 181,019,852 | — | ||||||
Net cash flows provided by (used in) investing activities | 180,839,396 | (178,500,000 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from initial public offering | — | 172,365,000 | ||||||
| Proceeds from working capital loan —related party | 650,000 | 55,000 | ||||||
Payments of notes payable — related party | — | (55,000 | ) | |||||
Proceeds from private placement units | — | 8,850,000 | ||||||
Proceeds from the issuance of class B stock to sponsor | — | 25,000 | ||||||
Payment of offering costs | — | (944,318 | ) | |||||
| Redemption of common stock | (139,353,878 | ) | — | |||||
Net cash flows (used in) provided by financing activities | (138,703,878 | ) | 180,295,682 | |||||
NET CHANGE IN CASH AND RESTRICTED CASH | 41,043,271 | 1,098,573 | ||||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | 1,098,573 | — | ||||||
CASH AND RESTRICTED CASH, END OF PERIOD | $ | 42,141,844 | $ | 1,098,573 | ||||
Supplemental disclosure of noncash activities: | ||||||||
Deferred underwriting commissions payable charged to additional paid in capital | $ | — | $ | 9,150,000 | ||||
Accretion for Class A common stock to redemption value | $ | 2,417,776 | $ | 21,096,005 | ||||
| Shareholder redemption liability | $ | 27,842,747 | $ | — | ||||
December 31, 2022 | December 31, 2021 | |||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Restricted cash | $ | 41,665,974 | $ | — | ||||
Total cash and restricted cash | $ | 42,141,844 | $ | 1,098,573 | ||||
December 31, 2022 | December 31, 2021 | |||||||
Current expense | $ | 599,159 | $ | — | ||||
Deferred tax benefit | — | 69,807 | ||||||
Change in valuation allowance | — | (52,939 | ) | |||||
| Total income tax expense (benefit) | $ | 599,159 | $ | (16,868 | ) | |||
December 31, 2022 | December 31, 2021 | |||||||
Deferred tax assets | $ | 596,692 | $ | 69,807 | ||||
| Deferred tax liabilities | — | |||||||
Valuation allowance for deferred tax assets | (596,692) | (52,939 | ) | |||||
Net deferred tax assets | $ | — | $ | 16,868 | ||||
December 31, 2022 | December 31, 2021 | |||||||
General and administration expenses before business combination | $ | 596,692 | $ | 69,807 | ||||
Valuation allowance for deferred tax assets | (596,692 | ) | (52,939 | ) | ||||
Total | $ | — | $ | 16,868 | ||||
December 31, 2022 | December 31, 2021 | |||||||
Statutory federal income tax rate | 21.0 | % | 21.0 | % | ||||
State taxes, net of federal tax benefit | 0.0 | % | 0.0 | % | ||||
Valuation allowance | 852.7 | % | (26.1 | )% | ||||
Income tax provision (benefit) | 873.7 | % | (5.1 | )% | ||||
Gross proceeds | $ | 175,000,000 | ||
Less: | ||||
IPO Costs allocated to Public Warrants | (5,250,000 | ) | ||
Class A common stock issuance costs | (12,346,005 | ) | ||
Plus: Accretion of carrying value to redemption value | 21,096,005 | |||
Class A common stock subject to possible redemption, December 31, 2021 | $ | 178,500,000 | ||
Plus: Accretion of carrying value to redemption value | 2,417,776 | |||
Less: Redemption of shares | (167,693,708 | ) | ||
Class A common stock subject to possible redemption, December 31, 2022 | $ | 13,224,068 | ||
Year Ended December 31, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net loss per common share | ||||||||
Numerator: | ||||||||
Allocation of net loss, as adjusted | $ | (531,288 | ) | $ | (136,448 | ) | ||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 17,896,428 | 4,596,250 | ||||||
Basic and diluted net loss per common share | $ | (0.03 | ) | $ | (0.03 | ) | ||
For the period June 8, 2021 (inception) through December 31, 2021 | ||||
Net loss | $ | (315,547 | ) | |
Accretion for Class A Common Stock to redemption value | (21,096,005 | ) | ||
Net loss including accretion of temporary equity to redemption value | $ | (21,411,552 | ) | |
For the period June 8, 2021 (inception) through December 31, 2021 | ||||||||
Class A | Class B | |||||||
NUMERATOR | ||||||||
Allocation of net loss | $ | (164,860 | ) | $ | (150,687 | ) | ||
Accretion for Class A Common Stock to redemption value | 21,096,005 | — | ||||||
Net loss including accretion of temporary equity to redemption value | $ | 20,931,145 | $ | (150,687 | ) | |||
DENOMINATOR | ||||||||
Weighted Average Shares Outstanding including common stock subject to redemption | 5,041,048 | 4,607,658 | ||||||
Basic and dilution net loss per share | $ | 4.15 | $ | (0.03 | ) | |||
December 31, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Prepaid expenses and other assets | 225,188 | 262,500 | ||||||
Restricted cash held in Trust Account | 41,665,974 | — | ||||||
Total current assets | 42,367,032 | 1,361,073 | ||||||
OTHER ASSETS | ||||||||
Prepaid expenses-noncurrent | — | 200,651 | ||||||
Deferred tax asset | — | 16,868 | ||||||
Investments held in Trust Account | — | 178,499,615 | ||||||
TOTAL ASSETS | $ | 42,367,032 | $ | 180,078,207 | ||||
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | ||||||||
Accounts payable and accrued expenses | $ | 1,653,120 | $ | 14,433 | ||||
Income tax payable | 599,159 | — | ||||||
Shareholder redemption liability | 27,842,747 | — | ||||||
| Working capital loan – related party | 650,000 | — | ||||||
Franchise tax payable | — | 80,324 | ||||||
Due to Affiliate | 3,315 | 3,315 | ||||||
Total current liabilities | 30,748,341 | 98,072 | ||||||
LONG TERM LIABILITIES | ||||||||
Deferred underwriting fee payable | 9,150,000 | 9,150,000 | ||||||
Total liabilities | 39,898,341 | 9,248,072 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE COMMON STOCK | ||||||||
Class A Common stock subject to possible redemption, $0.0001 par value, 1,288,298 and 17,500,000 shares at redemption value of $10.26 and $10.20 per share as of December 31, 2022 and 2021, respectively | 13,224,068 | 178,500,000 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A common stock; $0.0001 par value; 60,000,000 shares authorized; 885,000 shares issued and outstanding as of December 31, 2022 (excluding 1,288,298 shares subject to possible redemption) and 2021 (excluding 17,500,000shares subject to possible redemption) | 88 | 88 | ||||||
Class B common stock; $0.0001 par value; 10,000,000 shares authorized; 4,596,250 shares issued and outstanding | 459 | 459 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (10,755,924 | ) | (7,670,412 | ) | ||||
Total stockholders’ deficit | (10,755,377 | ) | (7,669,865 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 42,367,032 | $ | 180,078,207 | ||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
OPERATING EXPENSES | ||||||||
General and administrative | $ | 2,841,391 | $ | 251,706 | ||||
Franchise tax | 64,050 | 80,324 | ||||||
Total operating expenses | 2,905,441 | 332,030 | ||||||
| OTHER INCOME (LOSS) | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | (385 | ) | |||||
Interest earned on marketable securities held in Trust Account | 2,836,864 | — | ||||||
| LOSS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES | (68,577 | ) | (332,415 | ) | ||||
Income tax expense (benefit) | 599,159 | (16,868 | ) | |||||
NET LOSS | $ | (667,736 | ) | $ | (315,547 | ) | ||
Weighted average shares outstanding of Class A common stock | 17,896,428 | 5,041,048 | ||||||
Basic and diluted net (l oss) per share, Class A | $ | (0.03 | ) | $ | 4.15 | |||
Weighted average shares outstanding of Class B common stock | 4,596,250 | 4,607,658 | ||||||
Basic and diluted net loss per share, Class B | $ | (0.03 | ) | $ | (0.03 | ) | ||
Common stock | Additional paid-in capital | Accumulated deficit | Total Stockholders’ deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, June 08, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Common Stock to initial stockholder | — | — | 4,679,125 | 467 | 24,533 | — | 25,000 | |||||||||||||||||||||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | — | — | — | — | 4,866,687 | — | 4,866,687 | |||||||||||||||||||||
Sale of private placement units | 885,000 | 88 | — | — | 8,849,912 | — | 8,850,000 | |||||||||||||||||||||
Forfeiture of shares | — | — | (82,875 | ) | (8 | ) | 8 | — | — | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | (13,741,140 | ) | (7,354,865 | ) | (21,096,005 | ) | ||||||||||||||||||
Net Loss | — | — | — | — | — | (315,547 | ) | (315,547 | ) | |||||||||||||||||||
| Balance, December 31, 2021 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (7,670,412 | ) | $ | (7,669,865 | ) | ||||||||||||||
Net Loss | — | — | — | — | — | (667,736 | ) | (667,736 | ) | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | — | (2,417,776 | ) | (2,417,776) | ||||||||||||||||||||
| Balance, December 31, 2022 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (10,755,924 | ) | $ | (10,755,377 | ) | ||||||||||||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (667,736 | ) | $ | (315,547 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | 385 | ||||||
Interest earned on marketable securities held in Trust Account | (2,836,864 | ) | ||||||
Income tax benefit | — | (16,868 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 254,831 | (463,151 | ) | |||||
Income tax payable | 599,159 | |||||||
Due to Affiliates | — | 3,315 | ||||||
Accounts payable and accrued expenses | 1,638,687 | 14,433 | ||||||
Franchise tax payable | (80,324 | ) | 80,324 | |||||
Net cash flows used in operating activities | (1,092,247 | ) | (697,109 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash deposited to Trust Account | (325,000 | ) | (178,500,000 | ) | ||||
Cash withdrawn from Trust Account for taxes | 144,544 | — | ||||||
Cash withdrawn from Trust Account in connection with redemption | 181,019,852 | — | ||||||
Net cash flows provided by (used in) investing activities | 180,839,396 | (178,500,000 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from initial public offering | — | 172,365,000 | ||||||
| Proceeds from working capital loan —related party | 650,000 | 55,000 | ||||||
Payments of notes payable — related party | — | (55,000 | ) | |||||
Proceeds from private placement units | — | 8,850,000 | ||||||
Proceeds from the issuance of class B stock to sponsor | — | 25,000 | ||||||
Payment of offering costs | — | (944,318 | ) | |||||
| Redemption of common stock | (139,353,878 | ) | — | |||||
Net cash flows (used in) provided by financing activities | (138,703,878 | ) | 180,295,682 | |||||
NET CHANGE IN CASH AND RESTRICTED CASH | 41,043,271 | 1,098,573 | ||||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | 1,098,573 | — | ||||||
CASH AND RESTRICTED CASH, END OF PERIOD | $ | 42,141,844 | $ | 1,098,573 | ||||
Supplemental disclosure of noncash activities: | ||||||||
Deferred underwriting commissions payable charged to additional paid in capital | $ | — | $ | 9,150,000 | ||||
Accretion for Class A common stock to redemption value | $ | 2,417,776 | $ | 21,096,005 | ||||
| Shareholder redemption liability | $ | 27,842,747 | $ | — | ||||
December 31, 2022 | December 31, 2021 | |||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Restricted cash | $ | 41,665,974 | $ | — | ||||
Total cash and restricted cash | $ | 42,141,844 | $ | 1,098,573 | ||||
December 31, 2022 | December 31, 2021 | |||||||
Current expense | $ | 599,159 | $ | — | ||||
Deferred tax benefit | — | 69,807 | ||||||
Change in valuation allowance | — | (52,939 | ) | |||||
| Total income tax expense (benefit) | $ | 599,159 | $ | (16,868 | ) | |||
December 31, 2022 | December 31, 2021 | |||||||
Deferred tax assets | $ | 596,692 | $ | 69,807 | ||||
| Deferred tax liabilities | — | |||||||
Valuation allowance for deferred tax assets | (596,692) | (52,939 | ) | |||||
Net deferred tax assets | $ | — | $ | 16,868 | ||||
December 31, 2022 | December 31, 2021 | |||||||
General and administration expenses before business combination | $ | 596,692 | $ | 69,807 | ||||
Valuation allowance for deferred tax assets | (596,692 | ) | (52,939 | ) | ||||
Total | $ | — | $ | 16,868 | ||||
Director Director Director Director Director | ||||
Director | ||||
December 31, 2022 | December 31, 2021 | |||||||
Statutory federal income tax rate | 21.0 | % | 21.0 | % | ||||
State taxes, net of federal tax benefit | 0.0 | % | 0.0 | % | ||||
Valuation allowance | 852.7 | % | (26.1 | )% | ||||
Income tax provision (benefit) | 873.7 | % | (5.1 | )% | ||||
Gross proceeds | $ | 175,000,000 | ||
Less: | ||||
IPO Costs allocated to Public Warrants | (5,250,000 | ) | ||
Class A common stock issuance costs | (12,346,005 | ) | ||
Plus: Accretion of carrying value to redemption value | 21,096,005 | |||
Class A common stock subject to possible redemption, December 31, 2021 | $ | 178,500,000 | ||
Plus: Accretion of carrying value to redemption value | 2,417,776 | |||
Less: Redemption of shares | (167,693,708 | ) | ||
Class A common stock subject to possible redemption, December 31, 2022 | $ | 13,224,068 | ||
Year Ended December 31, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net loss per common share | ||||||||
Numerator: | ||||||||
Allocation of net loss, as adjusted | $ | (531,288 | ) | $ | (136,448 | ) | ||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 17,896,428 | 4,596,250 | ||||||
Basic and diluted net loss per common share | $ | (0.03 | ) | $ | (0.03 | ) | ||
For the period June 8, 2021 (inception) through December 31, 2021 | ||||
Net loss | $ | (315,547 | ) | |
Accretion for Class A Common Stock to redemption value | (21,096,005 | ) | ||
Net loss including accretion of temporary equity to redemption value | $ | (21,411,552 | ) | |
For the period June 8, 2021 (inception) through December 31, 2021 | ||||||||
Class A | Class B | |||||||
NUMERATOR | ||||||||
Allocation of net loss | $ | (164,860 | ) | $ | (150,687 | ) | ||
Accretion for Class A Common Stock to redemption value | 21,096,005 | — | ||||||
Net loss including accretion of temporary equity to redemption value | $ | 20,931,145 | $ | (150,687 | ) | |||
DENOMINATOR | ||||||||
Weighted Average Shares Outstanding including common stock subject to redemption | 5,041,048 | 4,607,658 | ||||||
Basic and dilution net loss per share | $ | 4.15 | $ | (0.03 | ) | |||
ASSETS | ||||
CURRENT ASSETS | ||||
Cash | $ | 1,098,573 | ||
Prepaid expenses and other assets | 262,500 | |||
Total current assets | 1,361,073 | |||
OTHER ASSETS | ||||
Prepaid expenses-noncurrent | 200,651 | |||
Deferred tax asset | 16,868 | |||
Investments held in Trust Account | 178,499,615 | |||
TOTAL ASSETS | $ | 180,078,207 | ||
| LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | ||||
Accounts payable and accrued expenses | $ | 14,433 | ||
Franchise tax payable | 80,324 | |||
Due to Affiliate | 3,315 | |||
Total current liabilities | 98,072 | |||
LONG TERM LIABILITIES | ||||
Deferred underwriting fee payable | 9,150,000 | |||
Total liabilities | 9,248,072 | |||
COMMITMENTS AND CONTINGENCIES | 0 | |||
REDEEMABLE COMMON STOCK | ||||
Class A Common stock subject to possible redemption, $0.0001 par value, 17,500,000 shares at redemption value of $10.20 per share. | 178,500,000 | |||
STOCKHOLDERS’ DEFICIT | ||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued or outstanding | 0 | |||
Class A common stock; $0.0001 par value; 60,000,000 shares authorized; 885,000 shares issued and outstanding(excluding 17,500,000 shares subject to possible redemption) | 88 | |||
Class B common stock; $0.0001 par value; 10,000,000 shares authorized; 4,596,250 shares issued and outstandin g | 459 | |||
Additional paid-in capital | 0 | |||
Accumulated deficit | (7,670,412 | ) | ||
Total stockholders’ deficit | (7,669,865 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 180,078,207 | ||
OPERATING EXPENSES | ||||
General and administrative | 251,706 | |||
Franchise tax | 80,324 | |||
Total operating expenses | 332,030 | |||
OTHER INCOME (EXPENSE) | ||||
Unrealized loss on marketable securities held in Trust Account | (385 | ) | ||
LOSS BEFORE PROVISION FOR INCOME TAXES | (332,415 | ) | ||
Income tax expense (benefit) | (16,868 | ) | ||
NET LOSS | (315,547 | ) | ||
Weighted average shares outstanding of Class A common stock | 5,041,048 | |||
Basic and diluted net income per share, Class A | $ | 4.15 | ||
Weighted average shares outstanding of Class B common stock | 4,607,658 | |||
Basic and diluted net loss per share, Class B | $ | (0.03 | ) | |
Common stock | Additional paid-in capital | Accumulated deficit | Total Stockholders’ deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, June 08, 2021 (inception) | 0 | $ | 0 | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Issuance of Common Stock to initial stockholder | — | — | 4,679,125 | 467 | 24,533 | — | 25,000 | |||||||||||||||||||||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | — | — | — | — | 4,866,687 | — | 4,866,687 | |||||||||||||||||||||
| Sale of private placement units | 885,000 | 88 | — | — | 8,849,912 | — | 8,850,000 | |||||||||||||||||||||
Forfeiture of shares | — | — | (82,875 | ) | (8 | ) | 8 | — | — | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | (13,741,140 | ) | (7,354,865 | ) | (21,096,005 | ) | ||||||||||||||||||
Net Loss | — | — | — | — | — | $ | (315,547 | ) | $ | (315,547 | ) | |||||||||||||||||
Balance, December 31, 2021 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | 0 | $ | (7,670,412 | ) | $ | (7,669,865 | ) | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss | $ | (315,547 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Unrealized loss on marketable securities held in Trust Account | 385 | |||
Income tax expense (benefit) | (16,868 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other assets | (463,151 | ) | ||
Due to Affiliates | 3,315 | |||
Accounts payable and accrued expenses | 14,433 | |||
Franchise tax payable | 80,324 | |||
Net cash flows used in operating activities | (697,109 | ) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Cash deposited to Trust Account | (178,500,000 | ) | ||
Net cash flows used in investing activities | (178,500,000 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from initial public offering | 172,365,000 | |||
Proceeds from notes payable—related party | 55,000 | |||
Payments from notes payable—related party | (55,000 | ) | ||
| Proceeds from private placement units | 8,850,000 | |||
| Proceeds from the issuance of class B stock to sponsor | 25,000 | |||
Payment of offering costs | (944,318 | ) | ||
Net cash flows provided by financing activities | 180,295,682 | |||
NET CHANGE IN CASH | 1,098,573 | |||
CASH, BEGINNING OF PERIOD | 0 | |||
CASH, END OF PERIOD | $ | 1,098,573 | ||
Supplemental disclosure of noncash activities: | ||||
Deferred underwriting commissions payable charged to additional paid in capital | $ | 9,150,000 | ||
Accretion for Class A common stock to redemption value | $ | 21,096,005 | ||
December 31, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Prepaid expenses and other assets | 225,188 | 262,500 | ||||||
Restricted cash held in Trust Account | 41,665,974 | — | ||||||
Total current assets | 42,367,032 | 1,361,073 | ||||||
OTHER ASSETS | ||||||||
Prepaid expenses-noncurrent | — | 200,651 | ||||||
Deferred tax asset | — | 16,868 | ||||||
Investments held in Trust Account | — | 178,499,615 | ||||||
TOTAL ASSETS | $ | 42,367,032 | $ | 180,078,207 | ||||
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ DEFICIT | ||||||||
Accounts payable and accrued expenses | $ | 1,653,120 | $ | 14,433 | ||||
Income tax payable | 599,159 | — | ||||||
Shareholder redemption liability | 27,842,747 | — | ||||||
| Working capital loan – related party | 650,000 | — | ||||||
Franchise tax payable | — | 80,324 | ||||||
Due to Affiliate | 3,315 | 3,315 | ||||||
Total current liabilities | 30,748,341 | 98,072 | ||||||
LONG TERM LIABILITIES | ||||||||
Deferred underwriting fee payable | 9,150,000 | 9,150,000 | ||||||
Total liabilities | 39,898,341 | 9,248,072 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE COMMON STOCK | ||||||||
Class A Common stock subject to possible redemption, $0.0001 par value, 1,288,298 and 17,500,000 shares at redemption value of $10.26 and $10.20 per share as of December 31, 2022 and 2021, respectively | 13,224,068 | 178,500,000 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Class A common stock; $0.0001 par value; 60,000,000 shares authorized; 885,000 shares issued and outstanding as of December 31, 2022 (excluding 1,288,298 shares subject to possible redemption) and 2021 (excluding 17,500,000shares subject to possible redemption) | 88 | 88 | ||||||
Class B common stock; $0.0001 par value; 10,000,000 shares authorized; 4,596,250 shares issued and outstanding | 459 | 459 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated deficit | (10,755,924 | ) | (7,670,412 | ) | ||||
Total stockholders’ deficit | (10,755,377 | ) | (7,669,865 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 42,367,032 | $ | 180,078,207 | ||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
OPERATING EXPENSES | ||||||||
General and administrative | $ | 2,841,391 | $ | 251,706 | ||||
Franchise tax | 64,050 | 80,324 | ||||||
Total operating expenses | 2,905,441 | 332,030 | ||||||
| OTHER INCOME (LOSS) | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | (385 | ) | |||||
Interest earned on marketable securities held in Trust Account | 2,836,864 | — | ||||||
| LOSS BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES | (68,577 | ) | (332,415 | ) | ||||
Income tax expense (benefit) | 599,159 | (16,868 | ) | |||||
NET LOSS | $ | (667,736 | ) | $ | (315,547 | ) | ||
Weighted average shares outstanding of Class A common stock | 17,896,428 | 5,041,048 | ||||||
Basic and diluted net (l oss) per share, Class A | $ | (0.03 | ) | $ | 4.15 | |||
Weighted average shares outstanding of Class B common stock | 4,596,250 | 4,607,658 | ||||||
Basic and diluted net loss per share, Class B | $ | (0.03 | ) | $ | (0.03 | ) | ||
Common stock | Additional paid-in capital | Accumulated deficit | Total Stockholders’ deficit | |||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, June 08, 2021 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Common Stock to initial stockholder | — | — | 4,679,125 | 467 | 24,533 | — | 25,000 | |||||||||||||||||||||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | — | — | — | — | 4,866,687 | — | 4,866,687 | |||||||||||||||||||||
Sale of private placement units | 885,000 | 88 | — | — | 8,849,912 | — | 8,850,000 | |||||||||||||||||||||
Forfeiture of shares | — | — | (82,875 | ) | (8 | ) | 8 | — | — | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | (13,741,140 | ) | (7,354,865 | ) | (21,096,005 | ) | ||||||||||||||||||
Net Loss | — | — | — | — | — | (315,547 | ) | (315,547 | ) | |||||||||||||||||||
| Balance, December 31, 2021 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (7,670,412 | ) | $ | (7,669,865 | ) | ||||||||||||||
Net Loss | — | — | — | — | — | (667,736 | ) | (667,736 | ) | |||||||||||||||||||
Accretion for Class A Common Stock to redemption value | — | — | — | — | — | (2,417,776 | ) | (2,417,776) | ||||||||||||||||||||
| Balance, December 31, 2022 | 885,000 | $ | 88 | 4,596,250 | $ | 459 | $ | — | $ | (10,755,924 | ) | $ | (10,755,377 | ) | ||||||||||||||
For the Year Ended December 31, 2022 | For the Period from June 8, 2021 (Inception) to December 31, 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (667,736 | ) | $ | (315,547 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Unrealized loss on marketable securities held in Trust Account | — | 385 | ||||||
Interest earned on marketable securities held in Trust Account | (2,836,864 | ) | ||||||
Income tax benefit | — | (16,868 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 254,831 | (463,151 | ) | |||||
Income tax payable | 599,159 | |||||||
Due to Affiliates | — | 3,315 | ||||||
Accounts payable and accrued expenses | 1,638,687 | 14,433 | ||||||
Franchise tax payable | (80,324 | ) | 80,324 | |||||
Net cash flows used in operating activities | (1,092,247 | ) | (697,109 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash deposited to Trust Account | (325,000 | ) | (178,500,000 | ) | ||||
Cash withdrawn from Trust Account for taxes | 144,544 | — | ||||||
Cash withdrawn from Trust Account in connection with redemption | 181,019,852 | — | ||||||
Net cash flows provided by (used in) investing activities | 180,839,396 | (178,500,000 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from initial public offering | — | 172,365,000 | ||||||
| Proceeds from working capital loan —related party | 650,000 | 55,000 | ||||||
Payments of notes payable — related party | — | (55,000 | ) | |||||
Proceeds from private placement units | — | 8,850,000 | ||||||
Proceeds from the issuance of class B stock to sponsor | — | 25,000 | ||||||
Payment of offering costs | — | (944,318 | ) | |||||
| Redemption of common stock | (139,353,878 | ) | — | |||||
Net cash flows (used in) provided by financing activities | (138,703,878 | ) | 180,295,682 | |||||
NET CHANGE IN CASH AND RESTRICTED CASH | 41,043,271 | 1,098,573 | ||||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD | 1,098,573 | — | ||||||
CASH AND RESTRICTED CASH, END OF PERIOD | $ | 42,141,844 | $ | 1,098,573 | ||||
Supplemental disclosure of noncash activities: | ||||||||
Deferred underwriting commissions payable charged to additional paid in capital | $ | — | $ | 9,150,000 | ||||
Accretion for Class A common stock to redemption value | $ | 2,417,776 | $ | 21,096,005 | ||||
| Shareholder redemption liability | $ | 27,842,747 | $ | — | ||||
December 31, 2022 | December 31, 2021 | |||||||
Cash | $ | 475,870 | $ | 1,098,573 | ||||
Restricted cash | $ | 41,665,974 | $ | — | ||||
Total cash and restricted cash | $ | 42,141,844 | $ | 1,098,573 | ||||
December 31, 2021 | ||||
Current expense | $ | 0 | ||
Deferred tax benefit | 69,807 | |||
Change in valuation allowance | (52,939 | ) | ||
Total income tax benefit | $ | 16,868 | ||
December 31, 2022 | December 31, 2021 | |||||||
Current expense | $ | 599,159 | $ | — | ||||
Deferred tax benefit | — | 69,807 | ||||||
Change in valuation allowance | — | (52,939 | ) | |||||
| Total income tax expense (benefit) | $ | 599,159 | $ | (16,868 | ) | |||
December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||
Deferred tax assets | $ | 69,807 | $ | 596,692 | $ | 69,807 | ||||||
Deferred tax liabilities | 0 | — | ||||||||||
Valuation allowance for deferred tax assets | (52,939 | ) | (596,692) | (52,939 | ) | |||||||
Net deferred tax assets | $ | 16,868 | $ | — | $ | 16,868 | ||||||
December 31, 2021 | ||||
General and administration expenses before business combination | $ | 69,807 | ||
Valuation allowance for deferred tax assets | (52,939 | ) | ||
Total | $ | 16,868 | ||
December 31, 2022 | December 31, 2021 | |||||||
General and administration expenses before business combination | $ | 596,692 | $ | 69,807 | ||||
Valuation allowance for deferred tax assets | (596,692 | ) | (52,939 | ) | ||||
Total | $ | — | $ | 16,868 | ||||
2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross proceeds | $ | 175,000,000 | ||
Less: | ||||
IPO Costs allocated to Public Warrants | (5,250,000 | ) | ||
Class A common stock issuance costs | (12,346,005 | ) | ||
Plus: Accretion of carrying value to redemption value | 21,096,005 | |||
Class A common stock subject to possible redemption, December 31, 2021 | $ | 178,500,000 | ||
Plus: Accretion of carrying value to redemption value | 2,417,776 | |||
Less: Redemption of shares | (167,693,708 | ) | ||
Class A common stock subject to possible redemption, December 31, 2022 | $ | 13,224,068 | ||
Gross proceeds | $ | 175,000,000 | ||
| Less: | ||||
| Fair value of Public Warrants at issuance (net of offering costs) | (5,250,000 | ) | ||
Class A common stock issuance costs | (12,346,005 | ) | ||
Plus: Accretion of carrying value to redemption value | 21,096,005 | |||
Class A common stock subject to possible redemption | $ | 178,500,000 |
(inception) through December 31, 2021 | ||||||||
Year Ended December 31, 2022 | ||||||||
Class A | Class B | |||||||
Basic and diluted net loss per common share | ||||||||
Numerator: | ||||||||
Allocation of net loss, as adjusted | $ | (531,288 | ) | $ | (136,448 | ) | ||
Denominator: | ||||||||
Basic and diluted weighted average shares outstanding | 17,896,428 | 4,596,250 | ||||||
Basic and diluted net loss per common share | $ | (0.03 | ) | $ | (0.03 | ) | ||
Class A | Class B | |||||||
NUMERATOR | ||||||||
| Allocation of net loss before accretion income | $ | (164,860 | ) | $ | (150,687 | ) | ||
| Accretion for Class A Common Stock to redemption value | 21,096,005 | 0 | ||||||
Net loss including accretion of temporary equity to redemption value | $ | 20,931,145 | $ | (150,687 | ) | |||
DENOMINATOR | ||||||||
| Weighted Average Shares Outstanding including common stock subject to redemption | 5,041,048 | 4,607,658 | ||||||
| Basic and dilution net income (loss) per share | $ | 4.15 | $ | (0.03 | ) | |||
For the period June 8, 2021 (inception) through December 31, 2021 | ||||
Net loss | $ | (315,547 | ) | |
Accretion for Class A Common Stock to redemption value | (21,096,005 | ) | ||
Net loss including accretion of temporary equity to redemption value | $ | (21,411,552 | ) | |
For the period June 8, 2021 (inception) through December 31, 2021 | ||||||||
Class A | Class B | |||||||
NUMERATOR | ||||||||
Allocation of net loss | $ | (164,860 | ) | $ | (150,687 | ) | ||
Accretion for Class A Common Stock to redemption value | 21,096,005 | — | ||||||
Net loss including accretion of temporary equity to redemption value | $ | 20,931,145 | $ | (150,687 | ) | |||
DENOMINATOR | ||||||||
Weighted Average Shares Outstanding including common stock subject to redemption | 5,041,048 | 4,607,658 | ||||||
Basic and dilution net loss per share | $ | 4.15 | $ | (0.03 | ) | |||
• | in whole and not in part; |
• | at a price of $ 0.01 per warrant; |
• | upon not less than 30 days ’ prior written notice of redemption; |
• | if, and only if, the reported last sale price of Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 -trading-day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and |
• | if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying the warrants. |
Level | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
U.S. Treasury Securities | 1 | $ | 178,499,615 | — | — | |||||||||||
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form
Exhibit No. | Description | |
| 1.1 | ||
| 2.1 | ||
| 2.2 | ||
| 3.1 | ||
| 3.2 | ||
| 3.3 | ||
| 4.1 | ||
| 4.2 | ||
| 4.3 | ||
| 4.4 | ||
| | ||
| 10.1 | ||
| 10.2 | ||
| 10.3 | ||
| 10.4 | ||
| 10.5 | ||
| 10.6 | ||
| 10.7 | ||
| 10.8 | ||
| 10.9 | ||
| 10.10 | Form of Engagement Letter with Cohen & Company Capital Markets(2) | |
| 10.11 | Promissory Note, dated December 20, 2022, issued to Phoenix Biotech Sponsor, LLC(4) | |
1
Exhibit No. | Description | |
| 10.12 | ||
| 10.13 | ||
| 10.14 | ||
| 10.15 | ||
| 10.16 | ||
| 10.17 | Promissory Note, dated December 20, 2022, issued to Phoenix Biotech Sponsor, LLC(6) | |
| 14.1 | ||
| 21.1* | ||
| 31.1* | ||
| 31.2* | ||
| | ||
| | ||
| 101.INS* | XBRL Instance Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data | |
| * | Filed herewith |
| ^ | Furnished herewith |
| (1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on October 12, 2021 |
| (2) | Previously filed as an exhibit to our Registration Statement on Form S-1, as amended (FileNo. 333-259491) |
Previously filed as an exhibit to our Annual Report on Form 10-K |
| (4) | Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on October 31, 2022 |
| (5) | Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 7, 2022 |
| (6) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 20, 2022 |
2
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PHOENIX BIOTECH ACQUISITION CORP. | ||||||
Dated: March | /s/ Chris Ehrlich | |||||
Chris Ehrlich | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name | Position | Date | ||
/s/ Chris Ehrlich Chris Ehrlich | Chief Executive Officer and Director (Principal Executive Officer) | March | ||
/s/ Daniel Geffken Daniel Geffken | Chief Financial Officer Principal Financial and Accounting Officer | March | ||
/s/ Douglas Fisher Douglas Fisher | President | March | ||
/s/ Brian G. Atwood Brian G. Atwood | Director | March | ||
/s/ Kathleen LaPorte Kathleen LaPorte | Director | March | ||
/s/ Barbara A. Kosacz Barbara A. Kosacz | Director | March | ||
/s/ Caroline M. Loewy Caroline M. Loewy | Director | March | ||