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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-05-30 · 49 added, 3 removed, 53 unchanged (50% of the section changed)

5 unchanged sentences

An aggregate of $234,600,000 in proceeds from our IPO and the Private Placement has been placed in the Trust Account.

For the year ended December 31, 2022, we had net income of $18,132,948, which consisted of formation and operating expenses of $1,577,543 and a provision for income tax of $362,282, offset by a gain of $16,688,950 for the change in fair value of the warrant liability and dividend income of $3,383,823 on marketable securities held in trust.

In comparison, for the period from April 13, 2021 (inception) through December 31, 2021, we had net income of $2,325,692, which consisted of formation and operating expenses of $838,998, offset by a gain of $3,164,000 for the change in fair value of the warrant liability and an unrealized gain of $690 on marketable securities held in the Trust Account.

Except with respect to interest earned on the funds held in the Trust Account that may be released to us to pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), the proceeds deposited in the Trust Account will not be released from the Trust Account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide our public stockholders the right to have their public shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by December 14, 2024 or during any extended time we have to consummate our initial business combination beyond December 14, 2024 as a result of a stockholder vote to amend our amended and restated certificate of incorporation (an “Extension Period”) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (c) the redemption of all of our public shares if we are unable to complete our initial business combination by December 14, 2024 or during any Extension Period, subject to applicable law.

The proceeds held in the Trust Account may only be invested in U.S.

government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S.

government treasury obligations.

On June 9, 2023, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to extend the time that the Company has to consummate its initial business combination from June 14, 2023 to September 14, 2023 and to allow the board of directors of the Company, without another stockholder vote, to elect to further extend the date to consummate an initial business combination after September 14, 2023 up to six times, by an additional month each time, up to March 14, 2024, providing the Company a 21-month period (or up to 27-month period) from the closing of the IPO to consummate its initial business combination.

In connection with the Special Meeting, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for cash, resulting in 4,150,065 shares of Class A common stock issued and outstanding and subject to possible redemption.

Accordingly, at December 31, 2023 and 2022, there were 8,350,065 and 23,000,000 shares of Class A common stock issued and outstanding, including 4,150,065 and 23,000,000 shares of Class A common stock subject to possible redemption, respectively.

In advance of the Special Meeting, on May 25, 2023, the Company entered into non-redemption agreements with unaffiliated third parties in exchange for each such party agreeing not to redeem public shares held by them in connection with such meeting.

In exchange for the foregoing commitments not to redeem public shares, the sponsor agreed to transfer to such third parties an aggregate of up to 1,499,996 founder shares.

In addition, in advance of the Special Meeting and the entry into the non-redemption agreements, on May 25, 2023, pursuant to the terms of our charter, the sponsor converted 4,200,000 founder shares held by it on a one-for-one basis into Public Shares.

Prior to December 31, 2023, the board of directors of the Company approved four monthly extensions from September 14, 2023 to January 14, 2024.

As described in Note 11 to the financial statements (Subsequent Events), in January and February 2024, the board approved two further monthly extensions up to March 14, 2024.

In connection with each of the monthly extensions, the sponsor transferred 166,666 shares of the Company’s Class B common stock held by the sponsor to unaffiliated third parties in accordance with those certain voting and non-redemption agreements previously entered into between the sponsor and such third parties.

In addition, on March 14, 2024, the Company’s stockholders approved a proposal to amend the Company’s amended and restated certificate of incorporation to further extend the time that the Company has to consummate its initial business combination from March 14, 2024 to December 14, 2024.

In connection with the vote to extend the time that the Company has to consummate its initial business combination from March 14, 2024 to December 14, 2024, the holders of 2,986,952 shares of Class A common stock properly exercised their right to redeem their shares for an aggregate redemption amount of $32,214,591, resulting in 1,163,113 shares of Class A common stock issued and outstanding and subject to possible redemption.

As of December 31, 2023, we had not yet commenced any operations.

All activity from inception through December 31, 2023 relates to our formation, our IPO and our pursuit of a target company with which to effect our initial business combination.

The Company has selected December 31 as its fiscal year end.

For the year ended December 31, 2023, we had net income of $2,729,602, which consisted of dividend income of $6,707,678 on marketable securities held in trust, offset by operating expenses of $1,670,440, a provision for income tax of $1,319,280, a $934,906 financing expense, and a $53,450 loss on the change in fair value of the warrant liability.

In comparison, for the year ended December 31, 2022, we had net income of $18,132,948, which consisted of dividend income of $3,383,823 on marketable securities held in trust and a $16,668,950 gain on the change in fair value of the warrant liability, offset by operating expenses of $1,577,543 and a provision for income tax of $362,282.

The provision for income taxes increased $956,998 as a result of the Company’s effective tax rate increasing from 1.96% as of December 31, 2022 to 32.58% as of December 31, 2023 largely due to changes in the fair value of warrant liabilities and the valuation allowance.

Results of Operations and Known Trends or Future Events

11 unchanged sentences

maintained by Continental Stock Transfer & Trust Company, acting as trustee.

In connection with the Special Meeting, the holders of 18,849,935 shares of Class A common stock properly exercised their right to redeem their shares for an aggregate redemption amount of $197,694,657, resulting in 4,150,065 shares of Class A common stock issued and outstanding and subject to possible redemption.

Accordingly, at December 31, 2023, there were 8,350,065 shares of Class A common stock issued and outstanding, including 4,150,065 shares of Class A common stock subject to possible redemption.

Continental Stock Transfer & Trust Company (the “Trustee”) processed the redemptions and withdrew the $197,694,657 payable to the holders redeeming 18,849,935 shares of Class A common stock on July 7, 2023.

Transaction costs of the initial public offering amounted to $13,935,218, consisting of $4,600,000 of underwriting discount, $8,050,000 of deferred underwriting discount, and $1,285,218 of actual offering costs.

2 unchanged sentences

For the year ended December 31, 2023, net cash provided by operating activities was $5,542,225.

Net income of $18,132,948 was adjusted by $759,525 of accrued dividends on marketable securities held in trust, $16,688,950 change in fair value of warrant liability, and $287,991 of changes in operating assets.

Net income of $2,729,602 was increased by a $53,450 gain on the change in fair value of the warrant liability, $934,906 of financing expense, and $2,022,686 of changes in operating assets and liabilities, offset by accrued dividends on marketable securities held in trust of $198,419.

As of December 31, 2023, we had marketable securities held in the Trust Account of $44,709,805, consisting of securities held in a money market fund that invests in U.S.

2 unchanged sentences

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

The sponsor has committed to making capital contributions to the Company in order to fund its search for and consummation of an initial business combination.

The sponsor has provided cash contributions of $800,000 and $0 for the years ended December 31, 2023 and December 31, 2022, respectively.

We do not believe we will have sufficient funds in order to meet the expenditures required for operating our business prior to our initial business combination.

17 unchanged sentences

We have entered into a letter agreement with our sponsor pursuant to which we are required to pay our sponsor a total of $15,000 per month for office space, utilities, and secretarial and administrative services, commencing on December 10, 2021, the date that our securities were first listed on the NYSE, through the earlier of our initial business combination and our liquidation.

Commitments and Contingencies

Registration rights

The holders of the founder shares (and public shares issued upon conversion thereof), Private Placement Warrants and any warrants that may be issued upon conversion of working capital loans (and in each case holders of the underlying securities thereof, as applicable) are entitled to registration rights pursuant to a registration rights agreement signed on December 9, 2021, requiring the Company to register such securities for resale (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 registration demands, that the Company register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).

However, the registration rights agreement provides that the Company is not required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period with respect to such securities.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

We granted the underwriter a 45-day option from the date of our IPO to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discount.

On December 13, 2021, the underwriter exercised the option in full, closing the sale of the 3,000,000 additional Units on December 14, 2021.

The underwriter was paid an underwriting commission of $4,600,000 upon the closing of our IPO.

In addition, the underwriter was entitled to a deferred fee of $0.35 per unit, or $8,050,000 in the aggregate, payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement.

On August 22, 2022, the underwriter delivered a letter to the Company pursuant to which the underwriter waived its entitlement to the payment of the deferred underwriting fee.

The $8,050,000 waived fee was recorded to accumulated deficit.

Non-redemption Agreements

On May 25, 2023, the Company and the sponsor entered into Non-Redemption Agreements with unaffiliated third parties in exchange for such third parties agreeing (i) not to redeem an aggregate of 4,000,000 shares of Class A common stock sold in its initial public offering (the “Non-Redeemed Shares”) in connection with the Special Meeting and (ii) to vote in favor of the Extension Amendment Proposal and the Extension at the Special Meeting (other than with respect to certain shares acquired or to be acquired pursuant to the Non-Redemption Agreements).

In exchange for the foregoing commitments, the sponsor agreed to transfer to such third parties an aggregate of up to 1,499,996 shares of Class B common stock held by the sponsor, with 500,000 of such shares to be transferred to such third parties promptly upon consummation of the Extension, and an additional 166,666 shares to be transferred to such third parties monthly beginning on September 14, 2023 and up to, and including, February 14, 2024, if the board of directors of the Company elects to further extend the deadline to consummate an initial business combination at or prior to such date, in each case, if such third parties continue to hold such Non-Redeemed Shares through the Special Meeting.

As of December 31, 2023, the Company had extended the deadline to complete the business combination four times, to January 14, 2024, resulting in an aggregate of 666,664 additional shares of Class B common stock held by the sponsor being transferred to such third parties.

As discussed in Note 11 to the financial statements (Subsequent Events), in January and February 2024, the Company further extended the deadline to March 14, 2024, resulting in the full amount of 1,499,996 shares of Class B common stock being transferred to such third parties.

The Company accounted for the Non-Redemption Agreements in accordance with Staff Accounting Bulletin Topic 5T (“SAB Topic 5T”).

The Company considered the sponsor’s transfer of Class B common stock to the unaffiliated third parties in exchange for the Non-Redemption Agreements as a capital contribution by the sponsor and recognized the excess fair value of the transferred Class B common stock as a financing expense on the statements of operations.

The Company determined the excess fair value of the 1,166,664 shares of Class B common stock transferred to such third parties upon the consummation of the Extension to be $934,906.

Critical Accounting Estimates

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis