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Item 7. Management’s Discussion and Analysis

2024-03-13 compared with 2023-04-20 · 64 added, 63 removed, 94 unchanged (57% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company,” “our Company” or “MCAC” refer to Monterey Capital Acquisition Corporation, a Delaware corporation.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report.

References to the “Company,” “our,” “us” or “we” refer to Monterey Capital Acquisition Corporation.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

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These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

In some cases, you can identify forward-looking statements by terminology

such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions.

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of

such terms or other similar expressions.

Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-K.

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On May 13, 2022, we consummated the Initial Public Offering of 9,200,000 units (the “Units” and, with respect to the Class A Common Stock included in the Units, the “Class A Common Stock”), inclusive of 1,200,000 Over-Allotment Units (defined below) resulting from the full exercise by the underwriters of their over-allotment option, at $10.00 per Unit, generating gross proceeds of $92 million, and incurring offering costs (inclusive of the full exercise of the underwriter’s over-allotment option on May 13, 2022) of approximately $8.7 million, consisting of approximately $0.9 million of underwriting fees, approximately $3.7 million of deferred underwriting fees that will be paid only if a business combination is entered into, approximately $0.6 million representing the fair value of the 138,000 shares of Class A Common Stock we issued to the underwriter of the Initial Public Offering (the “Representative Shares”), approximately $2.5 million representing the fair value of the 600,000 Founder Shares (the “Transferred Founder Shares”) the Sponsor sold to the group of ten qualified institutional buyers and institutional accredited investors, which are not affiliated with the Company (the “Anchor Investors”), and approximately $1.0 million of other offering costs.

At the IPO date, cash of approximately $0.9 million was held outside of the Trust Account (as defined below) and was available for the payment of the Note (see Note 3), payment of accrued offering costs and for working capital purposes.

At the IPO date, cash of approximately $0.9 million was held outside of the Trust Account (as defined below) and was available for the payment of the promissory note to the Sponsor, payment of accrued offering costs and for working capital purposes.

Each Unit consists of one share of common stock, one redeemable warrant (“Public Warrant”), with each Public Warrant exercisable into one share of common stock at an exercise price of $11.50 per share, and one right (“Rights”) to receive one-tenth of one share of common stock upon consummation of the Company’s initial business combination.

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Upon the closing of the Initial Public Offering and the Private Placement (including the additional Units sold in connection with the full exercise of the underwriter’s over-allotment option), $92,920,000 ($10.10 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in the Trust Account.

If we are unable to complete an initial Business Combination within 12 months (or up to 18 months if the Company extends the period of time to consummate a Business Combination up to two times by an additional three months each time) from the closing of the Initial Public Offering, or May 13, 2023 (or November 13, 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 the shares of Class A Common stock subject to possible redemption, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (less any income or franchise tax obligations and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding shares of common stock, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of

directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

On May 9, 2023, the Company extended the period of time available to consummate its Business Combination to August 13, 2023, pursuant to Extension One.

On August 11, 2023, the Company further extended the period of time available to consummate its Business Combination to November 13, 2023, pursuant to Extension Two.

The Initial Extensions represented the two three-month extensions permitted under the Company’s governing documents.

On November 6, 2023, the stockholders of MCAC held a special meeting of stockholders where the MCAC stockholders approved the Amended Charter and IMTA Amendment.

The Amended Charter provides the board of directors of MCAC with the right to extend the date by which MCAC has to consummate its Business Combination up to an additional six (6) times for one (1) month each time from November 13, 2023 to May 13, 2024, by depositing into the Trust Account, for each one-month extension, the lesser of (a) $414,000 and (b) $0.045 for each then-outstanding share of Common Stock after giving effect to the redemption of shares of Common Stock (the “Current Extension”).

On November 9, 2023, the Company further extended the period of time to consummate its Business Combination by an additional one-month period from November 13, 2023 to December 13, 2023 pursuant to the Current Extension, by ConnectM’s deposit of approximately $325,715 into the Trust Account.

On December 11, 2023, the Company further extended the period of time to consummate its Business Combination by an additional one-month period from December 13, 2023 to January 13, 2024 pursuant to the Current Extension, by ConnectM’s deposit of approximately $325,716 into the Trust Account.

On January 8, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one-month period from January 13, 2024 to February 13, 2024 pursuant to the Current Extension, by ConnectM’s deposit of approximately $325,716 into the Trust Account.

On February 9, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one-month period from February 13, 2024 to March 13, 2024 pursuant to the Current Extension, by ConnectM’s deposit of approximately $325,716 into the Trust Account.

On March 11, 2024, the Company further extended the period of time to consummate its Business Combination by an additional one-month period from March 13, 2024 to April 13, 2024 pursuant to the Current Extension, by ConnectM’s deposit of approximately $325,716 into the Trust Account.

In connection with the special meeting of stockholders on November 6, 2023, stockholders holding 1,961,875 shares of Class A Common Stock issued in the Initial Public Offering exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account.

As a result, approximately $20,961,169 (approximately $10.68 per share after removal of interest to pay taxes) was removed from the Trust Account to pay such holders, resulting in approximately $77,333,961 remaining in the Trust Account immediately following the redemption payments.

If the Company is unable to complete an initial Business Combination before the deadline, currently May 13, 2024, the Company 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 the shares of Class A Common stock subject to possible redemption, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (less any income or franchise tax obligations and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding shares of common stock, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors of MCAC, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Proposed Business Combination

On December 31, 2022, MCAC entered into the Merger Agreement by and among MCAC, Merger Sub, and ConnectM.

Pursuant to the terms and conditions of the Merger Agreement, a business combination between MCAC and ConnectM will be effected through the merger of Merger Sub with and into ConnectM, with ConnectM surviving the Merger as a wholly owned subsidiary of MCAC.

Refer to Note 1 for further discussion of the Merger Agreement and related agreements.

On December 31, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, ConnectM Technology Solutions, Inc., a Delaware corporation (“ConnectM”), and Chronos Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”).

Pursuant to the terms and conditions of the Merger Agreement, a business combination between the Company and ConnectM will be effected through the merger of Merger Sub with and into ConnectM, with ConnectM surviving the merger as a wholly owned subsidiary of the Company.

On October 12, 2023, the Company, Merger Sub and ConnectM entered into a First Amendment to Agreement and Plan of Merger (the “Amendment”), which amended the Merger Agreement.

The Amendment extends the date after which either party may terminate the Merger Agreement for convenience (with limited exceptions) from November 13, 2023 to May 13, 2024.

The Amendment also provides that, subject to the Company obtaining the requisite stockholder approval to amend its amended and restated certificate of incorporation (the “Amended Charter”) and the Investment Management Trust Agreement by and between the Company and Continental Stock Transfer & Trust Company, dated May 10, 2022 (the “IMTA Amedment”), with such approval received on November 6, 2023 at MCAC’s special meeting of stockholders, the Company will be able to extend the date by which the Company has to consummate a business combination by up to six months and ConnectM will pay to the Company or the Trust Account the funds necessary to effect such extension (not to exceed $414,000 for each monthly extension or $2,484,000 in the aggregate for all six monthly extensions).

Liquidity and Capital Resources

At December 31, 2022, we had cash of $5,938 and a working capital deficit of $1,605,220, excluding the income and franchise tax liabilities, as these tax liabilities will be paid using the dividend and interest income earned in the Trust Account.

At December 31, 2023, we had cash of $5,947 and a working capital deficit of $6,843,119.

We have neither engaged in any operations nor generated any revenues to date.

Our only activities from September 23, 2021 (inception) to December 31, 2022 were organizational activities and those necessary to consummate the Initial Public Offering and identifying a target company for a business combination.

We do not expect to generate any operating revenues until after the completion of our business combination.

We have generated and expected to generate non-operating income in the form of dividend and interest income on marketable securities held after the Initial Public Offering.

Our only activities from September 23, 2021 (inception) to December 31, 2023 were organizational activities and those necessary to consummate the Initial Public Offering, identify a target company and prepare for a potential business combination with ConnectM.

We do not expect to generate any operating revenues until at least after the completion of our business combination, if at all.

We have generated and expected to generate non-operating income in the form of dividend and interest income on marketable securities held in the Trust Account.

We have incurred and expect to incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $25,000 from the sale of the Founder Shares (Note 5), and a loan amounting to $354,100 as of the IPO date, which was repaid on May 16, 2022, under an unsecured and noninterest bearing promissory note from the Sponsor.

Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity needs have been and will continue to be satisfied through the net proceeds held outside of the Trust Account from the consummation of the Initial Public Offering and the Private Placement.

In addition, in order to finance transaction costs in connection with an initial business combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).

Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity needs have been satisfied through the net proceeds held outside of the Trust Account from the consummation of the Initial Public Offering and the Private Placement.

In addition, in order to finance the Company’s operations as well as transaction costs in connection with an initial business combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).

The Working Capital Loans are to be repaid upon consummation of a business combination, without interest, or, at the lender’s option, up to $1.5 million of the outstanding Working Capital Loans are convertible into warrants at a price of $1.00 per warrant.

Through December 31, 2022, the Company received $157,000 in Working Capital Loans (Note 5).

Through December 31, 2023, the Company has received $739,457 in Working Capital Loans (Note 5).

Further, during the year ended December 31, 2023, the Company received $445,000 in loans from ConnectM in the same form as the Working Capital Loans.

As of December 31, 2023, the Company had cash in the Trust Account of $78,702,824.

The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions of $3,680,000 and $441,166 available to satisfy the Company’s tax liabilities) to complete its initial business combination.

To the extent that the Company’s capital stock or debt is used, in whole or in part, as consideration to complete its initial business combination.

Until the consummation of a business combination, we will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the business combination.

The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions of $3,680,000) to complete its initial business combination, to the extent that the Company’s capital stock or debt is used, in whole or in part, as consideration to complete its initial business combination.

Until the consummation of an initial business combination, we will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the business combination.

The Company is required to complete a Business Combination by May 13, 2024 pursuant to the Current Extension.

Considering that the Company’s ability to consummate its’ proposed Business Combination is uncertain, the Company may be required to dissolve as early as April 13, 2024, absent the payment of subsequent Additional Extension Payments, or May 13, 2024 pursuant to the requirements of the Additional Extension Options, should a Business Combination not be consummated within that timeframe.

We will need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors, or third parties.

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Accordingly, we may not be able to obtain additional financing.

If the 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, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.

We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the business combination or the date the Company is required to liquidate, no later than 10 business days after May 13, 2023 (or until November 13, 2023 if we decide to exercise the Extension Option).

These consolidated financial statements do not include any adjustments relating to

the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

In connection with the Company’s assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board’s (“FASB”) ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” management has determined that the factors discussed above raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the business combination or the date the Company is required to liquidate, no later than 10 business days after May 13, 2024.

These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Results of Operations

Our entire activity from inception through the IPO Date was in preparation for our Initial Public Offering, and since our Initial Public Offering, our activity has been limited to the search for a prospective initial business combination.

Our entire activity from inception through the IPO date was in preparation for our Initial Public Offering, and since our Initial Public Offering, our activity has been limited to the search for a prospective initial business combination and preparation for a Business

We will not generate any operating revenues until the closing and completion of our initial business combination, at the earliest.

For the year ended December 31, 2022, we had a net loss of $3,763,638, which was primarily related to $2,098,401 of general and administrative costs, $240,507 of income tax expense, and $2,770,000 loss on the change in fair value of the Forward Purchase Agreement liability, partially offset by $1,289,804 of dividend and interest income earned in the Trust Account and $55,466 of other income related to expense reimbursements received from a potential target.

For the period from September 23, 2021 (inception) through December 31, 2021 we had a net loss of $19,889, which consisted of all formation and general and administrative costs.

The dividend and interest income during the year ended December 31, 2022 represents the income earned in the Trust Account from the IPO date through December 31, 2022.

The income tax expense during the year ended December 31, 2022 was primarily attributable to the dividend and interest income earned in the Trust Account.

General and administrative costs increased during the year ended December 31, 2022 due to the Company’s activities related to operating as a public company and activities to identify a target for an initial Business Combination, versus only formation-related expenses during the period from September 23, 2021 (inception) through December 31, 2021.

For the year ended December 31, 2023, we had a net loss of $14,943,203, which consists of $2,980,863 of general and administrative costs, $913,808 of income tax expense, and $15,600,000 loss on the change in fair value of the Forward Purchase Agreement liability, partially offset by $4,551,468 of dividend and interest income earned in the Trust Account.

For the year ended December 31, 2022, we had a net loss of $3,763,638, which consists of $2,098,401 of general and administrative costs, $240,507 of income tax expense, and $2,770,000 loss on the change in fair value of the Forward Purchase Agreement liability, partially offset by $1,289,804 of dividend and interest income earned in the Trust Account and $55,466 of other income.

The increase in dividend and interest income during the year ended December 31, 2023 compared to the year ended December 31, 2022 was due to increased interest rates and a higher average principal balance in the Trust Account, as the IPO was closed on May 13, 2022.

The increase in income tax expense during the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily attributable to the increase in dividend and interest income earned in the Trust Account, combined with temporary tax differences related to certain expenses.

General and administrative costs increased during the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to the Company’s increased activities to prepare for the proposed Business Combination.

The increase in the loss on the change in fair value of the Forward Purchase Agreement is a result of the change in the fair value during the periods, which is primarily driven by the increase in the estimated probability of the closing of Business Combination with ConnectM, a significant input into the fair value calculation.

Commitments and Contractual Obligations

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Administrative Support Agreement

In conjunction with the IPO closing, the Company entered into the administrative support agreement under which it pays the Sponsor a total of $10,000 per month, for up to 12 months, for office space, secretarial and administrative services.

The Company incurred $75,000 under the agreement during the year ended December 31, 2022.

In conjunction with the IPO closing, the Company entered into the administrative support agreement under which it pays the Sponsor a total of $10,000 per month, for office space, secretarial and administrative services.

The Company incurred $120,000 and $75,000 under the agreement during the years ended December 31, 2023 and 2022, respectively.

Upon completion of the initial business combination or the Company’s liquidation, the Company will cease paying these monthly fees.

As of December 31, 2023 and 2022, $63,600 and $5,100, respectively, was due under the administrative support agreement, included in Due to Sponsor - related party in the Company’s consolidated balance sheets.

Critical Accounting Policies and Estimates

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previously recognized compensation cost is reversed if the service or performance conditions are not satisfied, and the award is forfeited.

Offering Costs Associated with the Initial Public Offering

Offering costs consisted of legal, accounting, underwriting and other costs incurred that were directly related to the Initial Public Offering.

Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received.

Offering costs associated with the issuance of Class A Common Stock subject to possible redemption were charged to temporary equity upon the completion of the Initial Public Offering.

For the year ended December 31, 2022, offering costs in the aggregate of $8,698,910 consisted of $920,000 of underwriting commissions, $3,680,000 of deferred underwriter’s commissions, $622,882 representing the fair value of Representative Shares issued, $2,508,632 representing the fair value of Transferred Founder Shares and $967,396 of other offering costs.

Of the total offering costs, $8,139,659 was allocated to the Class A common stock subject to possible redemption, $152,515 was allocated to the Public Warrants (Note 8), and $406,736 was allocated to the Rights (Note 8).

Derivative Financial Instruments

The Company issued warrants and Rights (see Note 3) to its investors, the overallotment option to the underwriter (see Note 7), and the Working Capital Loans to the Sponsor (see Note 5).

The Company issued warrants and Rights to its investors, the overallotment option to the underwriter, and the Working Capital Loans to the Sponsor.

The Company accounts for financial instruments as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the instruments and applicable authoritative guidance in ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own stock and whether the holders of the instruments could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

At the IPO date, the Public Warrants and Rights (see Note 3) and Private Warrants (see Note 4) were accounted for as equity instruments as they meet all of the requirements for equity classification under ASC 815 based on current expected terms, which are subject to change.

At the IPO date, the underwriter’s overallotment option (see Note 7) met the definition of a liability under ASC 480.

At the IPO date, the Public Warrants and Rights and Private Warrants were accounted for as equity instruments as they meet all of the requirements for equity classification under ASC 815 based on current expected terms, which are subject to change.

At the IPO date, the underwriter’s overallotment option met the definition of a liability under ASC 480.

The Forward Purchase Agreement with Meteora entered into on December 31, 2022 resulted in Meteora holding a put option on shares to be purchased pursuant to the agreement, up to the maximum of 6,600,000.

Pursuant to ASC 815, Derivatives and Hedging, this instrument meets the definition of a derivative and accordingly will be recognized at fair value.

The fair value of this put option liability was estimated at $2,770,000 at December 31, 2022, assuming Meteora will purchase the maximum number of shares at the consummation of the Business Combination.

This Forward Purchase Agreement liability resulted in the recognition of a $2,770,000 loss on the change in fair value of the Forward Purchase Agreement liability in the Company’s consolidated statement of operations for the year ended December 31, 2022.

Pursuant to ASC 815, Derivatives and Hedging, this instrument meets the definition of a derivative and accordingly was recognized at fair value.

The fair value of this put option liability was estimated at $18,370,000 and $2,770,000 at December 31, 2023 and 2022, respectively, assuming Meteora will purchase the maximum number of shares at the consummation of the Business Combination.

The Company recognized a $15,600,000 and $2,770,000 loss on the change in fair value of the Forward Purchase Agreement liability in the Company’s consolidated statement of operations for the years ended December 31, 2023 and 2022, respectively.

Net Loss Per Share of Common Stock

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The Company’s consolidated statements of operations include a presentation of net loss per share subject to redemption in a manner similar to the two-class method of income per share.

With respect to the accretion of the Class A Common Stock subject to possible

redemption and consistent with ASC 480-10-S99-3A, the Company deemed the fair value of the Class A Common Stock subject to possible redemption to approximate the contractual redemption value and the accretion has no impact on the calculation of net loss per share.

The Company’s Public Warrants (see Note 3), Private Warrants (see Note 4), and Rights (see Note 3), could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

Additionally, the Embedded Feature (see Note 2) allows for conversion of the convertible notes into Private Warrants, which could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

With respect to the accretion of the Class A Common Stock subject to possible redemption and consistent with ASC 480-10-S99-3A, the Company deemed the fair value of the Class A Common Stock subject to possible redemption to approximate the contractual redemption value and the accretion has no impact on the calculation of net loss per share.

The Company’s Public Warrants, Private Warrants, and Rights, could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

Additionally, the Embedded Feature allows for conversion of the convertible notes into Private Warrants, which could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

However, these potentially dilutive instruments were excluded when calculating diluted loss per share because such inclusion would be anti-dilutive for the periods presented.

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Recent Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

This guidance changes how entities account for convertible instruments and contracts in an entity’s own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments.

This guidance also modifies the guidance on diluted earnings per share calculations.

This new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, but allows for early adoption.

The Company adopted this standard effective January 1, 2022 and the adoption did not have material impact on the Company’s consolidated financial statements.

The Company does not expect any other recently issued standards to have a material impact on the Company’s consolidated financial statements.

The Company does not expect any recently issued standards to have a material impact on the Company’s consolidated financial statements.

On April 5, 2012, the JOBS Act was signed into law.

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Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of independent registered public accounting firm providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officers’ compensation to median employee compensation.

Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of independent registered public accounting firm providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officers’ compensation to median employee compensation.

These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an “emerging growth company,” whichever is earlier.

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On May 10, 2022, the Sponsor surrendered 575,000 Founder Shares, for no consideration, resulting in the Sponsor and directors continuing to hold 2,300,000 Founder Shares.

Up to 300,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option (see Note 7) was not exercised in full by the underwriter.

Up to 300,000 Founder Shares were subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriter.

As the Underwriters exercised their overallotment option in full at the IPO date, the forfeiture provisions lapsed for 300,000 Founder Shares.

On October 28, 2021, the Sponsor transferred 25,000 Founder Shares to each of Kathy Cuocolo, Leela Gray and Stephen Markscheid, the Board of Directors nominees.

In addition, at the IPO date, the Sponsor sold 60,000 Founder Shares to each Anchor Investor, or the aggregate of 600,000 Founders Shares to the group of ten Anchor Investors (see Note 1).

The proceeds of $4,860 from the sale were collected by the Company on behalf of the Sponsor, and are included in Due to Sponsor – related party on the accompanying consolidated balance sheet as of December 31, 2022.

On October 28, 2021, the Sponsor transferred 25,000 Founder Shares to each of Kathy Cuocolo, Leela Gray and Stephen Markscheid, the board of directors of MCAC nominees.

In addition, at the IPO date, the Sponsor sold 60,000 Founder Shares to each Anchor Investor, or the aggregate of 600,000 Founders Shares to the group of ten Anchor Investors.

Promissory Note — Related Party

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This loan was non-interest bearing and payable on the earlier of June 24, 2022 or the consummation of the Initial Public Offering.

The Note totaled $0 and $80,000 as of December 31, 2022 and 2021, respectively.

The Note totaled $0 as of December 31, 2023 and 2022, respectively.

The Note balance of $354,100 as of the IPO date was repaid on May 16, 2022 from the proceeds of the Initial Public Offering not placed in the Trust Account.

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In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.

During the year ended December 31, 2022, the Sponsor loaned the Company $157,000 in Working Capital Loans.

During the years ended December 31, 2023 and 2022, the Sponsor loaned the Company $582,457 and $157,000, respectively, in Working Capital Loans.

The Working Capital Loans are to be repaid upon consummation of a Business Combination, without interest, or, at the lender’s option, up to $1.5 million of the outstanding Working Capital Loans are convertible into Private Warrants at a price of $1.00 per warrant.

1 unchanged sentence

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What changed 10-K

Item 7. Management’s Discussion and Analysis