Item 1. Business
ITEM 1. BUSINESS
Introduction
We are a blank check company
incorporated as a Delaware corporation and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
recapitalization, reorganization or other similar business combination with one or more businesses or entities, which we refer to herein
as an initial business combination. Our sponsor is Redwoods Capital LLC, a Delaware limited liability company (“Sponsor”).
Our efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although we
intend to focus on the carbon neutral and energy storage industries. We do not have any specific business combination under consideration
or contemplation, and we have not, nor has anyone on our behalf, contacted any prospective target business or had any discussions, formal
or otherwise, with respect to such a transaction. We will not undertake an initial business combination with any entity with principal
business operations in China (including Hong Kong and Macau).
The registration statement
for our initial public offering (the “Initial Public Offering,” or “IPO”) was declared effective on March 30,
2022. On April 4, 2022, we consummated the Initial Public Offering of 10,000,000 units (the “public units”), each Public Unit
consisting of one share of common stock, $0.0001 par value (“Common Stock”), one redeemable warrant entitling the holder thereof
to purchase one share of Common Stock at a price of $11.50 per share and one right to receive one-tenth (1/10) of a share of Common Stock
upon the consummation of an initial business combination. The public units were sold at an offering price of $10.00 per public unit, generating
gross proceeds of $100,000,000. The Company granted the underwriters a 45-day option to purchase up to 1,500,000 additional units to cover
over-allotments, if any.
Simultaneously with the closing
of the IPO, we sold to the Sponsor and Chardan Capital Markets LLC, the representative of the underwriters in the IPO (“Chardan”),
in a private placement, 377,500 units and 100,000 units, respectively (the “private units”), at $10.00 per private unit, generating
total gross proceeds of $4,775,000. The private units are identical to the public units, except that the private warrants will be non-redeemable
and may be exercised on a cashless basis, in each case so long as they continue to be held by their initial purchasers or their permitted
transferees.
On April 7, 2022, the underwriters
exercised the over-allotment option in full and purchased 1,500,000 public units at a price of $10.00 per public unit, generating gross
proceeds of $15,000,000. Simultaneously with the closing of the over-allotment option, we consummated the sale of an additional aggregate
of 52,500 private units with the Sponsor and Chardan at a price of $10.00 per private unit, generating total proceeds of $525,000.
Transaction costs relating
to the IPO amounted to approximately $8.4 million, consisting of approximately $2.9 million of underwriting fees, approximately $4.3 million
of deferred underwriting fees (payable only upon completion of an initial business combination) and approximately $1.2 million of other
offering costs.
Upon the closing of the IPO
and the sale of private units on April 4, 2022, and the exercise of the over-allotment option and the sale of the additional private units
on April 7, 2022, a total of $116,150,000 was placed in a trust account (the “trust account”) located in the United States
with Continental Stock Transfer & Trust Company as a trustee, and invested only in U.S. “government securities,” within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of one hundred eighty-five (185) days or less,
or in money market funds meeting the conditions of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government
treasury obligations, as determined by the Company. These funds will not be released until the earlier of the completion of the initial
business combination and the distribution of the trust account as otherwise permitted under our amended and restated certificate of incorporation.
If we are unable to complete
an initial business combination within the combination period, 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 public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest (which interest shall be net of
taxes payable, and less certain amount of interest to pay dissolution expenses) divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate,
subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law.
We expect to continue to
incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete an initial business combination
will be successful.
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Our Company
We are a blank check company
formed under the laws of the State of Delaware for the purpose of entering into an initial business combination. To date, our efforts
have been limited to organizational activities as well as activities related to our Initial Public Offering and search for an initial
business combination target. Our efforts to identify a prospective target business will not be limited to any particular industry or geographic
region, although we intend to focus on the carbon neutral and energy storage industries. We will not undertake an initial business combination
with any entity with principal business operations in China (including Hong Kong and Macau).
Our Management Team
Our management team is comprised
of Jiande Chen, our Chief Executive Officer; Edward Cong Wang, our Chief Financial Officer; Raymond J. Gibbs, our Audit Committee Chair;
and Wei Kwang Ng and Hong Li, our independent directors.
Jiande Chen, our Chief Executive
Officer, served as the Chief Executive Officer and Vice Chairman of IMAX China (HKG:1970). Mr. Chen successfully led the team that completed
its initial public offering in October 2015. Mr. Wang has over 10 years of experience in investments. Raymond J. Gibbs, our Audit Committee
Chair, has more than 20 years of experience in high technology and fast moving consumer goods businesses across the primary and secondary
capital markets. Wei Kwang Ng, our independent director, has over 10 years of experience in business management and consulting experience
across marketing, banking and legal services. Hong Li, our independent director, has 25 years of executive management experiences in financial
industry in U.S. and China. We believe our team has the required investment, transactional and operational expertise to effect a business
combination with an attractive target and to position it for long-term success in the public markets.
Investment Criteria
We have identified the following
general criteria and guidelines as we evaluate prospective target companies.
● Large underpenetrated markets
with favorable industry dynamics . We intend to actively look for suitable investment opportunities within the carbon neutral and
energy storage sector with an enterprise value of approximately $250 million to $1 billion. We will prioritize targets that are already
benefiting from or capitalizing on trends found within their respective sectors.
● Strong management team .
The strength of the management team will be an important component in our review process. We will seek to partner with a visionary, experienced
and professional management team that has demonstrated a track record of driving growth, strategic decision making and long-term value
creation.
● Defensible market position
with sustainable competitive advantage . We intend to favor targets that have a strong competitive advantage or are category leaders
in their respective verticals. We will target companies that have strong intellectual property, technology, or brand equity within their
respective sectors that can be further monetized on a global basis.
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● Benefit from being a public
company . We intend to only acquire businesses that would benefit from being publicly traded in the United States, including access
to broader sources of capital and expanded market awareness. This improved access to capital could allow the targets to accelerate growth,
pursue new projects, retain and hire employees, and expand into new geographies or businesses.
While we intend to use these
criteria in evaluating the attractiveness of potential business combination opportunities, we may ultimately decide to enter into an initial
business combination with a target business that does not meet these criteria. 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 and guidelines in 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 SEC.
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as the review of
financial and other information which will be made available to us. We will also utilize our operational and capital allocation experience.
Our acquisition criteria, due diligence processes, and value creation methods 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.
Sourcing of Potential Business Combination Targets
We believe that the operational
and transactional experience of our management team and their respective affiliates, and the relationships they have developed as a result
of such experience, will provide us with a substantial number of potential business combination targets. These individuals and entities
have developed a broad network of contacts and corporate relationships around the world. This network has grown through sourcing, acquiring
and financing businesses, relationships with sellers, financing sources, and target management teams and experience in executing transactions
under varying economic and financial market conditions. We believe that these networks of contacts and relationships will provide us important
sources of investment opportunities. In addition, we anticipate that target business candidates may be brought to our attention from various
unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest
noncore assets or divisions.
Our acquisition criteria,
due diligence processes and value creation methods 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 SEC.
Other Acquisition Considerations
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers, or directors. In the event we seek
to complete our initial business combination with a company that is affiliated with our sponsor, officers, or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly
renders valuation opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business
combination is fair to our company from a financial point of view.
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Unless we complete our initial
business combination with an affiliated entity, or our board of directors cannot independently determine the fair market value of the
target business or businesses, we are not required to obtain an opinion from an independent investment banking firm, another independent
firm that commonly renders valuation opinions for the type of company we are seeking to acquire, or from an independent accounting firm
that the price we are paying for a target is fair to our company from a financial point of view. If no opinion is obtained, our stockholders
will be relying on the business judgment of our board of directors, which will have significant discretion in choosing the standard used
to establish the fair market value of the target or targets, and different methods of valuation may vary greatly in outcome from one another.
Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial
business combination.
Members of our management
team may directly or indirectly own our common stock and/or private placement units of our Company, and, accordingly, may have a conflict
of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business
combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business
combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any
agreement with respect to our initial business combination.
Each of our directors and
officers presently has, and in the future any of our directors and our officers may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present acquisition opportunities to such entity.
Accordingly, subject to his or her fiduciary duties under Delaware law, if any of our officers or directors becomes aware of an acquisition
opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will need
to honor his or her fiduciary or contractual obligations to present such acquisition opportunity to such entity, and only present it to
us if such entity rejects the opportunity. Our amended and restated certificate of incorporation provides that, subject to his or her
fiduciary duties under Delaware law, we renounce our interest in any corporate opportunity offered to any officer or director 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. We do not believe,
however, that any fiduciary duties or contractual obligations of our directors or officers would materially undermine our ability to complete
our business combination.
There is no restriction in
the geographic location of targets we can pursue, provided that we shall not undertake our initial business combination with any entity
with its principal business operations in China (including Hong Kong and Macau). We will seek to identify targets that are likely to provide
attractive financial returns through business combinations. We have yet to determine a time frame, an investment amount or any other criteria,
which would trigger our search for business opportunities outside of United States.
Initial Business Combination
Nasdaq rules require that
our initial business combination must be with one or more target businesses that together have an aggregate 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. If our board of directors 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
banking firm or another independent firm that commonly renders valuation opinions for the type of company we are seeking to acquire or
an independent accounting firm. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial
business combination.
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We have until December 4,
2024 to consummate an initial business combination. In addition, if we anticipate that we may not be able to consummate an initial business
combination by such date, an amendment to the Investment Management Trust Agreement, dated March 30, 2022, allows us to extend the date
on which the trustee must liquidate the trust account by up to twelve (12) times for an additional one month each time from December 4,
2023 to December 4, 2024 by depositing $35,000 per month for each monthly extension. If we are unable to consummate our initial business
combination within the combination period, we will, as promptly as possible but not more than ten business days thereafter, redeem 100%
of our outstanding public shares for a pro rata portion of the funds held in the trust account, including a pro rata portion of any interest
earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes, and then seek to liquidate
and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors which may take priority over the
claims of our public stockholders. In the event of our liquidation and subsequent dissolution, the public warrants and public rights will
expire and will be worthless.
We will either (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose, at which stockholders may seek to redeem their shares,
regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then
on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us
by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision
as to whether we will seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us
in 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 whether the terms of the transaction would otherwise require us to seek stockholder approval. Any tender offer documents used in connection
with a business combination will contain substantially the same financial and other information about the initial business combination
as is required under the SEC’s proxy rules.
Pursuant to the Nasdaq listing
rules, our initial business combination must occur with one or more target businesses having an aggregate fair market value of at least
80% of the value of the trust account (excluding any deferred underwriting discounts and commissions and taxes payable on the income earned
on the trust account), which we refer to as the 80% test, at the time of the agreement to enter into the initial business combination.
We are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value in
excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on its own. If
we are no longer listed on Nasdaq, we will not be required to satisfy the 80% test.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns less than 100% of such interests or assets of the target business in order to meet certain
objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if
the post-transaction company owns 50% or more of the outstanding voting securities of the target or otherwise owns a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended,
or the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders
prior to the business combination may collectively own a minority interest in the post-transaction 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 in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test.
If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate
value of all of the target businesses.
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Emerging Growth Company Status and Other Information
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012, or 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 of 2002,
or 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 non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less
active trading market for our securities and the prices of our securities may be more volatile.
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 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 our 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 common stock that is held by non-affiliates exceeds $700 million as of the end
of that year’s second fiscal quarter, and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during
the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the
JOBS Act.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed
fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that year’s second
fiscal quarter.
Employees
We have two executive officers.
They are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary
to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for the business combination and the stage of the business combination process the company is in. Accordingly, once management locates
a suitable target business to acquire, they will spend more time investigating such target business and negotiating and processing the
business combination (and consequently spend more time to our affairs) than they would prior to locating a suitable target business. We
presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could
range from only a few hours a week while we are trying to locate a potential target business to a majority of their time as we move into
serious negotiations with a target business for a business combination). We do not intend to have any full time employees prior to the
consummation of a business combination.
For additional discussion
of the general development of our business, see our final IPO prospectus filed with the SEC on April 1, 2022.
ITEM 1A. RISK FACTORS
As a smaller reporting company,
we are not required to make disclosures under this Item.
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