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Item 2. Management’s Discussion and Analysis

2023-05-18 compared with 2022-11-10 · 55 added, 51 removed, 85 unchanged (55% of the section changed)

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Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.

We are a blank check company incorporated as a Delaware corporation on May 14, 2021 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

We intend to consummate an initial business combination using cash from the proceeds of our Public Offering (the “Public Offering”) that closed on October 21, 2021 (the “Closing Date”) and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.

Our sponsor is SportsMap, LLC , a Delaware limited liability company (the “Sponsor”).

The registration statement for our initial public offering was declared effective on October 18, 2021.

We are blank check company incorporated as a Delaware corporation on May 14, 2021 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

We intend to consummate an initial business combination using cash from the proceeds of our initial public offering (the “IPO”) that closed on October 21, 2021 and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.

On December 5, 2022, we entered into a Business Combination Agreement with Infrared Cameras Holdings, Inc., a Delaware corporation.

Business – Recent Developments for more information.

On April 14, 2023, we held a special meeting of stockholders (the “Meeting”), at which the Company’s stockholder of record voted to approve the amendment of the Company’s amended and restated certificate of incorporation to extend the date by which the Company must consummate a business combination or, if it fails to do so, cease its operations and redeem or repurchase 100% of the shares of the Company’s common stock issued in the Company’s initial public offering, from April 20, 2023, monthly for up to eight additional months at the election of the Company, ultimately until as late as December 20, 2023 (“Extension”).

With this amendment, the Company has agreed to deposit into the Trust Account $0.05 for each outstanding public share for each monthly extension of the date by which the Company must complete its initial Business Combination.

Since the Meeting, we have deposited $81,747 into the Trust Account to extend the date by which it must consummate a business combination or cease operations until May 20, 2023.

In connection with the Extension, 9,865,056 shares of the Company’s common stock were redeemed (the “Redemption”), with 5,184,944 shares of Common Stock remaining outstanding after the Redemption, of which 1,634,944 shares of Common Stock remaining outstanding after the Redemption are shares issued in connection with our IPO (the “Public Shares”).

Our public stockholders will continue to have the opportunity to redeem all or a portion of their Public Shares upon the completion of our initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount on deposit in the trust account as of two business days prior to the vote to approve the consummation of our initial business combination, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding Public Shares.

Following the Redemption, approximately $17,000,000 remains on deposit in our trust account.

In April 2023, multiple lenders (“Multiple Lenders”) agreed to loan the Company up to $680,000.

The loans are non-interest bearing, unsecured and due at the earlier of the consummation of an initial Business Combination;

provided that the Company has the right to extend the repayment date for up to 12 months.

These notes are non-convertible into any securities of the Company.

In consideration for the loans, the lenders will receive Founder Shares from the Company’s initial shareholders.

The principal of the loans ranges from $30,000 to $300,000 each and Founder Shares granted to the lenders range from 6,000 to 60,000 for a total of 136,000 shares.

The Company has secured an additional approximate $320,000 in funding.

Terms and conditions of these loans are expected to be substantially the same as with the Multiple Lenders.

Additionally, the Company’s initial shareholders are expected to grant an additional approximate 64,000 Founder Shares for these loans.

Liquidity and Capital Resources

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and (3) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption of public shares as described in the IPO or redeem 100% of the public shares if we do not complete the initial Business Combination within the required time period or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity.

As of September 30, 2022, we had $347,671 in our operating bank account, and working capital of $527,665, excluding taxes.

Our liquidity needs through September 30, 2022 were satisfied through a payment from the Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of up to $400,000.

The outstanding balance under the promissory note of $323,190 was paid in full on October 22, 2021 and the unsecured promissory note is no longer available to the Company.

As of September 30, 2022, no amounts were outstanding under the unsecured promissory note.

After consummation of the IPO on October 21, 2021, we had $24,991 in its operating bank account, and working capital of $1,463,454, which included $2,150,000 of private placement proceeds receivable from the Sponsor which was received into our operating bank account on October 22, 2021.

In addition, 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, provide us Working Capital Loans.

As of September 30, 2022, there were no amounts outstanding under any Working Capital Loans.

As of March 31, 2023, we had $13,981 in our operating bank account, and working capital deficit of $343,046, excluding taxes.

Our liquidity needs through March 31, 2023 were satisfied through a payment from the Sponsor of $25,000 for the Founder Shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of up to $400,000.

The outstanding balance under the promissory note of $323,190 was paid in full on October 22, 2021.

After consummation of the IPO on October 21, 2021, we had $2,150,000 of private placement proceeds receivable from the Sponsor which was received into our operating bank account on October 22, 2021.

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, provide us Working Capital Loans.

As of March 31, 2023, there were no amounts outstanding under any Working Capital Loans.

Going Concern

We anticipate that the $347,671 held outside the trust account as of September 30, 2022 might not be sufficient to allow us to operate for at least 12 months from the issuance of the financial statements, assuming that a business combination is not consummated during that time.

Until consummation of its business combination, we will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the initial shareholders, certain of our officers and directors (see Note 5), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

We can raise additional capital through Working Capital Loans from the initial shareholders, certain of our officers, and directors (see Note 5), or through loans from third parties.

We anticipate that the $13,981 held outside the trust account as of March 31, 2023 might not be sufficient to allow us to operate for at least 12 months from the issuance of the financial statements, assuming that a business combination is not consummated during that time.

Until consummation of a business combination, we will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5 of the Financial Statements) from the initial shareholders, certain of our officers and directors (see Note 5 of the Financial Statements), for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.

We can raise additional capital through Working Capital Loans from the initial shareholders, certain of our officers, and directors (see Note 5 of the Financial Statements), or through loans from third parties.

None of the sponsor, officers or directors are under any obligation to advance funds to, or to invest in, us.

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These conditions raise substantial doubt about our ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements.

We have until April 20, 2023 to consummate a Business Combination.

It is uncertain that we will be able to consummate a Business Combination by that date, which is less than 12 months from the issuance date of these financial statements.

We have until May 20, 2023 to consummate a Business Combination.

It is uncertain that we will be able to consummate a Business Combination by that date, which is less than 12 months from the issuance date of these unaudited condensed financial statements.

If a Business Combination is not consummated by the required date, there will be a mandatory liquidation and subsequent dissolution.

In connection with our assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” we have determined that mandatory liquidation, and subsequent dissolution, should we be unable to complete a business combination, raises substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of these financial statements.

No adjustments have been made to the carrying amounts of assets and liabilities should we be required to liquidate after April 20, 2023.

connection with our assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” we have determined that mandatory liquidation, and subsequent dissolution, should we be unable to complete a business combination, raises substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of these unaudited condensed financial statements.

No adjustments have been made to the carrying amounts of assets and liabilities should we be required to liquidate after May 20, 2023.

Risks and Uncertainties

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Results of Operations

As of September 30, 2022, we had not commenced any operations.

All activity for the period from May 14, 2021 (inception) through September 30, 2022 relates to our formation and the Initial Public Offering.

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

All activity for the period from May 14, 2021 (inception) through March 31, 2023 relates to our formation and the Initial Public Offering.

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

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

For the three months ended September 30, 2022, we had a net income of $184,106, which consisted of interest earned on cash and securities held in Trust Account of $541,215, offset by operating costs of $253,954 and provision for income taxes of $103,155.

For the nine months ended September 30, 2022, we had a net loss of $133,014, which consisted of $795,516 in operating costs and provision for income taxes of $115,308, offset by interest earned on cash and securities held in Trust Account of $777,810.

For the three months ended September 30, 2021, we had a net loss of $30 which consists of formation and operating costs.

For the period from May 14, 2021 (inception) through September 30, 2021, we had a net loss of $443 which consists of formation and operating costs.

For the three months ended March 31, 2023, we had a net income of $505,192, which consisted of interest earned on cash and securities held in Trust Account of $1,284,042, offset by operating costs of $520,185 and provision for income taxes of $258,665.

For the three months ended March 31, 2022, we had a net loss of $186,893, which consisted of $227,175 in formation and operating costs, offset by interest earned on cash and securities held in Trust Account of $40,282.

Contractual Obligations

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Upon completion of our initial Business Combination or our liquidation, we will cease paying these monthly fees.

At September 30, 2022 and December 31, 2021, we had accrued $21,356 and $24,516, respectively, of administrative service fees, net of payments made.

For the three and nine months ended September 30, 2022, the Company incurred $30,000 and $90,000 of administrative service fees expense, respectively.

For the period of three months and for from May 14, 2021 (inception) through September 30, 2021, the Company did not incur any fees for these services.

At March 31, 2023 and December 31, 2022, we had accrued $21,356 and $21,356, respectively, of administrative service fees, net of payments made.

For the three months ended March 31, 2023 and 2022, the Company incurred $30,000 and $30,000 of administrative service fees expense, respectively.

Included in the Administrative Service Fee paid to the Sponsor is $100,000 the Sponsor pays to Lawson Gow, the Company’s Chief Strategy Officer, in connection with services related to identifying and consummating the initial Business Combination.

Registration Rights

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provided that any holder that is affiliated with an underwriter participating in the IPO may participate in a “piggy-back” registration only during the seven-year period beginning on the commencement date of sales in the IPO.

Underwriting Agreement

On October 21, 2021, we paid a cash underwriting discount of 2.0% per Unit, or $2,300,000.

Business Combination Marketing Agreement

We have engaged the representative as an advisor in connection with the Business Combination to assist it in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing its securities in connection with the initial Business Combination, assist us in obtaining stockholder approval for the Business Combination and assist us with its press releases and public filings in connection with the Business Combination.

We will pay the representative a cash fee for such services upon the consummation of the initial Business Combination in an amount equal to 3.5% of the gross proceeds of the IPO, or $4,025,000 (exclusive of any applicable finders’ fees which might become payable).

The Company has engaged Roth Capital Partners, LLC, the representative, as an advisor in connection with the Business Combination to assist it in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing its securities in connection with the initial Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination.

The Company will pay the representative a cash fee for such services upon the consummation of the initial Business Combination in an amount equal to 3.5% of the gross proceeds of the IPO, or $4,025,000 (exclusive of any applicable finders’ fees which might become payable).

Additionally, the Company engaged Craig-Hallum Capital Group LLC (“Craig-Hallum”) to act as its placement agent and its merger and acquisition advisor in connection with any offering in respect to a Business Combination with a Target.

Craig-Hallum will assist with identifying selecting a potential target company, assisting with the formation of a letter of intent (“LOI”), evaluating proposals for potential business combination, assisting in structuring the formation of a potential business combination, identifying and selecting investors and other activities related to a potential business combination.

In the event an offering of securities in connection with a Business Combination with a Target or any other evidence of commitment with a Business Combination with a Target, the Company will pay Craig-Hallum a cash fee of 6.0% of the gross proceeds raised and only if Craig-Hallum is the source of introduction to the specific transaction.

Additionally, if the Company completes a Business Combination with a target during the term of the contract with Craig Hallum, Craig-Hallum will be owed an M&A Advisory Fee in stock equal to the greater of (i) 2.0% of the aggregate transaction value of the target;

and (ii) 250,000 shares of newly issued common stock registered within 90 days of closing of the Business Combination.

Roth Capital will be due 30% of the M&A Advisory Fee in stock.

The Company has engaged ArentFox Schiff LLP (“AFS”) to assist with various routine and business combination related matters.

AFS has agreed to perform the foregoing services at a discounted rate, and, subject to final consummation of the Business Combination, the Company will pay an additional amount to AFS equal to the cumulative amount earned by AFS up until the date of the consummation of the Business Combination.

To the extent the Business Combination is not completed, the Company will not be required to pay AFS any additional amounts in excess of the discounted rate.

Critical Accounting Policies

Offering Costs

We comply with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A – “Expenses of Offering”.

Offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the IPO.

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

Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction of equity.

Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately.

Upon closing of the IPO on October 21, 2021, offering costs associated with the common stock and the warrants were charged to stockholders’ equity.

Transaction costs amounted to $2,822,937, consisting of $2,686,076 which was charged to temporary equity and $136,861 which was charged to additional paid-in capital.

Common Stock Subject to Possible Redemption

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We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

At September 30, 2022, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in our earnings.

At March 31, 2023 and 2022, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in our earnings.

As a result, diluted loss per common stock is the same as basic income (loss) per common stock for the period presented.

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Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments.

The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments.

ASU 2020-06 allows for a modified or full retrospective method of transition.

For smaller reporting companies, this update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted.

We are currently evaluating the impact this change will have on our financial statements.

Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.

Off-Balance Sheet Arrangements

As of September 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements.

We do not believe that inflation had a material impact on our business, revenues or operating results during the period presented.

As of March 31, 2023 and December 31, 2022, we did not have any off-balance sheet arrangements.

We do not believe that inflation had a material impact on our business or operating results during the period presented.

Emerging Growth Company Status

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We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, us, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

This may make comparison of our unaudited condensed financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Quantitative and Qualitative Disclosures About Market Risk.

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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-Q

Item 2. Management’s Discussion and Analysis