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Item 2. Management’s Discussion and Analysis

2023-08-21 compared with 2023-05-18 · 34 added, 31 removed, 109 unchanged (37% of the section changed)

11 unchanged sentences

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.

On December 5, 2022, we entered into a Business Combination Agreement with Infrared Cameras Holdings, Inc., a Delaware corporation, which was amended on June 27, 2023.

Business – Recent Developments for more information.

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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.

Since the Meeting, we have deposited $245,242 into the Trust Account to extend the date by which it must consummate a Business Combination or cease operations until August 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.

In April and May 2023, we secured operational working capital of $1,000,000 (“Promissory Notes”) through investors affiliated with the Sponsor and other third parties.

The Promissory Notes are not interest bearing are not convertible into any securities of the company.

As an incentive for the Promissory Notes provided, the investors were given an aggregate of 165,598 Founder Shares.

The principal balance of the Promissory Notes shall be payable upon consummation of an initial Business Combination;

provided that we shall have the right to extend the Repayment Date for up to 12 months thereafter in the event that the minimum cash transaction proceeds (as described in the definitive agreement with respect to such Business Combination) are not met, or would not be met but for such extension.

The principal balance may be prepaid at any time.

The investors have no right to redemption on the transferred shares.

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 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.

Additionally, we issued $1,000,000 in Promissory Notes to related parties and third party investors.

As of June 30, 2023, we had $255,452 in our operating bank account, and working capital deficit of $1,327,066, excluding taxes payable from the Trust Account.

Our liquidity needs through June 30, 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.

Additionally, we issued $1,000,000 in Promissory Notes.

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.

As of June 30, 2023, there were no amounts outstanding under any Working Capital Loans.

Going Concern

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.

We anticipate that the $255,452 held outside the trust account as of June 30, 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.

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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 May 20, 2023 to consummate a Business Combination.

We have until August 20, 2023 (or until December 20, 2023 with additional funding of the Trust Account) 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.

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.

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 unaudited condensed financial statements.

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

Risks and Uncertainties

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Results of Operations

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.

As of June 30, 2023, we had not commenced any operations.

All activity for the period from May 14, 2021 (inception) through June 30, 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 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.

For the three months ended June 30, 2023, we had a net loss of $959,222, which consisted of operating costs of $432,334, accrued interest on Promissory Notes of $911,167 and provision for income taxes of $97,259, offset by interest earned on investments held in Trust Account of $481,538.

For the six months ended June 30, 2023, we had a net loss of $454,030, which consisted of operating costs of $952,519, accrued interest on promissory note of $911,167 and provision for income taxes of $355,924, offset by interest earned on investments held in Trust Account of $1,765,580.

For the three months ended June 30, 2022, we had a net loss of $130,227, which consisted of $314,387 in formation and operating costs and provision for income taxes of $12,153, offset by interest earned on investments held in Trust Account of $196,313.

For the six months ended June 30, 2022, we had a net loss of $317,120, which consisted of $541,562 in formation and operating costs and provision for income taxes of $12,153, offset by interest earned on investments held in Trust Account of $236,595.

Contractual Obligations

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

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.

At June 30, 2023 and December 31, 2022, we had accrued $51,356 and $21,356, respectively, of administrative service fees, net of payments made.

For the three and six months ended June 30, 2023, the Company incurred $30,000 and $60,000 of administrative service fees expense, respectively.

For the three and six months ended June 30, 2022, the Company incurred $30,000 and $60,000 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.

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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.

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;

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Accordingly, common stock subject to possible redemption will be presented at redemption value as temporary equity, outside of the stockholders’ equity section of our condensed balance sheets.

Net Income (Loss) Per Common Stock

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 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.

Net Loss Per Common Stock

We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net 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 June 30, 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 loss per common stock for the period presented.

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

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Off-Balance Sheet Arrangements

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

As of June 30, 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.

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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