−Removed: We are a Delaware blank check company formed on May 14, 2021.
−Removed: We were incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” Our efforts to identify a prospective target business are not be limited to a particular industry or geographic location.
−Removed: Recent Developments
−Removed: On December 5, 2022, we entered into a Business Combination Agreement (the “ Business Combination Agreement ”), by and among SportsMap, Infrared Cameras Holdings, Inc., a Delaware corporation (“ ICI ”), and ICH Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of SportsMap (“ Merger Sub ”).
−Removed: The transactions contemplated by the Business Combination Agreement are hereinafter referred to as the “ Business Combination .” The Business Combination Agreement and the transactions contemplated thereby have been unanimously approved by the board of directors of each of SportsMap, Merger Sub, and ICI and by the stockholders of ICI and Merger Sub.
−Removed: The Business Combination Agreement
−Removed: The Business Combination
−Removed: The Business Combination Agreement provides that, on the terms and subject to the conditions of the Business Combination Agreement, Merger Sub will merge with and into ICI (the “ Merger ”) with ICI surviving the Merger as a wholly-owned subsidiary of SportsMap (the “ Surviving Company ”).
−Removed: The Business Combination is expected to close in the third quarter of 2023, following the receipt of the required approval of SportsMap’s stockholders and the fulfillment or waiver (if permitted by applicable law) of other customary closing conditions.
−Removed: The closing of the Business Combination is referred to herein as the “ Closing ”.
−Removed: Business Combination Consideration
−Removed: At the effective time of the Merger (the “ Effective Time ”), in accordance with the terms and subject to the conditions of the Business Combination Agreement:
−Removed: ● each share of ICI common stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares (as defined in the Business Combination Agreement) and shares held immediately prior to the Effective Time by ICI as treasury stock) will be converted into the right to receive such number of shares of SportsMap common stock equal to the Exchange Ratio (as defined below),
−Removed: ● each option (a “Company Option”) to purchase shares of ICI Class B Common Stock that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, other than any Out-of-the-Money Option (as defined in the Business Combination Agreement) (the “Participating Company Options”), will be converted into an option to purchase a number of shares of SportsMap common stock upon substantially the same terms and conditions (but taking into account any accelerated vesting provided for in ICI’s equity plan or any award agreement by reason of the Business Combination Agreement or the transactions contemplated by the Business Combination Agreement) as are in effect with respect to such Company Option prior to the Effective Time, except that such option shall represent the right to receive a number of shares of SportsMap common stock equal to the number of shares of Company Class B Common Stock subject to such Company Option prior to the Effective Time multiplied by the Exchange Ratio, and the exercise price per share shall be equal to the exercise price per share of such Company Option prior to the Effective Time multiplied by the Exchange Ratio;
−Removed: and each Out-of-the-Money Option will be cancelled and terminated for no consideration;
−Removed: ● each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into one share of common stock of the Surviving Company;
−Removed: ● each share of ICI common stock held immediately prior to the Effective Time by ICI as treasury stock will be cancelled and extinguished for no consideration;
−Removed: ● each Dissenting Share of ICI will not convert in the Merger and will be entitled to rely on such rights as are granted pursuant to Delaware law, subject to certain conditions set forth in the Business Combination Agreement and in accordance with applicable law.
−Removed: The “ Exchange Ratio ” will be determined by (i) dividing the Adjusted Equity Value by $10.00, which is the value of one share of Sports Map common stock, and (ii) further dividing the quotient of the calculation in clause (i) by the aggregate number of shares of ICI Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held immediately prior to the Effective Time by ICI as treasury stock) on a fully-diluted basis assuming the exercise of all Participating Company Options, excluding any such shares issuable upon exercise of Out-of-the-Money Options, which will be cancelled at the Effective Time.
−Removed: The “ Adjusted Equity Value ” will be equal to (a) $100,000,000, less (b) the aggregate amount of ICI’s outstanding indebtedness at the Effective Time, plus (b) the aggregate exercise price that would be paid in respect of Participating Company Options if all Participating Company Options were exercised in full immediately prior to the Effective Time, plus (c) all cash and cash equivalents of ICI as of immediately prior to the Effective Time, plus (d) the aggregate principal amount of any convertible promissory notes entered into by ICI on or after the date of the Business Combination Agreement but prior to the Closing in each case on terms and subject to conditions set forth in the Business Combination Agreement.
−Removed: Pursuant to the Business Combination Agreement, SportsMap will reserve for issuance 2,400,000 shares of SportsMap common stock (the “ Earnout Shares ”).
−Removed: The Earnout Shares will be issued pro rata to the holders of ICI common stock if either (a) during the period beginning six months after the closing of the Business Combination and ending on December 31, 2024, the common stock of the post-closing public company (“ PubCo ”) achieves a market price of $12.50 per share for a specified number of days, or the combined company consummates a transaction in which its stockholders have the right to receive consideration implying a value of at least $12.50 per share, or (b) PubCo achieves revenue of $68.5 million during the fiscal year ending December 31, 2024, subject to certain limitations set forth in the Business Combination Agreement.
−Removed: In addition, the Business Combination Agreement provides that, if ICI raises additional capital by the issuance of convertible promissory notes on or after the date of the Business Combination Agreement but prior to the Closing, such convertible notes will convert into ICI Class A Common Stock (as defined in the Business Combination Agreement) immediately prior to the Effective Time and will convert in the Merger in the same manner as ICI Common Stock.
−Removed: The Business Combination Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Business Combination, including, but not limited to, (i) by either SportsMap or ICI if the Business Combination is not consummated by June 30, 2023, provided that such date may be extended by ICI by an additional 60 days under certain circumstances set forth in the Business Combination Agreement, (ii) by SportsMap if there is a material breach of the representations, warranties or covenants of ICI, subject to a thirty (30)-day cure period following notice of such breach, and (iii) by ICI upon a material breach of the representations, warranties or covenants of SportsMap, subject to a thirty (30)-day cure period following notice of such breach.
−Removed: If the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have any liability or any further obligation under the Business Combination Agreement, other than customary confidentiality obligations, except in the case of willful breach or fraud.
−Removed: Business Strategy
−Removed: New technologies are transforming the sports industry.
−Removed: Key trends include the use of wearables, data analytics, new methods of fan engagement and new esports and gambling platforms.
−Removed: These developments are creating attractive, high-growth opportunities.
−Removed: According to Grand View Research, the global sports technology (“sports tech”) market in the U.S.
−Removed: is forecast to grow from $12 billion in 2021 to over $36 billion in 2028, a CAGR of 16.8%.
−Removed: Our plan is to tap into the backgrounds, experiences and relationships of our board and management team to capture the opportunity in sports tech.
−Removed: Sports Tech Categories:
−Removed: We are focusing our efforts in four categories of sports tech.
−Removed: (1) Fan Engagement.
−Removed: Technologies are enhancing the fan experience.
−Removed: Examples include new media platforms, specialized content, virtual and augmented reality, smart stadiums, and online communities.
−Removed: Fans can now connect with their sports in new and exciting ways.
−Removed: (2) Health and Wellness.
−Removed: This category includes wearables and other data analytics that are improving the way that athletes and fitness enthusiasts train, perform, recover, and monitor their well-being.
−Removed: Businesses feature hardware, including new workout equipment and post-workout devices, and software for instruction and workout coaching, analysis, and feedback.
−Removed: This is one of the fastest growing categories in sports tech.
−Removed: Esports features new games, teams, tournament platforms, and businesses providing sponsorship opportunities for this high-growth category.
−Removed: Much of what has traditionally taken place in the physical realm is now taking place virtually as well.
−Removed: (4) Fantasy Sports and Gambling.
−Removed: Increasing acceptance and legalization of gambling have created exciting new business models.
−Removed: These span content and information, tools for making bets, and new digital platforms for fantasy and gambling.
−Removed: In-game betting will change the way fans watch sports, some refer to this as the gamification of sports.
−Removed: Across all these categories, technology is enabling interconnectedness, social interaction, new communities, improved health, subscriber-based business models, software as a service, and new revenues streams.
−Removed: We believe innovation through technology in sports presents a compelling opportunity.
−Removed: Our Approach:
−Removed: We are seeking target companies with the following criteria.
−Removed: ● High Growth Strategic Position:
−Removed: The entity will have secured a strong strategic position and will be poised for rapid growth and value creation.
−Removed: ● Management:
−Removed: We will look for a quality management team, capable of running as a public entity and/or we will augment the team to support the demands of transitioning from private to public.
−Removed: ● Our Value-Add:
−Removed: We envision our board and management team will be able to provide strategic and/or management expertise to the target company.
−Removed: ● Target Size:
−Removed: Because our SPAC size is smaller than most, our targets will likely be also.
−Removed: As a result, we believe the marketplace for targets will be less competitive.
−Removed: A target company will likely have a need for growth capital, liquidity and potentially benefit from higher multiples in the public markets.
−Removed: We will seek to capitalize on the industry experiences, network of relationships, domain expertise and deal-making abilities of our management team.
−Removed: The experiences of our management team members include running major league teams, a multi-platform media company, a successful sports tech business and a large innovation hub that includes sports tech ventures.
−Removed: The group also possesses public company, M&A, and financial management experience, and a strong track record of private equity investments, including in sports tech.
−Removed: We believe our management team positions our company to efficiently find, screen and consummate an attractive transaction.
−Removed: The past performance of our management team or of their affiliates is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate.
−Removed: Investors should not rely on the historical record of our management team’s or their affiliates’ performance as indicative of our future performance.
−Removed: Initial Business Combination
−Removed: We have until the end of our combination period to consummate our initial business combination.
−Removed: If we are unable to consummate our initial business combination within the applicable time period, we will, as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the funds held in the trust account and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our 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.
−Removed: In such event, the warrants will be worthless.
−Removed: Nasdaq rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination.
−Removed: If our board 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 with respect to the satisfaction of such criteria.
−Removed: 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% fair market value test.
−Removed: If the business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses.
−Removed: If our securities are not listed on Nasdaq, we would not be required to satisfy the 80% requirement.
−Removed: However, we intend to satisfy the 80% requirement even if our securities are not listed on Nasdaq at the time of our initial business combination.
−Removed: 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.
−Removed: We may, however, structure our initial business combination such that the post-transaction company owns or acquires 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 or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
−Removed: Even if the post-transaction company owns or acquires 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.
−Removed: 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, shares or other equity securities of a target.
−Removed: In this case, we would acquire a 100% controlling interest in the target.
−Removed: 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 issued and outstanding shares subsequent to our initial business combination.
−Removed: We are not prohibited from pursuing an initial business combination with a company that is affiliated with our initial stockholders, officers or directors.
−Removed: In the event we seek to complete our initial business combination with a company that is affiliated with our initial stockholders, 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 that our initial business combination is fair to our company (or stockholders) from a financial point of view.
−Removed: Members of our management team and our independent directors and their affiliates will directly or indirectly own common stock and private units, which securities will be worthless if our initial business combination is not completed.
−Removed: Accordingly, a conflict of interest may arise in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
−Removed: 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.
−Removed: Additionally, each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity, including other blank check companies similar to our company, pursuant to which such officer or director may be required to present a business combination opportunity to such entity.
−Removed: Specifically, our executive officers and directors are affiliated with our sponsor and other entities that make, or are looking to make, investments in companies.
−Removed: Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.
−Removed: We do not believe, however, that the fiduciary duties or contractual obligations of our executive officers and directors will materially affect our ability to complete our business combination.
−Removed: Our amended and restated certificate of incorporation provides that, subject to fiduciary duties under Delaware law, we renounce our interest in any corporate opportunity offered to any director or officer 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.
−Removed: Our Competitive Advantages
−Removed: Status as a Publicly Listed Company
−Removed: We believe our structure will make us an attractive business combination partner to prospective target businesses.
−Removed: As a publicly listed company, we will offer a target business an alternative to the traditional initial public offering.
−Removed: We believe that target businesses will favor this alternative, which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering.
−Removed: During an initial public offering, there are typically expenses incurred in marketing, which would be costlier than a business combination with us.
−Removed: Furthermore, once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent the offering from occurring.
−Removed: Once public, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company.
−Removed: A target business can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management staffs.
−Removed: Strong Financial Position and Flexibility
−Removed: With a trust account initially in the amount of $117,300,000, we can offer a target business a variety of options to facilitate a business combination and fund future expansion and growth of its business.
−Removed: This amount assumes no redemptions.
−Removed: Because we are able to consummate a business combination using the cash proceeds from our initial public offering, our share capital, debt or a combination of the foregoing, we have the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address the needs of the parties.
−Removed: However, if a business combination requires us to use substantially all of our cash to pay for the purchase price, we may need to arrange third party financing to help fund our business combination.
−Removed: Effecting Our Initial Business Combination
−Removed: We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering, our shares, new debt, or a combination of these, as the consideration to be paid in our initial business combination.
−Removed: We may seek to consummate our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
−Removed: If our initial business combination is paid for using shares or debt securities, or not all of the funds released from the trust account are used for payment of the purchase price in connection with our business combination or used for redemptions of purchases of our common stock, we may apply the cash released to us from the trust account that is not applied to the purchase price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.
−Removed: Subject to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of the trust account (less any taxes payable on interest earned) at the time of the agreement to enter into such initial business combination, we have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses.
−Removed: Accordingly, there is no current basis to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination.
−Removed: Although our management will assess the risks inherent in a particular target business with which we may combine, this assessment may not result in our identifying all risks that a target business may encounter.
−Removed: Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
−Removed: We may seek to raise additional funds through a private offering of debt or equity securities in connection with the consummation of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account.
−Removed: Subject to compliance with applicable securities laws, we would consummate such financing only simultaneously with the consummation of our business combination.
−Removed: In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law or the rules of Nasdaq, we would seek stockholder approval of such financing.
−Removed: There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination.
−Removed: At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
−Removed: Sources of Target Businesses
−Removed: Target business candidates are brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community.
−Removed: Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings.
−Removed: Our officers and directors, as well as their respective affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.
−Removed: While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, other than the services of Lawson Gow provided pursuant to the Administrative Services Agreement with Gow Media, LLC, an affiliate of our sponsor, that we entered into in connection with our initial public offering (the “Administrative Services Agreement”), we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.
−Removed: In no event, however, will any of our existing officers, directors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination (regardless of the type of transaction), other than the services provided pursuant to the Administrative Services Agreement.
−Removed: Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination.
−Removed: The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.
−Removed: We are not prohibited from pursuing an initial business combination with a company that is affiliated with our initial stockholders, officers or directors.
−Removed: In the event we seek to complete our initial business combination with a target that is affiliated with our initial stockholders, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company (or stockholders) from a financial point of view.
−Removed: Selection of a Target Business and Structuring of a Business Combination
−Removed: Subject to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of the trust account (less any taxes payable on interest earned) at the time of the agreement to enter into such initial business combination, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
−Removed: In any case, we will only consummate an initial business combination in which we become the majority stockholder of the target (or control the target through contractual arrangements in limited circumstances for regulatory compliance purposes as discussed below) or are otherwise not required to register as an investment company under the Investment Company Act.
−Removed: To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, we may be affected by numerous risks inherent in such company or business.
−Removed: Although our management will endeavor to evaluate the risks inherent in a particular target business, we may not properly ascertain or assess all significant risk factors.
−Removed: In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available to us.
−Removed: This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third parties.
−Removed: The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty.
−Removed: Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
−Removed: Fair Market Value of Target Business or Businesses
−Removed: Nasdaq rules provide that our initial business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the trust account (less any taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination.
−Removed: If our board 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 with respect to the satisfaction of such criteria.
−Removed: If our securities are not listed on Nasdaq, we would not be required to satisfy the 80% requirement.
−Removed: However, we intend to satisfy the 80% requirement even if our securities are not listed on Nasdaq at the time of our initial business combination.
−Removed: We anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business or businesses.
−Removed: We may, however, structure our initial business combination to acquire less than 100% of such interests or assets of the target business, but we will only consummate such business combination if we will become the majority stockholder of the target (or control the target through contractual arrangements in limited circumstances for regulatory compliance purposes) or are otherwise not required to register as an “investment company” under the Investment Company Act.
−Removed: Even though we will own a majority interest in the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction.
−Removed: 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, shares or other equity securities of a target.
−Removed: In this case, we would acquire a 100% controlling interest in the target.
−Removed: 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 issued and outstanding shares subsequent to our initial business combination.
−Removed: The fair market value of a target business or businesses or assets will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential gross margins, the values of comparable businesses, earnings and cash flow, book value and, where appropriate, upon the advice of appraisers or other professional consultants.
−Removed: If our board of directors is not able to independently determine that the target business or assets has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from an unaffiliated, independent investment banking firm or an independent accounting firm with respect to the satisfaction of such criterion.
−Removed: Notwithstanding the foregoing, unless we consummate a business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or an independent accounting firm that the price we are paying is fair to our stockholders.
−Removed: Lack of Business Diversification
−Removed: For an indefinite period of time after consummation of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
−Removed: Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
−Removed: By consummating our initial business combination with only a single entity, our lack of diversification may:
−Removed: ● subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
−Removed: ● cause us to depend on the marketing and sale of a single product or limited number of products or services.
−Removed: Limited Ability to Evaluate the Target’s Management Team
−Removed: Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’ management may not prove to be correct.
−Removed: The future role of members of our management team, if any, in the target business cannot presently be stated with any certainty.
−Removed: Consequently, members of our management team may not become a part of the target’s management team, and the future management may not have the necessary skills, qualifications or abilities to manage a public company.
−Removed: Further, it is also not certain whether one or more of our directors will remain associated in some capacity with us following our initial business combination.
−Removed: Moreover, members of our management team may not have significant experience or knowledge relating to the operations of the particular target business.
−Removed: Our key personnel may not remain in senior management or advisory positions with the combined company.
−Removed: The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
−Removed: Following our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
−Removed: We may not have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
−Removed: Stockholders May Not Have the Ability to Approve Our Initial Business Combination
−Removed: In connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination at a meeting of stockholders called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount 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 on deposit in the trust account (net of taxes payable), in each case calculated as of two business days prior to the consummation of the business combination and subject to the limitations described herein.
−Removed: If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares.
−Removed: The decision as to whether we will seek stockholder approval of a proposed business combination or will 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.
−Removed: Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and related conversions of public shares for cash upon consummation of such initial business combination even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers.
−Removed: In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules.
−Removed: We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock vote are voted in favor of the business combination.
−Removed: We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act.
−Removed: However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation and this may force us to seek third party financing which may not be available on terms acceptable to us or at all.
−Removed: As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all.
−Removed: Public stockholders may therefore have to wait 18 months from the closing of our initial public offering in order to be able to receive a pro rata share of the trust account.
−Removed: Our initial stockholders and our officers and directors have agreed (1) to vote any common stock owned by them in favor of any proposed business combination, (2) not to redeem any common stock in connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any common stock in any tender in connection with a proposed initial business combination.
−Removed: None of our officers, directors, initial stockholders or their affiliates has indicated any intention to purchase units or common stock from persons in the open market or in private transactions.
−Removed: However, if we hold a meeting of stockholders to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against such proposed business combination or to convert their shares, our officers, directors, initial stockholders or their affiliates could make such purchases in the open market or in private transactions in order to increase the likelihood of satisfying the necessary closing conditions to such transaction.
−Removed: Notwithstanding the foregoing, our officers, directors, initial stockholders and their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock, shares or other equity securities.
−Removed: Redemption Rights for Public Stockholders upon Consummation of Our Initial Business Combination
−Removed: We will provide our public stockholders with the opportunity to redeem all or a portion their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein.
−Removed: The amount in the trust account is approximately $10.20 per share.
−Removed: The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.
−Removed: Our initial stockholders have agreed to waive their right to receive liquidating distributions if we fail to consummate our initial business combination within the requisite time period.
−Removed: However, if our initial stockholders or any of our officers, directors or affiliates acquires public shares, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the required time period.
−Removed: Manner of Conducting Redemptions
−Removed: At any meeting of stockholders called to approve an initial business combination, public stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, less any taxes then due but not yet paid.
−Removed: Alternatively, we may provide our public stockholders with the opportunity to sell their common stock to us through 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, less any taxes then due but not yet paid.
−Removed: Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 20% or more of the shares sold in our initial public offering.
−Removed: Such a public stockholder would still be entitled to vote against a proposed business combination with respect to all shares owned by him or his affiliates.
−Removed: We believe this restriction will prevent stockholders from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the redemption right as a means to force us or our management to purchase their shares at a significant premium to the then current market price.
−Removed: By limiting a stockholder’s ability to redeem no more than 20% of the shares sold in our initial public offering, we believe we have limited the ability of a small group of stockholders to unreasonably attempt to block a transaction which is favored by our other public stockholders.
−Removed: Our initial stockholders, officers and directors will not have redemption rights with respect to any common stock owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in the aftermarket.
−Removed: We may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either (i) tender their certificates (if any) to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve the business combination.
−Removed: There is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System.
−Removed: The transfer agent will typically charge the tendering broker a nominal amount and it would be up to the broker whether or not to pass this cost on to the holder.
−Removed: However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to deliver their shares prior to a specified date.
−Removed: The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated.
−Removed: However, in the event we require stockholders seeking to exercise redemption rights to deliver their shares prior to the consummation of the proposed business combination and the proposed business combination is not consummated this may result in an increased cost to stockholders.
−Removed: Any proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements.
−Removed: Accordingly, a stockholder would have from the time the stockholder received our proxy statement up until the vote on the proposal to approve the business combination to deliver his shares if he wishes to seek to exercise his redemption rights.
−Removed: This time period varies depending on the specific facts of each transaction.
−Removed: However, as the delivery process can be accomplished by the stockholder, whether or not he is a record holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average investor.
−Removed: However, we cannot assure our stockholders of this fact.
−Removed: Please see the risk factor titled “In connection with any meeting of stockholders called to approve a proposed initial business combination, we may require stockholders who wish to redeem their shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights” for further information on the risks of failing to comply with these requirements.
−Removed: Any request to redeem such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or the expiration of the tender offer.
−Removed: Furthermore, if a holder of public shares delivered his certificate in connection with an election of their redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
−Removed: If we seek stockholder approval, we will complete our initial business combination only a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
−Removed: A quorum for a meeting is the holders of a majority of the shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy.
−Removed: Our initial stockholders will count toward this quorum and pursuant to the letter agreement, our initial stockholders, officers and directors have agreed to vote their founder shares, private shares and any public shares purchased (including in open market and privately
−Removed: negotiated transactions) in favor of our initial business combination.
−Removed: For purposes of seeking approval of the majority of our outstanding common stock voted, abstentions and broker non-votes will have no effect on the approval of our initial business combination once a quorum is obtained.
−Removed: As a result, in addition to our initial stockholders’ founder shares and the private shares, we would need only 647,502, or approximately 5.6%, of the 11,500,000 public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming that only the minimum number of issued and outstanding shares representing a quorum is present in person or by proxy at a meeting) in order to have our initial business combination approved.
−Removed: These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination.
−Removed: Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
−Removed: If the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account as of two business days prior to the consummation of the initial business combination.
−Removed: In such case, we will promptly return any shares delivered by public holders.
−Removed: Permitted Purchases of Our Securities by Our Affiliates
−Removed: If we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our initial stockholders, directors, officers or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the consummation of our initial business combination.
−Removed: Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
−Removed: In the event that our initial stockholders, directors, officers or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
−Removed: The purpose of such purchases would be to (1) increase the likelihood of obtaining stockholder approval of the business combination or (2) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met.
−Removed: The founder shares and the private shares represent approximately 23.6% of our issued and outstanding common stock.
−Removed: This may result in the consummation of an initial business combination that may not otherwise have been possible.
−Removed: As a consequence of any such purchases, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain the listing or trading of our securities on a national securities exchange following consummation of a business combination.
−Removed: Redemption of Public Shares and Liquidation if No Initial Business Combination
−Removed: We must complete our initial business combination by the end of our combination period.
−Removed: If we are unable to consummate our initial business combination within the allotted time period, we will, as promptly as reasonably possible but not more than ten business days thereafter, distribute the aggregate amount then on deposit in the trust account (net of taxes payable, and less up to $50,000 of interest to pay liquidation expenses), pro rata to our public stockholders by way of redemption and cease all operations except for the purposes of winding up of our affairs.
−Removed: This redemption of public stockholders from the trust account shall be effected as required by function of our amended and restated certificate of incorporation and prior to any voluntary winding up, although at all times subject to applicable law.
−Removed: Our initial stockholders have agreed to waive their redemption rights with respect to their founder shares and private shares if we fail to consummate our initial business combination within the combination period.
−Removed: However, if our initial stockholders, or any of our officers, directors or affiliates acquire public shares, they will be entitled to redemption rights with respect to such public shares if we fail to consummate our initial business combination within the required time period.
−Removed: There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless in the event we do not consummate our initial business combination within the allotted time period.
−Removed: If we were to expend all of the net proceeds from our initial public offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.20.
−Removed: The proceeds deposited in the trust account could, however, become subject to
−Removed: the claims of our creditors, which would have higher priority than the claims of our public stockholders.
−Removed: The actual per-share redemption amount received by stockholders may be less than $10.20, plus interest (net of any taxes payable, and less up to $50,000 of interest to pay liquidation expenses).
−Removed: Although we seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account.
−Removed: If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
−Removed: Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
−Removed: Our independent registered public accounting firm has not executed agreements with us waiving such claims to the monies held in the trust account, nor did the underwriters in our initial public offering.
−Removed: If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
−Removed: Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
−Removed: In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
−Removed: In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.20 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
−Removed: In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims.
−Removed: However, our sponsor may not be able to satisfy those obligations.
−Removed: Other than as described above, none of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
−Removed: We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations.
−Removed: We therefore believe it is unlikely our sponsor would be able to satisfy its indemnity obligations if it was required to do so.
−Removed: However, we believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
−Removed: In the event that the proceeds in the trust account are reduced below $10.20 per share and our sponsor asserts that it is unable to satisfy any applicable obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action to enforce such indemnification obligations.
−Removed: While we currently expect that our independent directors would take legal action on our behalf to enforce such indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
−Removed: Accordingly, due to claims of creditors, the actual value of the per-share redemption price may be less than $10.20 per share.
−Removed: Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
−Removed: The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by the end of our combination period may be considered a liquidation distribution under Delaware law.
−Removed: If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of
−Removed: stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
−Removed: Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the combination period, is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.
−Removed: If we are unable to complete our initial business combination within the combination period, we will:
−Removed: (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 (net of the amount of interest which may be withdrawn to pay taxes, and less up to $50,000 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
−Removed: Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our combination period and, therefore, we do not intend to comply with those procedures.
−Removed: As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
−Removed: Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
−Removed: However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
−Removed: As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
−Removed: If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
−Removed: To the extent any bankruptcy claims deplete the trust account, we cannot assure our stockholders we will be able to return $10.20 per share to our public stockholders.
−Removed: Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders.
−Removed: Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
−Removed: We can provide no assurance that claims will not be brought against us for these reasons.
−Removed: Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of a redemption of the public shares prior to any winding up in the event we do not consummate our initial business combination within the allotted time period, (ii) if they redeem their shares in connection with an initial business combination that we consummate or (iii) if they redeem their shares 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 rights or to redeem 100% of our public shares if we do not complete our initial business combination within the allotted time period or (B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity.
−Removed: In no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
−Removed: In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account.
−Removed: Such stockholder must have also exercised its redemption rights described above.
−Removed: In identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups, venture capital funds, leveraged buyout funds, and operating businesses seeking strategic acquisitions.
−Removed: Many of these entities are well established and have significant experience identifying and effecting business combinations directly or through affiliates.
−Removed: Moreover, many of these competitors possess greater financial, technical, human and other resources than us.
−Removed: Our ability to acquire larger target businesses will be limited by our available financial resources.
−Removed: This inherent limitation gives others an advantage in pursuing the acquisition of a target business.
−Removed: In addition, in recent years, the number of special purpose acquisition companies that have been formed has increased substantially.
−Removed: Many potential targets for special purpose acquisition companies have already entered into an initial business combinations, and there are still many special purpose acquisition companies seeking targets for their initial business combinations, as well as many such companies currently in registration.
−Removed: As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
−Removed: Furthermore, the requirement that we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the trust account (less any taxes payable on interest earned) at the time of the agreement to enter into the business combination, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.
−Removed: Any of these factors may place us at a competitive disadvantage in successfully negotiating our initial business combination.
−Removed: We currently have three executive officers.
−Removed: These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
−Removed: The amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in.
−Removed: We do not intend to have any full time employees prior to the consummation of our initial business combination.
−Removed: Periodic Reporting and Financial Information
−Removed: We have registered our units, common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC.
−Removed: We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business.
−Removed: These financial statements must be prepared in accordance with, or be reconciled to, GAAP or IFRS and the historical financial statements must be audited in accordance with the standards of the PCAOB.
−Removed: These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and consummate our initial business combination within our time frame.
−Removed: We will be required to have our internal control procedures evaluated for the fiscal year ending December 31, 2022 required by the Sarbanes-Oxley Act.
−Removed: A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls.
−Removed: The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
−Removed: We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
−Removed: 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, 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.
−Removed: 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.
−Removed: 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.
−Removed: In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
−Removed: We intend to take advantage of the benefits of this extended transition period.
−Removed: 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 $1.235 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 prior June 30 th , and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
−Removed: References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
−Removed: Legal Proceedings
−Removed: There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
+Added: Business Overview
+Added: We build intelligent multi-sensing platforms incorporating edge and cloud AI software solutions that are utilized by organizations to monitor and protect critical assets across a wide range of industries.
+Added: We are a provider of sensing systems built around high-resolution thermal imagers along with visible and acoustic imagers, as well as vibration and laser spectroscopy sensors, that perceive and measure heat, sound, vibration, and gas in industrial assets and the surrounding environment, helping companies gain insight to efficiently manage their most important assets and infrastructure.
+Added: We design and manufacture turn-key multi-sensor solution platforms with edge and cloud-based software that we believe to be high performing and attractively priced across each of our four target markets:
+Added: distribution & logistics;
+Added: manufacturing;
+Added: and oil & gas.
+Added: Our core infrared sensor devices achieve a high degree of accuracy through proprietary calibration processes, which are the result of thousands of hours of engineering and research and development (“R&D”).
+Added: We believe this to be a distinct competitive advantage in the infrared industry.
+Added: We also offers a wide range of form factors for our sensor devices, ranging from small to large handheld designs with built-in displays and controls, to fixed-mounted single- and multi-sensor camera sensor systems, with or without displays and controls, to mobile multi-sensor payload and gimbal systems for unmanned aerial vehicles (“UAVs”), and more.
+Added: We believe that our digital multi-sensor technology platform positions us at the center of a global revolution in thermal and related sensing, as the introduction of continuous streaming thermal data alongside other adjacent sensor data and coupled with automated insights replaces intermittent manual thermal and physical inspections, and cloud-connected thermal, visible, acoustic, vibration, and spectroscopy big data capture enables artificial intelligence and machine learning (“AI/ML”) to elevate critical asset management to a new level.
+Added: Partnering with several blue-chip multinational customers throughout the development process, we have validated dozens of high-value use cases for our SmartIR and MSAI cloud-software across our four core verticals.
+Added: We estimate the global total addressable market (“TAM”) for thermal solutions in our target markets to be approximately $14 billion, consisting of approximately $9 billion in hardware sales and $5 billion in software and service sales.
+Added: Our revenue is distributed across four industry verticals, the largest of which represented approximately 40% of our revenue for the year ended December 31, 2023.
+Added: We believe this revenue distribution illustrates both the flexibility of our technology and the significant addressable opportunity across our target markets globally.
+Added: Industry Background
+Added: A Brief History of Applied Infrared Technology
+Added: Thermal imaging and sensing technologies were first discovered and leveraged in the early part of the 19 th century.
+Added: Originally used for radiation detection, the technology began being used in military applications for night vision, as well as in scientific and astronomical applications throughout the early portions of the 20 th century.
+Added: In the late 20 th century, infrared technology was incorporated into thermal cameras, used in manufacturing and other industrial settings to identify faulty equipment in need of maintenance, as well as other potential operational and safety issues by sensing “hotspots” or raised temperatures that often presage equipment failure.
+Added: As the technology grew in sophistication, and decreased dramatically in cost, the breadth of applications proliferated.
+Added: In the past three decades, thermal sensing technology has been applied across numerous applications such as production process monitoring, electrical equipment monitoring, industrial plant monitoring, early fire detection, pressure vessel monitoring, tank level monitoring, liquid and gas leak detection, and more.
+Added: Adjacent and Complementary Sensor Technologies to Infrared
+Added: In industrial applications, infrared imaging technology is used to measure temperature in a uniquely high-resolution and non-contact fashion in order to detect asset and process condition anomalies.
+Added: These anomalies can sometimes also be detected using sound, vibration, and visible image analysis.
+Added: As a result, augmenting infrared image sensing with acoustic and visible image sensing as well as vibration monitoring can further improve asset and process condition monitoring and resultant predictive maintenance efforts.
+Added: Continuous Monitoring & Data-Driven Insight
+Added: In industrial settings, thermal technology has typically been applied through handheld devices in order to inspect equipment on a sporadic basis.
+Added: With the decline in thermal camera prices and advancements in technology over the last decade, there has been an increase in fixed thermal sensing technologies used to continuously monitor critical assets.
+Added: Similarly, advancements in technology and declines in prices in acoustic imagers, vibration sensors, and other industrial sensors have made continuous monitoring economical and effective.
+Added: By deploying thermal and other sensors in continuous monitoring applications, organizations have been able to minimize downtime and process waste through enhanced preventative and predictive maintenance.
+Added: We have been at the forefront of this movement towards using thermal imaging and other related sensing technology for continuous monitoring of critical assets.
+Added: Most of the focus in the industry, historically, has been on the development of the sensing technology itself in an effort to enhance accuracy and reliability.
+Added: Having optimized the fixed mounted hardware and associated thermal, visible, acoustic, vibration, and spectroscopy devices, we have shifted our focus towards the acquisition, storage and analysis of data through our proprietary SmartIR and MSAI SaaS software packages.
+Added: Our SmartIR & MSAI Technology
+Added: We are continuing to develop and implement our SmartIR SaaS platform to support our customers as they increasingly adopt continuous monitoring solutions and data driven analytics.
+Added: And we continue to add additional sensor modalities to the SmartIR platform as we transition to the MultiSensor AI (MSAI) platform branding.
+Added: Our SmartIR & MSAI technology has been developed and continues to be refined primarily for use in four core industrial markets that we believe are at the forefront of the transition to continuous monitoring thermal solutions:
+Added: the distribution & logistics, manufacturing, utilities, and oil & gas markets.
+Added: We launched our SmartIR cloud-software product suite in the second quarter of 2023.
+Added: Market Opportunity
+Added: Overall Market Opportunity
+Added: We believe our thermal and multi-sensing technology has potential application across many industry verticals.
+Added: As the benefits of data-driven infrared multi-sensor technology become more widely accepted, we believe there are significant market opportunities available for our product offerings.
+Added: We define our TAM as applications in the distribution & logistics, manufacturing, utilities and oil & gas markets in the United States, where we actively engage and maintain customer relationships.
+Added: We estimate the TAM in these target markets based on a combination of the total number of estimated potential customers and facilities in each market, our expectations regarding the scope of potential uses of thermal and multi-sensing solutions in those markets, and our estimates of average selling prices in those markets and potential opportunity for software solutions to increase the utility of thermal imaging and multi-sensing solutions.
+Added: Our TAM calculations are based upon third-party industry and governmental sources of the total number of facilities in the U.S.
+Added: that could utilize thermal and multi-sensing solutions.
+Added: These facilities include, but are not limited to, distribution centers, large commercial and freight airports, industrial mills, oil & gas producing wellheads, chemical manufacturing plants, electrical substations and earthen dams.
+Added: Based on the number of these facilities in the United States and our estimates of how many of our multi-sensor sensing systems could be deployed at these facilities, we estimate the TAM in our target markets to be approximately $14 billion, consisting of approximately $9 billion in hardware sales and $5 billion in software and service sales in 2023.
+Added: Our current market share in each of our four target markets represent less than 0.1% penetration of the estimated TAM.
+Added: Our TAM calculation was based on a thorough bottoms-up analysis of the potential number of externally verified facilities and assets in the United States across our four target markets that could be penetrated by MSAI integrated SmartIR & MSAI SaaS and device
+Added: The calculations were made with several assumptions and limitations in mind, but these were consistent across the calculations in all four of the target markets.
+Added: Specifically these assumptions and limitations included only considering:
+Added: ● facilities located within the United States;
+Added: ● the current number of externally verifiable facilities, with no assumptions related to the growth or reduction in the number of such facilities in future periods;
+Added: ● facilities of the type in which we have current use cases with paying customers or have developed products that we are piloting with customers.
+Added: Although the numbers of facilities used in our calculation were specific to each of the target markets (e.g.
+Added: the number of distribution centers for warehouse and logistics or the number of steel mills for manufacturing), the rules for inclusion and exclusion were common to all four target markets.
+Added: While we have a long history of selling, implementing and supporting device-only thermal systems into each of the four target markets, there are some risks inherent to selling integrated device and software multi-sensing solutions into each of these target markets.
+Added: Please see Part I.
+Added: Risk Factors - Risks Related to Our Business and Industry for a more detailed discussion relating to the risks that apply to each of our four target markets, particularly as they relate to the adoption of our hardware and software offerings in each of the four target markets.
+Added: Distribution & Logistics Market Opportunity
+Added: We believe that the distribution & logistics TAM in 2023 was approximately $2.5 billion.
+Added: This distribution & logistics TAM includes conveyor system anomaly detection, hotspot detection, process automation, predictive maintenance, and failure avoidance, among other applications, with demand expected to be driven by both financial incentives related to process improvements and increased regulation pertaining to facility safety.
+Added: Manufacturing Market Opportunity
+Added: We believe that the manufacturing TAM in 2023 was approximately $2.5 billion.
+Added: This manufacturing market TAM includes process monitoring and control, predictive maintenance, power panel monitoring, production motor drives and vehicles, early fire detection, and electrified transport battery monitoring, among other applications.
+Added: We expect demand in the manufacturing market to be driven by ongoing commercial adoption of data-driven manufacturing processes (e.g., reduced scrap and waste).
+Added: One risk specific to the manufacturing target market is that many manufacturing customers have some form of legacy system, usually vibration monitors, that perform functions that overlap with some of the SmartIR & MSAI functionality.
+Added: Customers must be convinced that their legacy systems alone are not adequate for the predictive-maintenance, process-improvement or safety tasks.
+Added: Moreover, customers must be convinced that the combination of their legacy systems and SmartIR will be materially better for predictive maintenance, process improvement or safety and will generate returns on investment (e.g.
+Added: through prevention of unexpected downtime, improved process yields or early fire detection) that are significantly in excess of the costs of the SmartIR system.
+Added: Utilities Market Opportunity
+Added: We believe that the TAM for the power generation and utilities market in 2023 was approximately $4 billion.
+Added: This utilities TAM includes transformer failure and leak detection, fault detection, and solar field and wind turbine inspection, amongst dozens of other applications.
+Added: We expect demand to be stimulated by both increased regulations and customer demand for safe monitoring solutions and process efficiency enhancements.
+Added: Oil & Gas Market Opportunity
+Added: We believe that the oil & gas TAM in 2023 was approximately $5 billion.
+Added: This oil & gas TAM includes gas and liquid leak detection, tank level and flare monitoring, pipeline leak detection, and gas processing safety monitoring, as well as more general manufacturing reliability and predictive maintenance, among other applications.
+Added: We expect demand to be stimulated by both increased regulations and the general demand for safe and cost-effective thermal sensing and monitoring solutions.
+Added: In particular, the Environmental Protection Agency (“EPA”) has promulgated the regulations (commonly referred to as “Quad-O/Oa”) which have
+Added: established emission standards and compliance schedules for the control of volatile organic compounds and greenhouse gases, specifically methane.
+Added: These federal regulations are supplemented by state-level regulations from agencies such as the Texas Commission on Environmental Quality.
+Added: We believe that our fixed-mount, hand-held and drone-mounted systems are sufficient to promote compliance with the current Quad O/Oa and state-level standards for methane-leak detection and have sold devices for this specific use case for many years.
+Added: The EPA is preparing a new set of regulations, which are expected to come into effect in 2024 or 2025.
+Added: We believe that our solutions will also support compliance with these upgraded regulations, but until the regulations are finalized, this is not certain.
+Added: In addition, there are multiple established competing technologies for methane-leak detection, specifically including hand-held and drone-based thermal camera devices and hand-held methane “sniffers.” Although we believe that our fixed-mount continuous monitoring solutions are both more efficacious and more cost-effective than competing technologies, adoption of the ICI SmartIR fixed-mount solutions will require awareness, and adoption in the face of established practice.
+Added: In addition, there are multiple emerging technologies (e.g., satellite based thermal sensing) in the methane-detection space that may create additional competition for our commercial activity in the oil & gas vertical.
+Added: Infrared Sensing Technology
+Added: Infrared is a portion of the electromagnetic spectrum that is adjacent to the visible spectrum, but is invisible to the human eye due to its longer wavelengths.
+Added: Unlike visible light, infrared radiation (or heat) is emitted directly by all objects above absolute zero in temperature.
+Added: Thermal imaging systems detect this infrared radiation and convert it into an electronic signal, which is then processed for display as a video signal or analyzed by sophisticated software to conduct temperature data analysis.
+Added: Thermal sensors provide several benefits over ubiquitous visible, light-based sensing technologies, including the ability to measure temperature remotely and without touching the surface of the object, detect and image many types of otherwise invisible gases, observe in complete darkness, image through obscurants such as smoke and fog, detect and discriminate living beings in an efficient and reliable way, and see over long distances with minimal atmospheric interference.
+Added: For these reasons, we feel the potential of our core technology to grow in prevalence and importance is significant, particularly as the cost of the technology continues to decline, opening up large new end markets.
+Added: Acoustic Imaging Technology
+Added: Audible and ultrasonic sounds across the mechanical wave spectrum have historically been detected and analyzed using single point microphones.
+Added: Recently developed acoustic imaging technology combines an array of microphones surrounding a visible imaging sensor to both detect soundwaves and to estimate their source location within the camera’s field of view using sophisticated software.
+Added: The software analysis of these soundwaves can then identify, quantify, and localize compressed air or gas leaks as well as partial discharge in industrial equipment.
+Added: Vibration Monitoring Technology
+Added: Mechanical vibrations of industrial equipment can be monitored using piezoelectric or accelerometer-based vibration sensors.
+Added: Vibration sensor data can then be analyzed by sophisticated software to identify mechanical anomalies based upon frequency and intensity of detected vibrations and their position on the asset being monitored.
+Added: Multi-Sensor Technology
+Added: Our founders and engineering team have many years of infrared industry experience.
+Added: By leveraging our deep knowledge of infrared technology as well as complementary sensor technology, we have designed, manufactured, and sourced a range of industry-leading infrared and multi-sensor cameras and payloads.
+Added: We have also developed specialized software to ingest, store, and analyze this sensor data.
+Added: We often combine our sensor devices with our edge and cloud software to create tailored, end-to-end solutions for numerous industrial use cases.
+Added: Our sensor, sensor hardware, and sensor software products separately or collectively create new solutions to challenging problems across the industries we serve, and, as a result, we believe we are well-positioned to compete in the large new end markets we see emerging in infrared and related sensor technology.
+Added: Sensor Devices
+Added: Our sensor devices cover a large range of the electromagnetic and mechanical spectrums, encompassing visible-light imagers, shortwave (“SWIR”), midwave (“MWIR”), and longwave (“LWIR”) infrared imagers, ultraviolet (“UV”) imagers, acoustic imagers, and tunable diode laser emitter-detector pairs for laser absorption spectrometry (“TDLAS”).
+Added: While our sensor devices generally include an infrared imager as a core sensor technology, many of them are multi-sensor and include two or more of the aforementioned sensor devices.
+Added: Many of our infrared sensor devices achieve enhanced accuracy as a result of our proprietary calibration process, which corrects manufacturing variances inherent in infrared sensors and enables our products to outperform those of some competitors.
+Added: We have invested thousands of hours of engineering R&D in creating and refining this calibration process and believe it to be a distinct competitive advantage in the infrared industry.
+Added: We offer a wide range of form factors for our sensor devices, ranging from small to large handheld designs with built-in displays and controls, fixed-mounted single- and multi-sensor camera systems with or without displays and controls, fixed-mounted pan-tilt-zoom (“PTZ”) single- and multi-sensor camera standalone systems, and mobile multi-sensor payload and gimbal systems for UAVs and unmanned ground vehicles (“UGVs”).
+Added: A partial list of our sensor devices follows below:
+Added: Fixed-Mount Infrared Cameras
+Added: Longwave Infrared (LWIR) Auto-focus Ethernet camera
+Added: Longwave Infrared (LWIR) Manual-focus USB camera
+Added: Cooled Midwave Infrared (MWIR) Optical Gas Imaging (OGI) camera
+Added: Fixed-Mount Infrared + Visible & Multi-Sensor Cameras
+Added: Compact IP67-rated IoT Dual-spectrum Longwave Infrared (LWIR) + Visible camera
+Added: High resolution IP66-rated Dual-spectrum Longwave Infrared (LWIR) + Visible camera
+Added: Fixed-Mount Acoustic + Visible Cameras
+Added: Sound Detect FM
+Added: Industrial IP54-rated 128-microphone Acoustic + Visible camera
+Added: Handheld Infrared + Visible Cameras
+Added: High resolution handheld Dual-spectrum Longwave Infrared (LWIR) + Visible camera
+Added: Ultra-high resolution handheld Dual-spectrum Longwave Infrared (LWIR) + Visible camera
+Added: High resolution handheld IR Tablet PC with Dual-spectrum Longwave Infrared (LWIR) + Visible sensors with integrated edge processing software
+Added: Handheld Acoustic + Visible Cameras
+Added: Sound Detect Pro
+Added: Handheld ATEX-certified IP54-rated 128-microphone Acoustic + Visible camera
+Added: Unmanned Vehicle Multi-Sensor Payloads
+Added: Methane Mapper
+Added: Multi-sensor payload with TDLAS + Visible sensors and ICI edge processing device
+Added: OGI Inspector Plus
+Added: Multi-sensor payload with Cooled Midwave Infrared (MWIR) Optical Gas Imaging (OGI), TDLAS + Visible sensors and ICI edge processing device
+Added: Sensor Software
+Added: We have developed a suite of edge and cloud software systems to ingest, store, analyze, and automatically activate responses to sensor data.
+Added: The edge and cloud software systems can operate independently or be combined for maximum capability.
+Added: that the combination of our edge and cloud software together creates a multitude of turn-key software solutions for our customers that solve industrial problems in ways previously unavailable.
+Added: Edge Software
+Added: Our edge software is highly specialized because, in addition to performing standard, visible-light video processing, it also processes the raw radiometric data output from our infrared sensors, consisting of high-precision absolute temperature values for every pixel in the sensor array.
+Added: Our software is able to display a video image of the sensor output using customizable color palettes to represent temperature values and features automatic or adjustable minimum and maximum temperature values for this video image conversion.
+Added: Our edge software is also able to perform analytics on the sensor output, with powerful data processing, capture, charting, and the creation of configurable temperature alerts and alarms for both the overall sensor array as well as for customizable regions of the array, or Regions of Interest (“ROI”).
+Added: Additionally, powerful features like comparing temperatures between ROIs and measuring ROI temperature changes over time enable our software to provide extended insight into industrial equipment and processes.
+Added: Built-in report generation features enable easy documentation of findings for customers still performing manual inspections.
+Added: Our edge software also features multiple notification methods for communicating an uncovered anomaly, including automatic email and text message generation as well as automatic light and sound generation.
+Added: In addition, our software features flexible integration with customer systems using various industrial protocols to enable automatic, anomaly-driven remediation, whether dynamically adjusting operating parameters, shutting down production lines at risk of imminent failure, or triggering fire suppression systems.
+Added: Versions of our edge software are also capable of capturing, storing, and analyzing sensor data from UV imagers, acoustic imagers, and TDLAS devices.
+Added: Also, our edge software designed for UAV and UGV usage enables partial to complete integration with the unmanned system’s control architecture to not only capture sensor data, but also control gimbal devices and communicate with the unmanned system’s flight or ground controls.
+Added: A variation of our edge software is designed to measure human skin temperature in order to identify individuals who have an elevated body temperature.
+Added: This software features artificial intelligence (“AI”) capabilities and includes computer vision modules to automatically detect and locate a temperature reference source, automatically detect one or more human faces in the scene, and determine if a hat, glasses, or face mask is being worn so that appropriate actions can be taken.
+Added: This edge software can generate notifications via multiple communication channels in response to elevated body temperature detection.
+Added: It also can identify employees via badge-worn QR codes, validate employee status, perform temperature checks, and grant facility access only upon proper compliance, thus functioning as an access-control system.
+Added: Our edge software can be run on many types of edge devices, generally any PC, workstation, or server, and can be run on either Windows or Linux operating systems.
+Added: Customer implementation needs will determine the type and location of the edge device relative to the sensor device.
+Added: Cloud Software
+Added: Our cloud software, which currently runs on the Amazon Web Services platform, communicates bilaterally with one or more devices running our edge software via any suitable internet connection, including via mobile and satellite networks, thereby receiving and storing sensor data from our sensor devices, including metadata such as ROI temperature values and generated ROI temperature alerts, full frame temperature data, and streaming video.
+Added: In addition to receiving and storing this data, our cloud software provides a rich dashboard that enables users to simultaneously view live data and video streams from multiple sensor devices as well as related ROI temperature values and ROI temperature alerts.
+Added: For customers with multiple facilities distributed geographically, this central monitoring capability provides a new and powerful tool for thermal anomaly detection and management.
+Added: Our cloud software is distinguished by its capability to not only transmit metadata and streaming RGB video from the edge to the cloud, but also transmit radiometric image data.
+Added: This radiometric capability enables the full analytical power of infrared cameras to be harnessed in the cloud as well as at the edge.
+Added: In particular, this cloud radiometry enables vastly broader AI/ML capabilities, as models can be trained on radiometric data from enormous infrared datasets gathered from every camera connected at the edge.
+Added: We expect this “big data” capability to be a significant competitive advantage as we continue to develop transformative computer vision models for all of our customers’ use cases.
+Added: Our cloud software can also receive acoustic imager RGB video and metadata streams from our edge software, enabling remote monitoring and analysis of fixed-mount acoustic imagers.
+Added: Additionally, our cloud software can receive vibration monitor data from 3 rd -party wireless vibration sensor product solutions.
+Added: We believe incorporating acoustic, vibration, thermal, and visible imager data into one ‘single-pane-of-glass’ monitoring solution provides enhanced value for our customers.
+Added: Our cloud software features comprehensive user access management and security protocols to enable flexible and secure provisioning of sensor data access and visibility for multiple users across a company’s platform.
+Added: Our cloud software also features customizable Enterprise Asset Management (“EAM”) integrations to automatically generate work orders in the customer’s EAM system when an alert is triggered.
+Added: A variation of our cloud software is designed to provide centralized monitoring of employee health and safety across facilities by communicating with edge devices running our elevated body temperature monitoring software, leveraging the same core infrared cloud architecture that underpins our industrial monitoring software.
+Added: This software provides robust analytics for measuring and responding to health trends and features AI capabilities, including computer vision modules to automatically track the location of employees who display elevated body temperature.
+Added: Product Roadmap and Development
+Added: Our sensing platforms integrate multiple sensors into sensor devices paired with edge and cloud software to create solutions that protect critical industrial assets in multiple end markets.
+Added: Our product development is therefore focused on improving and expanding our sensor portfolio to include sensors with superior performance, price, or sensing capabilities, improving our sensor device portfolio to incorporate superior form factors with improved performance, including handheld, fixed, and mobile device forms, and improving our edge and cloud software to incorporate superior performance and additional functionality, with a particular focus on utilizing AI to automate and improve industrial anomaly detection and response.
+Added: Our product roadmap has expanded significantly over the past several years as the company has transitioned from a transactional device and edge software focus to a comprehensive subscription service approach incorporating devices, edge software, and cloud software in combination to offer unprecedented turn-key infrared technology solutions to numerous industrial challenges.
+Added: Our product roadmap now also includes significant development efforts in AI/ML on top of our sensor, device, and software platform, enabled by our revolutionary new infrared solutions approach.
+Added: Our Customers
+Added: We primarily target four markets globally:
+Added: distribution & logistics, oil & gas, manufacturing, and utilities.
+Added: For the year ended December 31, 2023, one customer accounted for 44% of total net revenue and no other customer accounted for more than 10% of total net revenue.
+Added: Distribution & Logistics
+Added: Our customers in the distribution & logistics market are generally engaged in the maintenance and upkeep of facilities and their critical assets.
+Added: This includes conveyor systems, transportation and machinery, facilities and building envelopes and electrics, and much more.
+Added: Traditionally, target users include mechanical engineers and maintenance and facilities professionals.
+Added: We believe that our data driven solutions will expand the user base to include operations and safety executives, process engineers, and other process- oriented leaders.
+Added: Manufacturing
+Added: Our customers in the manufacturing market are numerous and include automotive and vehicle manufacturers, chemical and paper manufacturers, and aerospace and defense manufacturers, among other complex systems manufacturers.
+Added: Our target users in the manufacturing market traditionally include mechanical engineers and facilities and maintenance professionals.
+Added: As our software solutions continue to evolve, we are increasingly targeting process design, safety, and operational leaders whose priorities involve process waste reduction, enhanced safety protocols, and improved consistency and quality in manufacturing outputs.
+Added: Our customers in the utilities market include all organizations involved in electrical power generation, transmission, and distribution.
+Added: Target applications include transformer and substation monitoring, power generation monitoring, and electrical line maintenance.
+Added: We also target organizations involved in green energy production, including wind and solar power generation.
+Added: Traditionally targeting linemen, substation managers, and maintenance professionals, our data driven solutions have expanded this user base to include operations, safety, environmental and reliability leaders.
+Added: Our customers in the oil & gas market leverage our technologies for a wide variety of uses, including facilities maintenance, asset performance assessment, tank level monitoring, leak detection, pipeline monitoring, and processing safety.
+Added: This market includes commercial businesses as well as some governmental agencies.
+Added: Traditionally, our solutions have been sold to maintenance professionals, safety professionals, and engineers.
+Added: We believe that our data driven software and all-encompassing solutions will expand users to include operational and manufacturing leaders, as well as other organizational leaders involved in enterprise-level sales.
+Added: Our Competitive Strengths
+Added: We believe the following strengths will allow us to maintain and extend our position as a provider of thermal sensing and software solutions.
+Added: Proprietary SaaS Technology
+Added: We have developed a proprietary cloud-based platform, SmartIR, used by our customers to analyze key data points and patterns acquired by our thermal and other sensors.
+Added: This proprietary platform allows users to identify failure points and patterns to inform safety protocols, enhance predictive maintenance to minimize unplanned downtime, and improve manufacturing processes.
+Added: We believe our SaaS platform represents a significant financial opportunity to continue to convert our more than 200 enterprise customers, which we define as Fortune 1000 companies, and equivalent government agencies and academic institutions, with revenues of greater than $5,000, to a recurring revenue model presented by our software solution.
+Added: As our platform capabilities expand, we believe our target applications, use cases, and points of differentiation in the marketplace will similarly expand.
+Added: High Performance At an Affordable Price
+Added: Our thermal imaging and sensing technologies represent one of the best price-to-quality ratios in the industry.
+Added: Our thermal devices provide high pixel resolution and accuracy, as well as industry-leading user software, at competitive prices.
+Added: This provides us with an ability to penetrate new markets and customers;
+Added: solution quality has also promoted customer retention.
+Added: We believe our SmartIR software will also provide value to customers that is differentiated within the industry by our turn-key cloud architecture, which enables customers to launch multi-facility thermal image monitoring without any software development work.
+Added: Leading Sensor Platform
+Added: Our sensor platform utilizes precise device sensor technology coupled with software-defined products that continue to drive low-cost customization.
+Added: With this combination, we expect to develop new solutions for industry-specific applications, expanding our product offering without requiring significant manufacturing or inventory changes.
+Added: Large and Diversified Enterprise Customer Base
+Added: We believe that the diversity of our customer base and our established presence in our four target markets gives us several advantages.
+Added: First, our customer diversity adds stability to our business.
+Added: By having a diverse customer base, we have reduced exposure to individual customers.
+Added: Second, we believe our participation across these four target markets provides some level of resilience to market or regulatory changes within a particular end market.
+Added: Third, our enterprise customers provide the potential for growth across these customers’ respective global footprints, enabling benefits of scale should we be successful in further penetrating these customers’ accounts.
+Added: As an example, an increase in our sales volume may result in a lower cost per device, allowing us to compete more effectively in each of the target markets.
+Added: Finally, we believe our early entrance into these markets with our SmartIR SaaS
+Added: solution will enable us to gain market- specific expertise, informing our product development decisions so that we may more effectively customize our solutions’ fit for the end market customers’ needs.
+Added: We also believe that our early entrance into our target markets affords us an early-mover advantage useful to establish strong relationships globally with key customers in each market.
+Added: Proven Management Team
+Added: To achieve our vision of making our technology platform widely available to enterprise customers, we have attracted an experienced executive leadership team.
+Added: Our company executives have extensive backgrounds in technology, finance, and operations.
+Added: Our Growth Strategies
+Added: Our goal is to increase our market share.
+Added: In order to achieve that goal, key elements of our growth strategy include:
+Added: Expand Our Sales and Marketing Presence
+Added: To further grow our market share in our target markets, we intend to strategically hire, scaling our dedicated business units to serve each end market.
+Added: As our market presence grows through targeted sales and marketing activity, we believe our customer base will grow.
+Added: In addition, we are increasingly cross-selling within accounts, accessing new projects and opportunities within accounts where we have a beachhead position and increasing the number of addressable opportunities even within single accounts.
+Added: Finally, we work closely with selected Strategic Channel Partners, including Amazon Web Services and Motion Industries, to leverage our commercial efforts into their existing customer base.
+Added: Increase Investment in SaaS Solution
+Added: Our SmartIR SaaS platform has been sold and is being used by key blue-chip accounts across our core vertical markets.
+Added: We believe the opportunity to cross-sell our value-added SaaS solutions alongside our sensors is an attractive opportunity to grow revenue.
+Added: We plan to continue to develop our software development capabilities in order to bring to market software products that fulfill current and evolving market applications and customer needs.
+Added: Execute On Our Product Roadmap
+Added: We continue to place a priority on innovation and product development to be competitive in our target markets over time in order to win new and expanded business opportunities.
+Added: We believe the high performance of our thermal sensors, in conjunction with the flexibility of our software will allow us to continue providing new solutions to our customers, and further expand the use cases for our systems across various vertical markets.
+Added: Grow Wallet Share with Enterprise Customers
+Added: We possess an established customer base in each of our four target markets that we believe can be further strengthened as our relationships with customers mature.
+Added: As our hardware and device customers also become users of our SmartIR SaaS solution, we expect we will be able to increase our order volumes.
+Added: We expect these deep relationships to inform our product development strategy while simultaneously increasing customer retention rates via multi-year agreements.
+Added: Sales for these programs are often, but not always, memorialized in multi-year contracts that provide a closer relationship to the customer and increased growth opportunities.
+Added: Among our existing enterprise customers are a leading ecommerce company and a leading automaker.
+Added: Both customers bought our camera systems during the COVID-19 pandemic for biorisk applications, and while the purchases for biorisk applications have nearly entirely ceased, we have worked closely with both customers to develop further industrial applications for our devices and software technology.
+Added: In July 2022, the ecommerce company initiated a paid pilot program for approximately $350,000 for 87 integrated devices and one-year SmartIR subscriptions across 18 of its facilities in the United Kingdom.
+Added: These subscriptions were each renewed for a minimum of one additional year in the third quarter of 2023.
+Added: In the fourth quarter of 2024, the ecommerce company contracted with MSAI to roll out our solutions at 57 additional facilities in the U.K.
+Added: and European Union, representing a total of approximately 650 subscriptions (approximately $2.3 million in annual recurring revenue), which implementation is currently in progress.
+Added: The ecommerce company has preliminary plans to deploy our devices at approximately 700 total sites by the end of 2025 in order to monitor conveyor belts, rollers, bearings and motors to detect imminent failures and avoid costly maintenance downtime.
+Added: We estimate that there is an aggregate annual recurring revenue opportunity of approximately $30 million associated with deploying devices at all of those sites.
+Added: We also have a pilot project in place with the automaker customer.
+Added: We and the customer have identified at least 16 potential additional applications for which we believe that our technology would provide high- ROI solutions to condition monitoring challenges or productivity improvement opportunities.
+Added: In addition to rolling out the pilot project (early fire detection in electric vehicle battery facilities) across multiple facilities, the automaker is currently evaluating the additional applications, with an eye toward broader rollout in 2024 and 2025.
+Added: The automaker customer has informed us that it intends to deploy our devices at 12 additional sites before the middle of 2025, primarily to continuously monitor temperature levels of electric vehicle batteries to avoid potential fires.
+Added: We estimate that there is an aggregate $2.5 million annual recurring revenue opportunity associated with deploying devices at all of those sites.
+Added: The ultimate sale by us of these devices and software subscriptions, the deployment of these devices by each of these customers at these additional sites and their timeline for doing so is subject to risks and uncertainties, including those described in Part I.
+Added: Risk Factors of this Annual Report on Form 10-K.
+Added: Expand Our Distribution Network
+Added: While the majority of our sales are direct to customers, we also sell our thermal sensors through a distribution network.
+Added: We believe these distributors enable us to reach more end customers in an operationally efficient manner.
+Added: We plan to grow our existing network and establish new distribution partnerships in regions where we do not currently have partnerships.
+Added: By leveraging these relationships, we believe we will be able to reach more customers faster and rapidly grow our sales.
+Added: As accounts grow, we maintain the right to begin selling directly to ensure close relationships with our most strategically and commercially important accounts.
+Added: Pursue Strategic Acquisitions
+Added: We may pursue acquisitions as a means to complement our technology and corporate capabilities should they represent a strategic fit and are consistent with our overall growth strategy.
+Added: While there is demand for our products today, we believe such acquisitions could create more expansive use cases for our products or provide greater access to our current target markets or access additional markets.
+Added: Manufacturing
+Added: We leverage our years of expertise in infrared and related sensors and devices to design, develop, source, and manufacture a variety of engineered products.
+Added: We have developed a flexible manufacturing strategy combining contract manufacturing for high-volume products and in-house manufacturing for lower- volume specialized products.
+Added: For our in-house manufacturing we purchase many subcomponents pre- assembled, including certain detectors, coolers and optics, as well as other sensors.
+Added: These components are then assembled into finished systems, calibrated and tested at our primary production facility located in Beaumont, Texas.
+Added: For both of these manufacturing approaches, we often apply our proprietary calibration process as part of final assembly, in order to achieve superior sensor accuracy than competitors.
+Added: The global market for infrared sensing devices is well established with large scale manufacturers, such as Teledyne FLIR and Fortive, selling primarily into military and commercial applications.
+Added: Newer and lower-cost manufacturers, both domestic and overseas, have made inroads into the market in recent decades, contributing to a meaningful decline in sensing device prices as well as an expansion of device capabilities.
+Added: This in turn has led to new end market applications for which infrared sensing devices are a useful and cost- effective solution.
+Added: We believe that our infrared sensing platform is competitive in this current market, as we offer high resolution and accuracy at an attractive price, and we offer differentiated device form factors, including multi-sensor devices.
+Added: While we expect our product costs to continue to decline and our functionality to continue to increase, we have faced and will continue to face competition from existing competitors and new entrants both on a cost and functionality basis.
+Added: The market for cloud-based, infrared sensing software is less developed, as larger infrared device manufacturers have historically been more focused on device design and manufacturing than on software development or cloud-based solutions.
+Added: The market for turn-key infrared sensing solutions is even less mature, as complete solutions have either been “Build-Your-Own” or installed by integrators.
+Added: We have established a differentiated position in the market providing turn-key infrared sensing solutions for specific end markets, including sensors, sensor devices, edge software, and cloud software, along with specific software modules such as integrations or AI/ ML, tailor-made for each specific end market.
+Added: Although we believe our position as a market leader here is strong and that our continued innovation will support our position, we have faced and will continue to face competition from existing competitors and new companies, as well as the potential for customers to develop their own end-to-end infrared sensing solutions.
+Added: We believe our competitive landscape varies somewhat across our four target markets.
+Added: In distribution & logistics, we mainly compete with large scale manufacturers of handheld sensor devices that provide on- device thermal image display and basic on-device software.
+Added: In manufacturing, we generally compete with handheld sensor devices offered by large scale manufacturers as well as less-common fixed camera solutions installed by industry-specialist consultants and integrators that source and install sensor devices from large scale manufacturers and offer limited software solutions without cloud or AI/ML feature sets.
+Added: In utilities, we mainly compete with large scale manufacturers of handheld sensor devices that provide on- device thermal image display and basic on-device software, as well as smaller integrators that offer sensing device payloads for fixed-wing or UAV applications.
+Added: In oil & gas, we generally compete with handheld sensor devices offered by large scale manufacturers, with smaller integrators that offer sensing device payloads for fixed-wing or UAV applications, and with fixed camera solutions installed by industry specialists that offer more fully-featured software solutions that sometimes include basic AI/ML capabilities.
+Added: Sales And Marketing
+Added: We plan to expand our sales and marketing efforts to attract new customers and grow orders from existing customers.
+Added: We maintain a global sales presence and sell directly to the majority of our customers.
+Added: Members of our sales team are technical and understand use cases and value drivers across our four core vertical target markets.
+Added: While we maintain direct relationships with the majority of our customers, we have also developed a global network of active direct dealers and distributors to sell, install, and support our solutions.
+Added: We collect feedback directly from our customers to generate insights that drive our business and innovation strategies.
+Added: We will continue to expand and optimize our dealer network to ensure that we have sufficient geographic coverage across both existing and new markets.
+Added: We take a targeted, data-driven marketing approach to each of our four focused markets.
+Added: We develop and publish digital content, including blogs, webinars, videos, and other digital solutions to educate potential customers and expand our reach.
+Added: We leverage a full technology stack, including a CRM system, marketing automation platforms, and account-based marketing tools to optimize target end user interactions and to drive efficient digital marketing efforts.
+Added: We also actively pursue thought-leaderships opportunities to present and speak at market-specific conferences, executive events, trade shows and industry events to further develop our brand and reputation.
+Added: These opportunities also allow us to showcase our technology and attract additional customer interest.
+Added: We also sponsor universities and other non-profit organizations to increase awareness of our technology and demonstrate its capabilities.
+Added: Research and Development
+Added: We have invested significant resources into research and development of our infrared sensor platform.
+Added: Our success has been, and will continue to be, substantially affected by our ability to innovate these new products and technologies to both augment our existing offerings and create new avenues for growth.
+Added: We strive to differentiate ourselves from our competition with our R&D capabilities.
+Added: We intend to continue to have significant internal R&D expenses in the future to provide a continuing flow of innovative and high- quality products to maintain and enhance our competitive position in each of our business segments.
+Added: In addition to these internally funded activities, we may engage in R&D projects that are reimbursed by government agencies or prime contractors pursuant to development contracts we undertake.
+Added: Government Regulation
+Added: The laws governing exportation of our thermal imaging technology vary from country to country and product to product.
+Added: Exporting our thermal cameras, infrared cameras, or infrared sensors to certain countries may be restricted by the United States
+Added: Government’s thermal camera export restrictions and many fall under International Traffic in Arms Regulations (ITAR).
+Added: All ITAR items are designated by the U.S.
+Added: Department of State.
+Added: Some of ICI’s thermal cameras fall under specific Export Control Classification Number (ECCN) codes.
+Added: ECCN items are governed by the U.S.
+Added: Department of Commerce Bureau of Industry and Security.
+Added: Likewise, most but not all of ICI’s cameras also have Commodity Jurisdiction (CJ) codes.
+Added: Depending on the sensor size and pixel pitch, ICI can export many of its thermal imaging cameras to most non U.S.-embargoed countries without restriction.
+Added: Other countries can receive thermal imaging cameras with restrictions and proper licensing and documentation.
+Added: Intellectual Property
+Added: We own and control various intellectual property rights, including patents, trade secrets, confidential information, trademarks, trade names, and copyrights.
+Added: We are licensed to use certain patents, technology and other intellectual property rights owned and controlled by others.
+Added: Similarly, other companies are licensed to use certain patents, technology and other intellectual property rights owned and controlled by us.
+Added: The annual royalties received or paid under license agreements are not significant to our overall operations.
+Added: Patents, patent applications and license agreements will expire or terminate over time by operation of law, in accordance with their terms or otherwise.
+Added: We do not expect the expiration or termination of these patents, patent applications and license agreements to have a material adverse effect on our business, results of operations or financial condition.
+Added: The table below sets out summary information for each patent that we consider to be material to our business, each of which is owned by us.
+Added: Scheduled Date of
+Added: Type of Patent
+Added: System to Adapt An Optical Device To Calculate A Condition Value
+Added: United States
+Added: Wireless Remote Control To Operate A Radiometric Camera Mounted To An Aerial Vehicle
+Added: United States
+Added: 11,549,827 B1
+Added: System And Method For Automated Condition Value Reporting
+Added: Machine and Method of Use
+Added: United States
+Added: Provisional Application
+Added: Apparatus For Noninvasive Veterinary Screening And Diagnosis
+Added: United States
+Added: In addition to our patent portfolio, we assert copyright, and enjoy copyright protection on multiple elements of our intellectual property, including edge and cloud software, product manuals, marketing materials, implementation materials, and training materials.
+Added: This copyright protection is further supplemented by extensive know how and proprietary trade secrets.
+Added: As of December 31, 2023, we employed a total of 35 people on a full-time basis in the United States.
+Added: We employ 16 engineers and technical talent, and we are continuing to look to significantly expand our technical employee count in order to meet our goals.
+Added: We also engage numerous consultants and contractors to supplement our permanent workforce.
+Added: None of our employees are represented by a labor union or covered by collective bargaining agreements.
+Added: We believe we have strong and positive relations with our employees.
+Added: Corporate Information
+Added: Prior to the Business Combination, the registrant was a blank check company incorporated as a Delaware corporation on May 14, 2021, originally formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.
+Added: In connection with the Merger, SportsMap changed its name to “Infrared Cameras Holdings, Inc.” The registrant subsequently changed its name to MultiSensor AI Holdings, Inc.
+Added: on February 9, 2024.
+Added: Available Information
+Added: We file electronically with the SEC our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information.
+Added: Our filings with the U.S.
+Added: Securities and Exchange Commission (the “SEC”) are available to the public over the Internet at the SEC’s website at www.sec.gov .
+Added: We make available on our website at www.multisensorai.com , free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC.
+Added: The information on any of our websites is deemed not to be incorporated in this Annual Report on Form 10-K or to be part of this Annual Report on Form 10-K.
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.