−Removed: Summary of Risk Factors
−Removed: An investment in our securities involves a high degree of risk.
−Removed: The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results.
−Removed: In that event, the trading price of our securities could decline, and our stockholders could lose all or part of their investment.
−Removed: Such risks include but are not limited to:
−Removed: ● We may not be able to complete the Business Combination pursuant to the Business Combination Agreement.
−Removed: If we are unable to do so, we will incur substantial costs associated with withdrawing from the transaction and may not be able to find additional sources of financing to cover those costs.
−Removed: ● Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
−Removed: ● We may not be able to complete our initial business combination by the end of our combination period, in which case we would cease all operations except for the purpose of winding up, we would redeem our public shares for a pro rata portion of the funds in the trust account, and we would liquidate.
−Removed: In such event, our warrants would expire worthless.
−Removed: ● If we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
−Removed: ● Stockholders only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of their right to redeem their shares from us for cash.
−Removed: ● If we seek stockholder approval of our initial business combination, and if a stockholder or a “group” of stockholders are deemed to hold in excess of 20% of our common stock, such stockholders will lose the ability to redeem all such shares in excess of 20% of our common stock.
−Removed: ● The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination, may not allow us to complete the most desirable business combination or optimize our capital structure, or may increase the probability that our initial business combination would be unsuccessful.
−Removed: ● We may require stockholders who wish to redeem their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights.
−Removed: ● If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, and their affiliates may elect to purchase shares in the open market or in privately negotiated transactions, which may influence a vote in favor of the business combination and may make it difficult for us to maintain the listing of our common stock on a national securities exchange following consummation of such business combination.
−Removed: ● We are not required to obtain an opinion from an independent investment banking firm, and consequently, an independent source may not confirm that the price we are paying for the business is fair to the company or our stockholders from a financial point of view.
−Removed: ● We may issue additional common stock or preferred stock to complete a business combination, which would dilute the interests of our stockholders.
−Removed: Similarly, we may issue notes or other debt securities, or otherwise incur substantial indebtedness, to complete a business combination, which may affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
−Removed: ● Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
−Removed: ● Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic and other events, and by the status of debt and equity markets.
−Removed: ● As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
−Removed: This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
−Removed: ● Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
−Removed: ● We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
−Removed: ● If we effect our initial business combination with a company located outside of the United States, we would be subject to additional risks relating to the impact of foreign laws, currency risk, tariffs and trade barriers, tax risks, less developed corporate governance standards, and investors may have difficulty in enforcing judgments against us.
−Removed: ● Past performance by our management team may not be indicative of future performance of an investment in us.
−Removed: ● Our officers and directors presently have fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
−Removed: ● Our officers and directors may have interests in a potential business combination that are different than our stockholders, which may create conflicts of interest.
−Removed: ● Stockholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances.
−Removed: Therefore, to liquidate their investment, a stockholder may be forced to sell its public shares, potentially at a loss.
−Removed: ● If third parties bring claims against us, and if our directors decide not to enforce the indemnification obligations of our sponsor or if our sponsor does not have the funds to indemnify us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share.
−Removed: Further, our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
−Removed: ● Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
−Removed: ● Holders of warrants will not participate in liquidating distributions if we are unable to complete an initial business combination.
−Removed: If we do not maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants, public warrant holders will only be able to exercise such warrants on a cashless basis.
−Removed: Further, we may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making the warrants worthless.
−Removed: ● We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of a majority of the then outstanding public warrants.
−Removed: ● Provisions of our amended and restated certificate of incorporation relating to the rights and obligations attaching to our common stock may be amended prior to the consummation of our initial business combination with the approval of the holders of 65% (or 50% if for the purposes of approving, or in conjunction with, the consummation of our initial business combination) of our issued and outstanding common stock attending and voting on such amendment.
−Removed: ● We may not call an annual meeting until after the consummation of our initial business combination, and accordingly, stockholders will not be afforded an opportunity to appoint directors and discuss company affairs with management until such time.
−Removed: ● If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
−Removed: ● We are an emerging growth company and smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
−Removed: Risks Relating to Searching for and Consummating a Business Combination
−Removed: We may not be able to complete the Business Combination pursuant to the Business Combination Agreement.
−Removed: If we are unable to do so, we will incur substantial costs associated with withdrawing from the transaction and may not be able to find additional sources of financing to cover those costs.
−Removed: In connection with the Business Combination Agreement, we have incurred substantial costs researching, planning and negotiating the transaction.
−Removed: These costs include, but are not limited to, costs associated with securing sources of financing, costs associated with employing and retaining third-party advisors who performed the financial, auditing and legal services required to complete the transaction, and the expenses generated by our officers, executives, and employees in connection with the transaction.
−Removed: If, for whatever reason, the transactions contemplated by the Business Combination Agreement fail to close, we will be responsible for these costs, but will have no source of revenue with which to pay them.
−Removed: We may need to obtain additional sources of financing in order to meet our obligations, which we may not be able to secure on the same terms as our existing financing or at all.
−Removed: If we are unable to secure new sources of financing and do not have sufficient funds to meet our obligations, we will be forced to cease operations and liquidate the trust account.
−Removed: Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
−Removed: As of December 31, 2022, we have incurred and expect to continue to incur costs in pursuit of our financing and acquisition plans.
−Removed: We cannot assure you that we will have sufficient liquidity to fund the working capital needs of the Company until the liquidation date and/or through twelve months from the issuance of this report.
−Removed: If we are unable to raise additional funds to alleviate liquidity needs and complete a business combination by the end of our combination period, then we will cease all operations except for the purpose of liquidating.
−Removed: Our liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about our ability to continue as a going concern.
−Removed: The financial statements contained elsewhere in this report do not include any adjustments that might result from our inability to continue as a going concern.
−Removed: The requirement that we complete our initial business combination by the end of our combination period may give potential target businesses leverage over us in negotiating our initial business combination and may limit the amount of time we have to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to consummate our initial business combination on terms that would produce value for our stockholders.
−Removed: Any potential target business with which we enter into negotiations concerning our initial business combination will be aware that we must consummate our initial business combination by the end of our combination period.
−Removed: Consequently, such target businesses may obtain leverage over us in negotiating our initial business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business.
−Removed: This risk will increase as we get closer to the timeframe described above.
−Removed: In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
−Removed: We may not be able to consummate our initial business combination within the required time period, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
−Removed: We must complete our initial business combination by the end of our combination period.
−Removed: We may not be able to find a suitable target business and consummate our initial business combination within such time period.
−Removed: Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
−Removed: If we are unable to consummate our initial business combination within the required 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, as further described herein.
−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.
−Removed: If we are unable to consummate our initial business combination by the end of our combination period, our public stockholders may be forced to wait beyond such period of time before redemption from our trust account.
−Removed: If we are unable to consummate our initial business combination by the end of our combination 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 by way of a voluntary liquidation, as further described herein.
−Removed: Any redemption of public stockholders from the trust account shall be effected as required by our amended and restated certificate of incorporation prior to our commencing any voluntary liquidation.
−Removed: If we are required to liquidate prior to distributing 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, then such winding up, liquidation and distribution must comply with the applicable provisions of the Delaware General Corporation Law, or DGCL.
−Removed: In that case, investors may be forced to wait beyond the end of our combination period before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account.
−Removed: Except as otherwise described herein, we have no obligation to return funds to investors prior to the date of any redemption required as a result of our failure to consummate our initial business combination within the period described above or our liquidation, unless we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their common stock.
−Removed: Only upon any such redemption of public shares as we are required to effect or any liquidation will public stockholders be entitled to distributions if we are unable to complete our initial business combination.
−Removed: Our public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination even though a majority of our public stockholders do not support such a combination.
−Removed: If we do not decide to hold a stockholder vote in conjunction with our initial business combination for business or other legal reasons, we will conduct redemptions pursuant to the tender offer rules of the SEC and our amended and restated certificate of incorporation.
−Removed: Nasdaq rules currently allow us to engage in a tender offer in lieu of a meeting of stockholders, provided that we were not seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration in any business combination.
−Removed: Furthermore, stockholder approval would not be required pursuant to the DGCL if our initial business combination were structured as a purchase of assets, a purchase of stock, shares or other equity securities of the target not involving a merger with us, or if we otherwise entered into contractual arrangements with a target to obtain control of such company.
−Removed: Therefore, if we were structuring
−Removed: a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination.
−Removed: However, except for as required by law, 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: Even if we seek stockholder approval, the holders of our founder shares and private shares will participate in the vote on such approval.
−Removed: Accordingly, we may consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination.
−Removed: Stockholders only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of their right to redeem their shares from us for cash.
−Removed: Because our board of directors may consummate our initial business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination.
−Removed: Accordingly, stockholders only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising their redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
−Removed: If we seek stockholder approval of our business combination and we do not conduct redemptions pursuant to the tender offer rules, and if a stockholder or a “group” of stockholders are deemed to hold in excess of 20% of our common stock, such stockholders will lose the ability to redeem all such shares in excess of 20% of our common stock.
−Removed: If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, individually or together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the shares sold in our initial public offering.
−Removed: Our stockholders inability to redeem more than an aggregate of 20% of the shares sold in our initial public offering will reduce their influence over our ability to consummate our initial business combination and they could suffer a material loss on their investment in us if they sell such excess shares in open market transactions.
−Removed: As a result, stockholders will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares, they would be required to sell their shares in open market transaction, potentially at a loss.
−Removed: Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that our stockholders do not support.
−Removed: Our initial stockholders own 23.6% of our issued and outstanding common stock.
−Removed: As a result, in addition to the founder shares and private shares, we would need 3,975,001, or 34.6%, of the 11,500,000 public shares sold as part of the units in our initial public offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business combination approved.
−Removed: Furthermore, assuming only the minimum number of stockholders required to be present at the stockholders’ meeting held to approve our initial business combination are present at such meeting, we would need only 212,502, or 1.8%, of the 11,500,000 public shares sold as part of the units in our initial public offering, to be voted in favor of our initial business combination in order to have such transaction approved.
−Removed: In addition, in the event that our board of directors amends our bylaws to reduce the number of shares required to be present at a meeting of our stockholders, we would need even fewer public shares to be voted in favor of our initial business combination to have such transaction approved.
−Removed: Accordingly, our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that our stockholders do not support, including amendments to our amended and restated certificate of incorporation.
−Removed: If our initial stockholders purchase any units or if they purchase any additional common stock in the aftermarket or in privately negotiated transactions, this would increase their control.
−Removed: Neither our sponsor nor, to our knowledge, any of our officers or directors, has any current intention to purchase additional securities.
−Removed: Factors that would be considered in making such additional purchases would include consideration of the current trading price of our common stock.
−Removed: Accordingly, our initial stockholders will continue to exert control at least until the consummation of our initial business combination.
−Removed: The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into our initial business combination with a target.
−Removed: We may enter into a business combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
−Removed: If too many public stockholders exercise their redemption rights, we may not be able
−Removed: to meet such closing condition, and as a result, would not be able to proceed with such business combination.
−Removed: Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon the consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
−Removed: Our amended and restated certificate of incorporation requires us to provide all of our public stockholders with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination.
−Removed: Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon the consummation of our initial business combination, or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
−Removed: Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our initial business combination transaction with us.
−Removed: The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to consummate the most desirable business combination or optimize our capital structure.
−Removed: In connection with the successful consummation of our initial business combination, we may redeem up to that number of common stock that would permit us to maintain net tangible assets of $5,000,001 immediately prior to or upon the consummation of our initial business combination.
−Removed: If our initial business combination requires us to use substantially all of our cash to pay the purchase price, the redemption threshold may be further limited.
−Removed: Alternatively, we may need to arrange third party financing to help fund our business combination in case a larger percentage of stockholders exercise their redemption rights than we expect.
−Removed: If the acquisition involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to the target or its stockholders to make up for the failure to satisfy a minimum cash requirement.
−Removed: Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels.
−Removed: This may limit our ability to effectuate the most attractive business combination available to us.
−Removed: The ability of our public stockholders to exercise their redemption rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.
−Removed: If our initial business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders may exercise redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption, or we may need to arrange third party financing to help fund our initial business combination.
−Removed: In the event that the acquisition involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to make up for a shortfall in funds.
−Removed: Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels.
−Removed: This may limit our ability to effectuate the most attractive business combination available to us.
−Removed: The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any taxes payable on interest earned) at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with.
−Removed: Pursuant to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any taxes payable on interest earned) at the time of the execution of a definitive agreement for our initial business combination.
−Removed: This restriction may limit the type and number of companies that we may complete an initial business combination with.
−Removed: If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and our stockholders will only be entitled to receive their pro rata portion of the funds in the trust account.
−Removed: We may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case public stockholders may have to remain stockholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell their shares in the open market.
−Removed: A potential target may make it a closing condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing.
−Removed: If the number of our public stockholders electing to exercise their redemption rights has the effect of reducing the amount of
−Removed: money available to us to consummate an initial business combination below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will 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: In that case, public stockholders may have to remain stockholders of our company and wait the full combination period in order to be able to receive a portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than they would have in a liquidation of the trust account.
−Removed: We intend to offer each public stockholder the option to vote in favor of the proposed business combination and still seek redemption of such stockholders’ shares.
−Removed: In connection with any meeting of stockholders held to approve an initial business combination, we will offer each public stockholder (but not our initial stockholders, officers or directors) the right to have his, her or its common stock redeemed for cash regardless of whether such stockholder votes for or against such proposed business combination or does not vote at all.
−Removed: We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon such consummation and a majority of the issued and outstanding common stock voted are voted in favor of the business combination.
−Removed: This is different than other similarly structured blank check companies where stockholders are offered the right to redeem their shares only when they vote for or against a proposed business combination.
−Removed: This threshold and the ability to seek redemption while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.
−Removed: We will require public stockholders who wish to redeem their common stock 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.
−Removed: We will require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, prior to the expiration date set forth in the tender offer documents mailed to such holders, or in the event we distribute proxy materials, up to two business days prior to the vote on the proposal to approve the business combination.
−Removed: In order to obtain a physical share certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request.
−Removed: It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent.
−Removed: However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate.
−Removed: While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case.
−Removed: Under the DGCL, we are required to provide at least 10 days advance notice of any meeting of stockholders, which would be the minimum amount of time a stockholder would have to determine whether to exercise redemption rights.
−Removed: Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares.
−Removed: In the event that a stockholder fails to comply with the various procedures that must be complied with in order to validly tender or redeem public shares, its shares may not be redeemed.
−Removed: Additionally, despite our compliance with the proxy rules or tender offer rules, as applicable, stockholders may not become aware of the opportunity to redeem their shares.
−Removed: Redeeming stockholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.
−Removed: We will require public stockholders who wish to redeem their common stock in connection with any proposed business combination to comply with the delivery requirements discussed above for redemption.
−Removed: If such proposed business combination is not consummated, we will promptly return such certificates to the tendering public stockholders.
−Removed: Accordingly, investors who attempted to redeem their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their securities to them.
−Removed: The market price for our common stock may decline during this time and stockholders may not be able to sell their securities when they wish to, even while other stockholders that did not seek redemption may be able to sell their securities.
−Removed: Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
−Removed: We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including private equity groups, venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions.
−Removed: Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates.
−Removed: Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
−Removed: Therefore, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
−Removed: This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
−Removed: Furthermore, seeking stockholder approval of our initial business combination may delay the consummation of a transaction.
−Removed: Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial business combination.
−Removed: If we seek stockholder approval of our business combination, our sponsor, directors, officers and their affiliates may elect to purchase shares from public stockholders, in which case they may influence a vote in favor of a proposed business combination that our stockholders do not support.
−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 sponsor, 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, although they are under no obligation to do so.
−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 sponsor, 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) 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: This may result in the consummation of an initial business combination that may not otherwise have been possible.
−Removed: Purchases of common stock in the open market or in privately negotiated transactions by our sponsor, directors, officers or their affiliates may make it difficult for us to maintain the listing of our common stock on a national securities exchange following the consummation of an initial business combination.
−Removed: If our sponsor, directors, officers or their affiliates purchase common stock in the open market or in privately negotiated transactions, the public “float” of our common stock and the number of beneficial holders of our securities would both be reduced, possibly making it difficult to maintain the listing or trading of our securities on a national securities exchange following consummation of the business combination.
−Removed: Because we are not limited to any particular business or specific geographic location or any specific target businesses with which to pursue our initial business combination, our stockholders will be unable to ascertain the merits or risks of any particular target business’ operations.
−Removed: We may pursue acquisition opportunities in any geographic region and in any business industry or sector.
−Removed: Except for the limitations that a target business have a fair market value of at least 80% of the value of the trust account (less any taxes payable on interest earned) and that we are not permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate.
−Removed: To the extent we consummate our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine.
−Removed: For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity.
−Removed: Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
−Removed: Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
−Removed: adversely impact a target business.
−Removed: An investment in our units may not ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition target.
−Removed: We are not required to obtain an opinion from an independent investment banking firm or another independent entity, and consequently, an independent source may not confirm that the price we are paying for the business is fair to our company (or stockholders) from a financial point of view.
−Removed: Unless we consummate our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that the price we are paying is fair to our company (or stockholders) from a financial point of view.
−Removed: If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community.
−Removed: Our board of directors will have significant discretion in choosing the standard used to establish the fair market value of the target acquisition.
−Removed: Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
−Removed: A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
−Removed: ● we issue additional common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a newly issued price of less than $9.20 per share;
−Removed: ● the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and
−Removed: ● the market value is below $9.20 per share,
−Removed: then the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the market value and the newly issued price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the market value and the newly issued price.
−Removed: Potential targets may seek a SPAC that does not have warrants that contain this provision, which may make it more difficult for us to consummate an initial business combination with a target business.
−Removed: Our warrants may have an adverse effect on the market price of our common stock and make it more difficult to effectuate our initial business combination.
−Removed: We issued warrants to purchase 8,625,000 common stock, as part of the units offered in our initial public offering, and warrants underlying the private units to purchase 506,250 common stock in the private placement we completed at the time of our initial public offering, in each case, at a price of $11.50 per share.
−Removed: In addition, our initial stockholders, officers and directors or their affiliates may, but are not obligated to, make certain loans to us, up to $1,000,000 of which may be converted upon consummation of our initial business combination into additional private units at a price of $10.00 per unit (which, for example, would result in the holders being issued private warrants to purchase an aggregate of 75,000 common stock).
−Removed: To the extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business.
−Removed: Any such issuance will increase the number of issued and outstanding common stock and reduce the value of the common stock issued to complete the business transaction.
−Removed: Therefore, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
−Removed: We may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan upon or after consummation of our initial business combination, which would dilute the interest of our stockholders and likely present other risks.
−Removed: Our amended and restated certificate of incorporation authorizes the issuance of 100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share.
−Removed: We may issue a substantial number of additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan upon or after consummation of our initial business combination.
−Removed: Although no such issuance of common stock or preferred stock will affect the per share amount available for redemption from the trust account, the issuance of additional common stock or preferred stock:
−Removed: ● may significantly dilute the equity interest of our stockholders, who will not have pre-emption rights in respect of such an issuance;
−Removed: ● may subordinate the rights of holders of common stock if preferred stock is issued with rights created by amendment of our amended and restated certificate of incorporation by resolution of the directors senior to those afforded our common stock;
−Removed: ● could cause a change in control if a substantial number of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
−Removed: ● may adversely affect prevailing market prices for our units, common stock and/or warrants.
−Removed: We may issue notes or other debt securities, or otherwise incur substantial debt, to complete our initial business combination, which may adversely affect our financial condition and thus negatively impact the value of our stockholders’ investment in us.
−Removed: Although we have no commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete initial business combination.
−Removed: Furthermore, we may issue a substantial number of additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan upon or after consummation of our initial business combination.
−Removed: We and our officers and directors have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account.
−Removed: As such, no issuance of debt will affect the per share amount available for redemption from the trust account.
−Removed: Nevertheless, the incurrence of debt could have a variety of negative effects, including:
−Removed: ● default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations;
−Removed: ● acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
−Removed: ● our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
−Removed: ● our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
−Removed: ● our inability to pay dividends on our common stock;
−Removed: ● using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
−Removed: ● limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
−Removed: ● increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
−Removed: ● limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
−Removed: We may only be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely dependent on a single business, which may have a limited number of products or services.
−Removed: This lack of diversification may negatively impact our operations and profitability.
−Removed: The net proceeds from our initial public offering and the sale of the private units provided us with approximately $118,927,000 that we may use to complete our initial business combination.
−Removed: We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously.
−Removed: However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis.
−Removed: By consummating our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks.
−Removed: Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities, which may have the resources to complete several business combinations in different industries or different areas of a single industry.
−Removed: Accordingly, the prospects for our success may be:
−Removed: ● solely dependent upon the performance of a single business, property or asset, or
−Removed: ● dependent upon the development or market acceptance of a single or limited number of products, processes or services.
−Removed: This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
−Removed: We may attempt to simultaneously consummate business combinations with multiple prospective targets, which may hinder our ability to consummate our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
−Removed: If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the initial business combination.
−Removed: With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
−Removed: If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
−Removed: Resources could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
−Removed: We anticipate that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others.
−Removed: If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
−Removed: Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons including those beyond our control.
−Removed: Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
−Removed: If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share or potentially less than $10.20 per share on our redemption, and our warrants will expire worthless.
−Removed: We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
−Removed: If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share or potentially less than $10.20 per share on our redemption, and the warrants will expire worthless.
−Removed: Although we believe that the net proceeds of our initial public offering and the sale of the private units, together with interest earned on the trust account, will be sufficient to allow us to consummate our initial business combination, because we have not yet identified any prospective target business we cannot ascertain the capital requirements for any particular transaction.
−Removed: If the net proceeds of our initial public offering and the sale of the private units, together with available interest from the trust account, prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination.
−Removed: Financing may not be available on acceptable terms, if at all.
−Removed: To the extent that additional financing proves to be unavailable when needed to consummate our initial business combination, we would be compelled to either restructure the transaction or abandon that particular initial business combination and seek an alternative target business candidate.
−Removed: If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share or potentially less than $10.20 per share on our redemption, and the warrants will expire worthless.
−Removed: In addition, even if we do not need additional financing to consummate our initial business combination, we may require such financing to fund the operations or growth of the target business.
−Removed: The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business.
−Removed: None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
−Removed: Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
−Removed: The United States federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports.
−Removed: We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
−Removed: These financial statements must be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or International Financial Reporting Standard as issued by the International Accounting Standards Board, or IFRS, and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or 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 combination period.
−Removed: Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) pandemic.
−Removed: The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination may have been materially and adversely affected or may be so affected in the future.
−Removed: Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner.
−Removed: The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
−Removed: If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
−Removed: As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
−Removed: This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
−Removed: 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 initial business combinations, and there are still
−Removed: 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: In addition, because there are more special purpose acquisition companies seeking to enter into initial business combinations with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets companies to demand improved financial terms.
−Removed: Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination.
−Removed: This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
−Removed: Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
−Removed: In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed.
−Removed: The premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable.
−Removed: There can be no assurance that these trends will not continue.
−Removed: The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination.
−Removed: In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both.
−Removed: However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
−Removed: In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination.
−Removed: As a result, in order to protect our directors and officers, the post-business combination entity will likely need to purchase additional insurance with respect to any such claims (“run-off insurance”).
−Removed: The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
−Removed: Risks Relating to the Post-Business Combination Company
−Removed: We may seek investment opportunities outside of our management’s area of expertise and our management may not be able to adequately ascertain or assess all significant risks associated with the target company.
−Removed: There is no limitation on the industry or business sector we may consider when contemplating our initial business combination.
−Removed: We may therefore be presented with a business combination candidate in an industry unfamiliar to our management team, but determine that such candidate offers an attractive investment opportunity for our company.
−Removed: In the event we elect to pursue an investment outside of our management’s expertise, our management’s experience may not be directly applicable to the target business or their evaluation of its operations.
−Removed: We may seek investment opportunities with a financially unstable business or in its early stages of development.
−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: These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel.
−Removed: Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
−Removed: Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
−Removed: Although we identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
−Removed: Although we have identified specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes.
−Removed: If we consummate our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines.
−Removed: In addition, if we announce our initial business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash.
−Removed: In addition, if stockholder approval of the transaction is required by law or the rules of Nasdaq, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
−Removed: If we are unable to complete our initial business combination, our public stockholders may only receive $10.20 per share or potentially less than $10.20 per share on our redemption, and our warrants will expire worthless.
−Removed: Subsequent to our consummation of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause our stockholders to lose some or all of their investment.
−Removed: Even if we conduct thorough due diligence on a target business with which we combine, this diligence may not surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise.
−Removed: As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
−Removed: Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.
−Removed: Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.
−Removed: In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.
−Removed: Our ability to successfully effect our initial business combination and to be successful thereafter will be largely dependent upon the efforts of our officers, directors and key personnel, some of whom may join us following our initial business combination.
−Removed: The loss of our officers, directors, or key personnel could negatively impact the operations and profitability of our business.
−Removed: Our operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors.
−Removed: We believe that our success depends on the continued service of our officers and directors, at least until we have consummated our initial business combination.
−Removed: In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
−Removed: We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers.
−Removed: The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.
−Removed: Additionally, we do not intend to have any full time employees prior to the consummation of our initial business combination.
−Removed: The role of such persons in the target business, however, cannot presently be ascertained.
−Removed: Although some of such persons may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place.
−Removed: While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct.
−Removed: These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
−Removed: We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
−Removed: When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’ management may be limited due to a lack of time, resources or information.
−Removed: Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected.
−Removed: Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
−Removed: Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares.
−Removed: Such stockholders are unlikely to have a remedy for such reduction in value.
−Removed: The officers and directors of an acquisition candidate may resign upon consummation of our initial business combination.
−Removed: The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.
−Removed: The role of an acquisition candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained at this time.
−Removed: Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that some members of the management team of an acquisition candidate will not wish to remain in place.
−Removed: Our management team and our stockholders may not be able to maintain control of a target business after our initial business combination.
−Removed: We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
−Removed: We may structure our initial business combination to acquire less than 100% of the equity interests or assets of a 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 may 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 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 such transaction could own less than a majority of our issued and outstanding shares subsequent to such transaction.
−Removed: In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock, shares or other equity securities than we initially acquired.
−Removed: Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
−Removed: If we effect a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks that may negatively impact our operations.
−Removed: If we consummate a business combination with a target business in a foreign country, we would be subject to any special considerations or risks associated with companies operating in the target business’ home jurisdiction, including any of the following:
−Removed: ● rules and regulations or currency conversion or corporate withholding taxes on individuals;
−Removed: ● tariffs and trade barriers;
−Removed: ● regulations related to customs and import/export matters;
−Removed: ● longer payment cycles;
−Removed: ● tax issues, such as tax law changes and variations in tax laws as compared to the United States;
−Removed: ● currency fluctuations and exchange controls;
−Removed: ● challenges in collecting accounts receivable;
−Removed: ● cultural and language differences;
−Removed: ● employment regulations;
−Removed: ● crime, strikes, riots, civil disturbances, terrorist attacks and wars;
−Removed: ● deterioration of political relations with the United States.
−Removed: We cannot assure our stockholders that we would be able to adequately address these additional risks.
−Removed: If we were unable to do so, our operations might suffer.
−Removed: If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.
−Removed: If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations.
−Removed: We cannot assure our stockholders that the target business will be able to enforce any of its material agreements or that remedies will be available in this new jurisdiction.
−Removed: The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
−Removed: The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.
−Removed: Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States.
−Removed: As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.
−Removed: There may be tax consequences to our business combinations that may adversely affect us.
−Removed: While we expect to undertake any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such business combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended tax-free treatment upon a transfer of shares or assets.
−Removed: A non-qualifying reorganization could result in the imposition of substantial taxes.
−Removed: Risks Relating to our Management, Directors, and Initial Stockholders
−Removed: Past performance by our management team may not be indicative of future performance of an investment in the Company.
−Removed: Information regarding performance by, or businesses associated with, our management team and their affiliates is presented for informational purposes only.
−Removed: Past performance by our management team 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: Stockholders should not rely on the historical record of our management team’s performance as indicative of our future performance of an investment in the company or the returns the company will, or is likely to, generate going forward.
−Removed: Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
−Removed: These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
−Removed: Our key personnel may be able to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination.
−Removed: Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
−Removed: in the form of cash payments and/or our securities for services they would render to us after the consummation of the business combination.
−Removed: The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
−Removed: However, we believe the ability of such individuals to remain with us after the consummation of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
−Removed: There is no certainty, however, that any of our key personnel will remain with us after the consummation of our initial business combination.
−Removed: Our key personnel may not remain in senior management or advisory positions with us.
−Removed: The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
−Removed: Management’s flexibility in identifying and selecting a prospective acquisition candidate, along with our management’s financial interest in consummating our initial business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
−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 will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate.
−Removed: Investors will be relying on management’s ability to identify business combinations, evaluate their merits, conduct or monitor diligence and conduct negotiations.
−Removed: Management’s flexibility in identifying and selecting a prospective acquisition candidate, along with management’s financial interest in consummating our initial business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
−Removed: Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
−Removed: Until we consummate our business combination, we intend to engage in the business of identifying and combining with one or more businesses.
−Removed: Our officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business.
−Removed: Our officers also may become aware of business opportunities, which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties or contractual obligations.
−Removed: Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
−Removed: These conflicts may not be resolved in our favor or that a potential target business would not be presented to another entity prior to its presentation to us.
−Removed: The shares beneficially owned by our officers and directors may not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.
−Removed: Our officers and directors have waived their right to redeem their founder shares or any other common stock acquired, or to receive distributions with respect to their founder shares upon our liquidation if we are unable to consummate our initial business combination, until all of the claims of any redeeming stockholders and creditors are fully satisfied (and then only from funds held outside the trust account).
−Removed: Accordingly, these securities will be worthless if we do not consummate our initial business combination.
−Removed: Any warrants they hold, like those held by the public, will also be worthless if we do not consummate an initial business combination.
−Removed: The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination.
−Removed: Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest.
−Removed: We may engage in our initial business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers or directors, which may raise potential conflicts of interest.
−Removed: We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
−Removed: In light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers and directors.
−Removed: Our directors also serve as officers and board members for other entities.
−Removed: Our sponsor, officers and directors are not currently aware of any specific opportunities for us to consummate our initial business combination with any entities with which they are affiliated, and there have been no discussions concerning a business
−Removed: combination with any such entity or entities.
−Removed: Despite our agreement to obtain an opinion from an independent investment banking firm or another independent firm that commonly renders valuation opinions regarding the fairness to our company (or stockholders) from a financial point of view of a target business affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
−Removed: Our directors have a fiduciary duty to act in the best interests of our company, whether or not a conflict of interest may exist.
−Removed: The value of the founder shares and private shares following completion of our initial business combination is likely to be substantially higher than the price paid for them, even if the trading price of our shares at such time is substantially less than $10.00 per share.
−Removed: The SPAC model may not fully align the interests of our sponsor and management with those of our public shareholders.
−Removed: Upon the closing of our initial public offering, our sponsor invested in us an aggregate of $5,420,000, comprised of the $20,000 purchase price for the 2,300,000 founder shares acquired by our sponsor and the $5,400,000 purchase price for the 540,000 private units acquired by our sponsor.
−Removed: Assuming a trading price of $10.00 per share upon consummation of our initial business combination, the 2,300,000 founder shares and 540,000 private shares would have an aggregate implied value of $28.4 million.
−Removed: Even if the trading price of our shares was as low as $1.91 per share, the value of the founder shares and private shares would be equal to our sponsor’s initial investment in us.
−Removed: As a result, our sponsor is likely to be able to recoup its investment in us and make a substantial profit on that investment, even if our public shares have lost significant value.
−Removed: Accordingly, our management team, which owns interests in our sponsor, may have an economic incentive that differs from that of the public shareholders to pursue and consummate an initial business combination rather than to liquidate and to return all of the cash in the trust to the public shareholders, even if that business combination were with a riskier or less-established target business.
−Removed: For the foregoing reasons, our stockholders should consider our management team’s financial incentive to complete an initial business combination when evaluating whether to redeem their shares prior to or in connection with the initial business combination.
−Removed: The nominal purchase price paid by our initial shareholders for the founder shares may result in significant dilution to the implied value of our public shares upon the consummation of our initial business combination.
−Removed: In our initial public offering, we sold our units at an offering price of $10.00 per unit and the amount in our trust account was initially $10.20 per public share, implying an initial value of $10.20 per public share.
−Removed: However, prior to our initial public offering, our initial shareholders paid a nominal aggregate purchase price of $25,000 for the founder shares, or approximately $0.01 per share.
−Removed: As a result, the value of the public shares may be significantly diluted.
−Removed: For example, the following table shows the dilutive effect of the founder shares on the implied value of the public shares upon the consummation of our initial business combination, assuming that our equity value at that time is $113,275,000, which is the amount we would have for our initial business combination in the trust account after payment of $4,025,000 of business combination marketing fees payable to the representative, assuming no interest is earned on the funds held in the trust account, and no public shares are redeemed in connection with our initial business combination, and without taking into account any other potential impacts on our valuation at such time, such as the trading price of our public shares, the business combination transaction costs, any equity issued or cash paid to the target’s sellers or other third parties, or the target’s business itself, including its assets, liabilities, management and prospects.
−Removed: At such valuation, each of our shares would have an implied value of $7.88 per share upon consummation of our initial business combination, which would be a 22.7% decrease as compared to the initial implied value per public share of $10.20 (the price per share in our initial public offering initially held in our trust account, assuming no value to the public warrants).
−Removed: Public shares
−Removed: Founder shares
−Removed: Total funds in trust available for initial business combination (less business combination marketing fees)
−Removed: Initial implied value per public share
−Removed: Implied value per share upon consummation of initial business combination
−Removed: Risks Relating to Our Securities
−Removed: Stockholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances.
−Removed: To liquidate their investment, therefore, stockholders may be forced to sell public shares, potentially at a loss.
−Removed: Our public stockholders shall be entitled to receive funds from the trust account only (i) in the event of a redemption to public stockholders prior to any winding up in the event we do not consummate our initial business combination or our liquidation (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 our combination period or (B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity.
−Removed: In no other circumstances will a stockholder have any right or interest of any kind to the funds in the trust account.
−Removed: Accordingly, to liquidate their investment, stockholders may be forced to sell their securities, potentially at a loss.
−Removed: If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders may be less than $10.20.
−Removed: Our placing of funds in trust may not protect those funds from third party claims against us.
−Removed: Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with 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, they may not execute such agreements.
−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 will not execute agreements with us waiving such claims to the monies held in the trust account, nor will the underwriters of our initial public offering.
−Removed: Even if such entities execute such agreements with us, they may seek recourse against the monies held in the trust account.
−Removed: A court may not uphold the validity of such agreements.
−Removed: Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public stockholders.
−Removed: If we liquidate the trust account before the completion of a business combination, our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement.
−Removed: However, our sponsor may not be able to meet such obligation.
−Removed: Therefore, the per-share distribution from the trust account in such a situation may be less than $10.20 due to such claims.
−Removed: Additionally, if we are forced to file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us which is not dismissed, or if we otherwise enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy or insolvency estate and subject to the claims of third parties with priority over the claims of our stockholders.
−Removed: To the extent any bankruptcy or insolvency claims deplete the trust account, we may not be able to return to our public stockholders at least $10.20 per share.
−Removed: Our directors may decide not to enforce indemnification obligations against our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
−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 its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine on our behalf whether to take legal action against our sponsor to enforce its indemnification obligations.
−Removed: While we currently expect that our independent directors would take legal action on our behalf to enforce such indemnification obligations, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
−Removed: If our independent directors choose not to enforce these indemnification obligations on our behalf, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.20 per share.
−Removed: The securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.20 per share.
−Removed: The proceeds held in the trust account will be invested only in U.S.
−Removed: government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S.
−Removed: government treasury obligations.
−Removed: While short-term U.S.
−Removed: government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years.
−Removed: Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
−Removed: In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable.
−Removed: Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.20 per share.
−Removed: Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
−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 within the combination period may be considered a liquidation distribution under Delaware law.
−Removed: If a 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 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: However, it is our intention to redeem our public shares as soon as reasonably possible following the end of our combination period in the event we do not complete our business combination and, therefore, we do not intend to comply with those procedures.
−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 10 years following our dissolution.
−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: If our plan of distribution complies with Section 281(b) of the DGCL, any liability of 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 likely be barred after the third anniversary of the dissolution.
−Removed: We cannot assure our stockholders that we will properly assess all claims that may be potentially brought against us.
−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 beyond the third anniversary of such date.
−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 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: We may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.
−Removed: In connection with our initial business combination, we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a price of $10.20 per share or which approximates the per-share amounts in our trust account at such time, which is generally approximately $10.20.
−Removed: The purpose of such issuances will be to enable us to provide sufficient liquidity to the post-business combination entity.
−Removed: The price of the shares we issue may therefore be less, and potentially significantly less, than the market price for our shares at such time.
−Removed: Our securities may not continue to be listed on Nasdaq in the future, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
−Removed: Our securities are currently listed on Nasdaq.
−Removed: However, we cannot assure our stockholders of this or that our securities will continue to be listed on Nasdaq in the future.
−Removed: Additionally, in connection with our business combination, Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements.
−Removed: We cannot assure our stockholders that we will be able to meet those initial listing requirements at that time.
−Removed: If Nasdaq delists our securities from trading on its exchange, and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market.
−Removed: If this were to occur we could face significant material adverse consequences, including:
−Removed: ● a limited availability of market quotations for our securities;
−Removed: ● a reduced liquidity with respect to our securities;
−Removed: ● a determination that our common stock are a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
−Removed: ● a limited amount of news and analyst coverage for our company;
−Removed: ● a decreased ability to issue additional securities or obtain additional financing in the future.
−Removed: The grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our common stock.
−Removed: Pursuant to an agreement to be entered into at the time of our initial public offering, our initial stockholders and their permitted transferees can demand that we register for resale an aggregate of 2,875,000 founder shares, 675,000 private units and the underlying private shares and private warrants, and up to 100,000 units issuable upon conversion of working capital loans and the underlying shares and warrants.
−Removed: We will bear the cost of registering these securities.
+Added: Risk Factors.
+Added: You should carefully consider the risks described below, as well as the other information in this Annual Report on Form 10-K, including our financial statements and the related notes and Part II.
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations, growth prospects and stock price.
+Added: Risks Related to Our Business and Industry
+Added: We have a history of losses or low income, and may continue to incur losses or limited income in the future.
+Added: We have incurred net losses or low income in recent years, as we pivoted the company from primarily stand-alone device sales to pairing device sales with sales of our software solutions.
+Added: We incurred a net loss of $13.3 million for the year ended December 31, 2022 and $22.3 million for the year ended December 31, 2023.
+Added: We believe that we may continue to incur operating and net losses each quarter until at least such time as we begin to realize the anticipated benefits of our investment in sales and marketing efforts, though those benefits may not be as great as we anticipate or may occur later that we anticipate or not at all.
+Added: Even if we successfully develop and sell our devices and software solutions, there can be no assurance that it will be commercially successful.
+Added: We believe achieving sustained profitability will be dependent upon the successful development and successful commercial introduction and acceptance of its solutions, which may not occur.
+Added: We may continue to incur losses or limited income in future periods as we:
+Added: ● expand our sales and marketing presence;
+Added: ● increase investment in SaaS solutions;
+Added: ● execute on our product roadmaps;
+Added: ● grow wallet share with enterprise customers;
+Added: ● expand our distribution network;
+Added: ● pursue strategic acquisitions.
+Added: Because we may incur the costs and expenses from these efforts before experiencing any incremental revenue growth as a result of these initiatives, our losses in future periods may be significant.
+Added: In addition, we may find that these efforts are more expensive than currently anticipated or that these efforts may not result in revenues, which would further increase our losses.
+Added: These initiatives may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue, if at all, in an amount sufficient to offset these higher expenses and to achieve and maintain profitability.
+Added: Certain of the market opportunities we are pursuing are at an early stage of development, and it may be many years before the end markets we expect to serve generate demand for our products at scale.
+Added: Our revenue may be adversely affected for a number of reasons, including an inability to up-sell or cross-sell SaaS offerings that we are seeking to expand or develop, the development and/or market acceptance of new technology that competes with our thermal imaging products, our ability to create, validate, and manufacture at high volume, and ship product to customers, our inability to effectively manage our inventory or manufacture products at scale, our inability to enter new markets or help our customers adapt our products for new applications or our failure to attract new customers or expand orders from existing customers or increasing competition.
+Added: Furthermore, it is difficult to predict the size and growth rate of our target markets, customer demand for our products, commercialization timelines, the entry of competitive products or the success of existing competitive products and services.
+Added: If our revenue does not grow, our ability to achieve and maintain profitability may be adversely affected, and the value of our business may significantly decrease.
+Added: Our revenue and margins could be adversely affected if we fail to maintain competitive average selling prices or high sales volumes, or we fail to reduce product costs.
+Added: Cost-cutting initiatives adopted by our customers can place increased downward pressure on our average selling prices.
+Added: We also expect that any long-term or high-volume agreements with customers may require step-downs in pricing over the term of the agreement.
+Added: Our average selling price may be driven down by customer-specific selling price fluctuations such as non-standard discounts on large volume purchases.
+Added: These lower average selling prices on large volume purchases may cause fluctuations in revenue and gross margins on a quarterly and annual basis and ultimately adversely affect its profitability.
+Added: We may also experience declines in the average selling prices of our products generally as our customers negotiate lower prices and as our competitors produce and commercialize lower cost competing technologies.
+Added: To achieve profitability and maintain margins, we will also need to continually reduce product and manufacturing costs.
+Added: Reductions in product and manufacturing costs are principally achieved by scaling production volumes and through step changes in manufacturing and continued engineering of the most cost-effective designs for its products.
+Added: In addition, we must continuously drive initiatives to reduce labor cost, improve worker efficiency, reduce the cost of materials, use fewer materials and further lower overall product costs by carefully managing component prices, inventory and shipping cost.
+Added: We need to continually increase sales volume and introduce new, lower-cost products in order to maintain our overall gross margin.
+Added: If we are unable to maintain competitive average selling prices, increase our sales volume or successfully introduce new, low-cost products, our revenue and overall gross margin would likely decline.
+Added: If we fail to successfully manage the expansion of our SaaS capabilities and offerings, our business and financial results could be adversely affected.
+Added: Expanding our SaaS capabilities and offerings will require considerable additional investment in our business.
+Added: Whether this expansion will be successful and will accomplish our business and financial objectives is subject to uncertainties, including, but not limited to, customer demand, attach and renewal rates, channel adoption, our ability to further develop and scale infrastructure, our ability to include functionality and usability in such offerings that address customer requirements, and the related costs.
+Added: If we are unable to successfully expand our existing offerings or establish new offerings and navigate our business expansion due to these risks and uncertainties, our business and financial results could be adversely impacted.
+Added: We have a limited operating history providing SaaS solutions, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
+Added: While we have been in operation since 1995, the company has a limited operating history providing SaaS solutions that we introduced to our industrial customers in 2023.
+Added: Our limited operating history providing SaaS solutions makes it difficult for us to evaluate our future prospects.
+Added: Certain factors that could alone or in combination prevent us from successfully commercializing these solutions or our other products include:
+Added: ● our reliance on third parties to supply significant parts of our production process or to manufacture our products;
+Added: ● our ability to establish and maintain successful relationships with our suppliers or manufacturers;
+Added: ● our ability to achieve commercial scale production of our products on a cost-effective basis and in a timely manner;
+Added: ● our ability to successfully expand our product offerings;
+Added: ● our ability to develop and protect intellectual property;
+Added: ● our ability to gain market acceptance of our products with customers and maintain and expand customer relationships, whether through strategic customer agreements or otherwise;
+Added: ● the adaptability of our products and the ability of our customers to integrate our products into their products and processes in a timely and effective manner;
+Added: ● the actions of direct and indirect competitors that may seek to enter the markets in which we expect to compete or that may seek to impose barriers to one or more markets that we intend to target;
+Added: ● the long lead time for development of market opportunities for which we are only at an early stage of development;
+Added: ● our ability to forecast our revenue and budget for, and manage, our expenses;
+Added: ● our ability to comply with existing and new or modified laws and regulations applicable to our business, or laws and regulations applicable to our customers for applications in which they may use our products;
+Added: ● our ability to plan for and manage capital expenditures for our current and future products, and manage our supply chain and supplier relationships related to these current and future products;
+Added: ● our ability to anticipate and respond to macroeconomic changes and changes in the markets in which we operate and expect to operate;
+Added: ● our ability to maintain and enhance the value of our reputation and brand;
+Added: ● our ability to effectively manage our growth and business operations;
+Added: ● our ability to recruit and retain talented people at all levels of our organization.
+Added: Our relationships with many of our existing customers are limited as they may not be prepared to select us as a long-term supplier given the relatively recent nature of our business relationship.
+Added: To establish preliminary relationships with certain customers and to build their confidence, we have entered, and may continue to enter, into pilot agreements, spot buy purchase orders, non-binding letters of intent and strategic customer agreements.
+Added: These agreements are largely non-binding, generally do not include any minimum obligation to purchase any quantities of any products, and do not require that the parties enter into a subsequent definitive, long-term, binding agreement.
+Added: If we are unable to build confidence with its existing customers, either through these preliminary agreements (due to any failure to enter into or perform under the agreements) or otherwise, or if we are unable secure opportunity from these non-binding agreements, involving strategic customer agreements, we may be unable to produce accurate forecasts or increase our sales.
+Added: With respect to new customers, they may be less confident in our business and less likely to purchase our products because of a lack of awareness about our products.
+Added: They may also not be convinced that our business will succeed because of the absence of an established sales, service, support and operating history.
+Added: To address this, we must, among other activities, grow and improve our marketing capability and brand awareness, which may be costly.
+Added: These activities may not be effective or could delay our ability to capitalize on the opportunities that we believe are suitable to our technology and products and may prevent us from successfully commercializing our products.
+Added: To build and maintain our business, we must maintain confidence in our products, long-term financial viability and business prospects.
+Added: Failure to establish and maintain customer confidence may also adversely affect our reputation and business among our suppliers, analysts, ratings agencies and other interested parties.
+Added: If we fail to understand fully or adequately address the challenges that we are currently encountering or that we may encounter in the future, including those challenges described here and elsewhere in this “Risk Factors” section, our business, financial condition and results of operations could be adversely and materially affected.
+Added: If the risks and uncertainties that we plan for when operating our business is incorrect or change, or if we fail to manage these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition and results of operations could be adversely affected.
+Added: If our products are not adopted in our targeted end markets, our business will be materially and adversely affected.
+Added: Although our products are designed for use in multiple markets, each of our target or new markets may have unique barriers to entry.
+Added: If we are unsuccessful in overcoming these barriers, it may affect our entrance into, or adoption by, these target or new markets, which could adversely affect our future results of operations.
+Added: Our products are used in a wide variety of existing and emerging use cases in the distribution and logistics market, where our products provide conveyor system monitoring solutions assisting customers with process automation, predictive maintenance and failure avoidance.
+Added: These customers tend to be large companies that move slowly to larger scale implementation, often with years-long timelines.
+Added: If our products are not chosen for deployment in these projects, or we lose a program under any circumstances, we may not have an opportunity to obtain that business again for many years.
+Added: Even if our products are chosen for deployment, implementation and adoption by our customers may not be on terms consistent with initial forecasts or agreements between us and the customer.
+Added: Industrial automation is a demanding industry with product specifications that our products may not always meet.
+Added: Our products also are used in a wide variety of existing and emerging use cases in the oil and gas market, which generally consists of gas and liquid leak detection, tank-level monitoring, pipeline leak detection and gas processing safety monitoring.
+Added: This is a nascent market, and while this industry is experimenting with the use of thermal imaging in these applications, our customers may decide that thermal imaging is not a feasible solution for one of a variety of reasons, including current price points of sensors using thermal imaging technology.
+Added: Our products also are used in a wide variety of existing and emerging use cases in the manufacturing market, in which our customers are generally engaged in power panel monitoring, early fire detection and electrified transport battery monitoring.
+Added: Additionally, our products are also used in a wide variety of existing and emerging use cases in the utilities market.
+Added: Both of these markets are competitive and customers often have strict functional and pricing requirements for products.
+Added: If we are unable to make products that meet these requirements, or sell products at the required price point, we could lose this business to competitors or competitive technologies.
+Added: Our target markets involve risks of program delay, loss, and cancellation.
+Added: We expect to incur substantial research and development costs and devote significant resources to developing and commercializing new products, which could significantly affect our ability to become profitable and may never result in revenue.
+Added: Any delay or interruption of the development and commercialization of new products may adversely affect our existing business and prospects for winning future business.
+Added: Our future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new and effective products on a timely basis that then achieve market acceptance.
+Added: To remain competitive, we develop new products and upgrades to our software and will need to continue to do so.
+Added: In connection with this development, we plan to incur substantial, and potentially increasing, research and development costs.
+Added: Because we account for research and development as an operating expense, these expenditures could adversely affect our results of operations in the future.
+Added: Further, our research and development program may be delayed and may not produce timely results.
+Added: If we cannot produce successful results in time to accommodate customers’ or potential customers’ implementation timelines, we may lose business.
+Added: If we are unsuccessful in introducing these products in accordance with its product launch plans or any publicly announced launch dates, it may be injurious to our reputation and brand and adversely affect our ability to be competitive in our target and new markets.
+Added: We expect to rely on products we are currently developing for a significant portion of our future growth.
+Added: However, even if our research and development efforts are successful and completed on time, there is no guarantee that we will be successful in adapting our business to our new products or that our new products will achieve market acceptance or generate sufficient revenue to make us profitable.
+Added: Our future products, such as any software solutions we develop, may be products we have limited or no experience commercializing.
+Added: In launching such products, we may face foreseen and unforeseen difficulties that adversely affect such commercialization and could have a material adverse effect on our operations and business.
+Added: Additionally, the success of our competitors’ research and development efforts, including producing higher performing products, may result in loss of business.
+Added: The promise of new products and successful research and development may even decrease our expected and actual revenue attributable to existing products as customers may delay or cancel outstanding purchasing commitments for current generation products in anticipation of the release of new generation products from us.
+Added: Additionally, new products may trigger increased warranty costs as information on such products is augmented by actual usage.
+Added: Product liability claims, product recalls and field service actions could have a material adverse effect on our reputation, business, results of operations and financial condition and we may have difficulty obtaining product liability and other insurance coverage.
+Added: As a manufacturer and distributor of a wide variety of products used in the oil and gas, distribution and logistics, manufacturing and utilities markets, our results of operations are susceptible to adverse publicity regarding the quality or safety of its products.
+Added: Product liability claims challenging the quality or safety of our products may result in a decline in sales for a product, which could adversely affect our results of operations.
+Added: This could be the case even if the claims themselves are proven to be untrue or settled for immaterial amounts.
+Added: While we have general liability and other insurance policies concerning product liabilities and errors and omissions, we have deductibles under such policies with respect to a portion of these liabilities.
+Added: Awarded damages could be more than our accruals.
+Added: We could incur losses above the aggregate annual policy limit as well.
+Added: We cannot ensure that insurance carriers will be willing to renew coverage or provide new coverage for product liability.
+Added: Product recalls can be expensive and tarnish our reputation and have a material adverse effect on the sales of its products.
+Added: We cannot assure that we will not have additional product liability claims or that we will not recall any products.
+Added: We may face risks associated with our reliance on certain artificial intelligence and machine learning models.
+Added: We rely on artificial intelligence and machine learning (“AI/ML”) in the development of our deterministic artificial intelligence-driven sensing system for industrial applications.
+Added: The AI/ML models that we use are trained using various data sets.
+Added: If the AI/ML models are incorrectly designed, the data used to train them is incomplete, inadequate, or biased in some way, or if we do not have sufficient rights to use the data on which its AI/ML models rely, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws, third-party privacy, or other rights, or contracts to which we are a party.
+Added: We face risks related to sales through distributors and other third parties which could harm our business.
+Added: We sell a portion of our products through third parties such as distributors and manufacturers representatives.
+Added: Using third parties for distribution exposes us to many risks, including concentration risk, credit risk and legal risk because, under certain circumstances, we may be held responsible for the actions of those third-party sales channels.
+Added: We may rely on one or more key distributors for selling a product, and the loss of these distributors could reduce its revenue.
+Added: Our distributors may face financial difficulties, including bankruptcy, which could harm our collection of accounts receivables and financial results.
+Added: Violations of the Foreign Corrupt Practices Act (“FCPA”) or similar anti-bribery laws by distributors or other third-party intermediaries could have a material impact on our business.
+Added: Competitors could also block our access to such parties.
+Added: Failing to manage risks related to our use of third-party sales channels may reduce sales, increase expenses, and weaken our competitive position, and could result in sanctions against us.
+Added: The period of time from initiating dialogue with potential customers to implementation (sales cycle) is long and we are subject to the risks of cancellation or postponement of the contract or unsuccessful implementation.
+Added: Prospective customers generally must make significant commitments of resources to test and validate products like those produced by us and confirm that they can integrate these products with other technologies before including them in any particular system, product, or process.
+Added: The selling cycle for our products with new customers varies widely depending on the application, market, customer, and the complexity of the product.
+Added: In the warehouse and logistics market, for example, this selling cycle can be a year (or more).
+Added: These selling cycles result in us investing our resources prior to realizing any revenue from commercialization.
+Added: Further, we are subject to the risk that customers cancel or postpone implementation of its technology solution or our customers are unable to integrate its technology solution successfully into a larger system.
+Added: If our customers face financial difficulties, they may also cancel current or future product programs that could materially and adversely impact our financial results.
+Added: Further, our revenue could be less than forecasted if the system, product, or process that includes our products is unsuccessful, including for reasons unrelated to our technology.
+Added: Long selling cycles and product cancellations or postponements may adversely affect our business, results of operations, and financial condition.
+Added: Developments in alternative technologies may adversely affect the demand for our technology.
+Added: Significant developments in alternative technologies may materially and adversely affect our business, prospects, financial condition, and operating results in ways we do not currently anticipate.
+Added: Existing and future infrared technologies may emerge as customers’ preferred alternative to our solutions.
+Added: Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced products in the industries we serve, which could result in the loss of competitiveness of our solutions, decreased revenue and a loss of market share to competitors (or a failure to increase revenue and/or market share).
+Added: Our research and development efforts may not be sufficient to adapt to changes in technology.
+Added: As technologies change, we plan to upgrade or adapt our solutions with the latest technology.
+Added: However, our solutions may not compete effectively with alternative systems if we are not able to source and integrate the latest technology into our existing products.
+Added: Our manufacturing business model and use of contract manufacturers may not be successful, which could harm our ability to deliver products and recognize revenue.
+Added: Our manufacturing strategy focuses on engaging contract manufacturers for our manufacturing needs while maintaining the design, engineering, prototyping, testing, and pilot manufacturing in-house at our facility in Beaumont, Texas.
+Added: We currently have agreements with certain contract manufacturers to provide contract manufacturing, testing, and delivery of certain of our products.
+Added: These arrangements are intended to lower our operating costs, but they also reduce our direct control over certain aspects of its operations.
+Added: This diminished control may have an adverse effect on the quality or quantity of products or services, or our flexibility to respond to changing conditions.
+Added: Reliance on contract manufacturers reduces our control over the manufacturing process, including reduced control over quality, product costs, and product supply and timing.
+Added: We may experience delays in shipments or issues concerning product quality from its contract manufacturers.
+Added: If any of our contract manufacturers experience interruptions, delays, or disruptions in supplying our products, including by natural disasters, epidemics or outbreaks of contagions, increased military conflict or tensions, such as in the Middle East, Eastern Europe or Asia, or work stoppages or capacity constraints, our ability to ship products would be delayed.
+Added: In addition, unfavorable economic conditions could result in financial distress among contract manufacturers upon which we rely, thereby increasing the risk of disruption of supplies necessary to fulfill our production requirements and meet customer demands.
+Added: Additionally, if any of our contract manufacturers experience quality control problems in their manufacturing operations and our products do not meet customer or regulatory requirements, such third parties could be required to cover the cost of repair or replacement of any defective products.
+Added: These delays or product quality issues could have an immediate and material adverse effect on our ability to fulfill orders and could have a negative effect on our operating results.
+Added: In addition, such delays or issues with product quality could adversely affect our reputation and our relationship with our channel partners.
+Added: If our contract manufacturers experience financial, operational, manufacturing capacity, or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture our products in required volumes or at all, our supply may be disrupted, we may be required to seek alternate manufacturers and we may be required to re-design its products.
+Added: It would be time-consuming, and could be costly and impracticable, to begin to use new manufacturers or designs, and such changes could cause significant interruptions in supply.
+Added: Such changes could also have an adverse effect on our ability to meet our scheduled product deliveries and may subsequently lead to the loss of sales.
+Added: While we take measures to protect our trade secrets, the use of contract manufacturers may also risk disclosure of our innovative and proprietary manufacturing methodologies, which could adversely affect our business.
+Added: We operate in a competitive landscape against market participants that may have substantially greater resources than us and against known and unknown market entrants who may disrupt our target markets.
+Added: Our target markets are highly competitive and we may not be able to compete effectively in the market against these competitors.
+Added: Competitors may offer products at lower prices than our products, including pricing that we believe is below their cost, or may offer superior performing products.
+Added: These companies also compete with us indirectly by attempting to solve some of the same challenges with different technology.
+Added: Certain competitors in the market for these devices and sensors may have significantly greater resources and more experience than we do.
+Added: These competitors have commercialized technology that has achieved market adoption, strong brand recognition and may continue to improve in both anticipated and unanticipated ways.
+Added: They may also have entered into
+Added: commercial relationships with key customers and have built relationships and dependencies between themselves and those key customers.
+Added: In addition to the existing market competitors, new competitors may be preparing to enter or are entering the market in which we compete that may disrupt the commercial landscape of target markets in ways that we may not be able to prepare for, including customers of our products who may be developing their own competitive solutions.
+Added: We do not know how close any of our current and potential competitors are to commercializing their similar products and services, if at all, nor what they intend to develop as part of their product roadmaps.
+Added: The already competitive landscape of the thermal infrared technology market, along with both foreseeable and unforeseeable entries of competitors and similar technology from those competitors in our target markets, may result in pricing pressure, reduced margins and may impede our ability to increase the sales of our products or cause us to lose market share, any of which will adversely affect its business, results of operations and financial condition.
+Added: Our manufacturing costs may increase and result in a market price for our products above the price that customers are willing to pay.
+Added: If the cost of manufacturing our products increases, we will be forced to charge our customers a higher price for the products in order to cover our costs and earn a profit.
+Added: While we expect our products will benefit from continued cost reduction over time from scale and planned redesigns, there is no guarantee that these efforts will be successful, or that these savings would not be offset by additional required content.
+Added: If the price of our products is too high, customers may be reluctant to purchase its products, especially if lower priced alternative products are available, and we may not be able to sell our products in sufficient volumes to recover our costs of development and manufacture or to earn a profit.
+Added: We, our contract manufacturers and our suppliers may rely on complex machinery for production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
+Added: We, our contract manufacturers and our suppliers may rely on complex machinery for the production, assembly and installation of our devices, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs.
+Added: Our production facilities and the facilities of our contract manufacturers and suppliers may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed.
+Added: Unexpected malfunctions of these components may significantly affect the intended operational efficiency.
+Added: Operational performance and costs can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters.
+Added: Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, prospects, financial condition or operating results.
+Added: If we do not maintain the correct level of inventory or if we do not adequately manage our inventory, we could lose sales or incur higher inventory-related expenses, which could negatively affect our operating results.
+Added: To ensure the correct level of inventory supply, we forecast inventory needs and expenses, places orders sufficiently in advance with its suppliers and manufacturing partners and manufactures products based on our estimates of future demand.
+Added: Fluctuations in the adoption of our products may affect our ability to forecast our future operating results, including revenue, gross margins, cash flows and profitability.
+Added: Our ability to accurately forecast demand for our products could be affected by many factors, including the rapidly changing nature of its current target markets, the uncertainty surrounding the market acceptance and commercialization of its technology, the emergence of new markets, an increase or decrease in customer demand for its products or for products and services of its competitors, product introductions by competitors, health epidemics and outbreaks, and any associated work stoppages or interruptions, unanticipated changes in general market conditions and the weakening of economic conditions or consumer confidence in future economic conditions.
+Added: We may face challenges acquiring adequate supplies to manufacture our products and we and our partners may not be able to manufacture our products at a rate necessary to satisfy the levels of demand, which would negatively affect our short-term and long-term growth.
+Added: This risk may be exacerbated by the fact that we may not carry or be able to obtain from our suppliers a significant amount of inventory to satisfy short-term demand increases.
+Added: If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products available for sale.
+Added: Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect our financial results, including our gross margin, and have a negative effect on our brand.
+Added: Conversely, if we underestimate customer demand for our products, we may not be able to deliver products to meet our requirements, and this could result in damage to our brand and customer relationships and adversely affect our revenue and operating results.
+Added: Risks Related to Our Growth Strategy
+Added: We will need to raise additional capital in the future in order to execute our business plan, which may not be available on terms acceptable to us, or at all.
+Added: We will require additional capital in order to execute on our business plan and may additionally require capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and may determine to engage in equity or debt financings or enter into credit facilities for other reasons.
+Added: In order to stay on our growth trajectory and further business relationships with current or potential customers or partners, or for other reasons, we may issue equity or equity-linked securities to such current or potential customers or partners.
+Added: We may not be able to timely secure additional debt or equity financing on favorable terms, or at all.
+Added: If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities or if we issue equity or equity-linked securities to current or potential customers to further business relationships, our existing stockholders could experience significant dilution.
+Added: Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
+Added: If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited and our business could be materially and adversely affected.
+Added: We create innovative technology by designing and developing unique hardware and software solutions.
+Added: A failure to achieve scale may affect our ability to sell at competitive prices, limit our customer base or lead to losses.
+Added: We incur significant costs related to procuring the materials and components required to manufacture and assemble its high-performance products as well as related to designing and developing our software solutions.
+Added: If our product sales do not increase as planned, or if our SaaS offerings are not sufficiently adopted by our customers, we may be unable to obtain anticipated material cost benefits or expected levels of fixed cost absorption that are needed to achieve its targeted margins and its operating results, business and prospects will be harmed.
+Added: Furthermore, many of the factors that impact our operating costs are beyond its control.
+Added: For example, the costs of our materials and components could increase due to shortages as global demand for these products increases or the cost of maintaining our proprietary SaaS cloud could increase.
+Added: The manufacture of our products is a complex process, and it is often difficult for companies to achieve acceptable product yields that could decrease available supply and increase costs.
+Added: Thermal imaging system yields depend on both our product design and manufacturing processes.
+Added: Because low yields may result from either design defects or process difficulties, we may not identify yield problems until well into the production cycle, when an actual product defect exists and can be analyzed and tested.
+Added: In addition, many of these yield problems are difficult to diagnose and time consuming or expensive to remedy.
+Added: If we are not able to effectively grow our sales and marketing organization, or maintain or grow an effective network of distributors, our business prospects, results of operations and financial condition could be adversely affected.
+Added: In order to generate future sales growth, we will need to expand the size and geographic coverage of our field organization, including marketing, direct sales, customer support and technical services.
+Added: Accordingly, our future success will depend largely on our ability to hire, train, retain, and motivate skilled regional sales managers and direct sales representatives with significant technical knowledge and understanding of our products.
+Added: Because of the competition for their skill set, we may not be able to attract or retain such personnel on reasonable terms, if at all.
+Added: If we are unable to grow our sales and marketing organization, we may not be able to increase our revenue, which would adversely affect our business, financial condition and results of operations.
+Added: Additionally, we rely on a network of independent distributors to help generate sales of our products.
+Added: If a dispute arises with a distributor, if we terminate our relationship with a distributor or if a distributor goes out of business, it may take time to identify an alternative distributor, to train new personnel to market our products, and our ability to sell those products in a region formerly serviced by a terminated distributor could be harmed.
+Added: In addition, our distributors may not successfully market and sell our products and may not devote sufficient time and resources that we believe are necessary to enable our products to develop, achieve or sustain market acceptance.
+Added: Any of these factors could reduce our revenue or impair our revenue growth in affected markets, increase our costs in those markets or damage our reputation.
+Added: In addition, if an independent distributor were to depart and be retained by one of our competitors, we may be unable to prevent that distributor from soliciting business from our existing customers, which could further adversely affect us.
+Added: As a result of our reliance on third-party distributors, we may be subject to disruptions and increased costs due to factors beyond our control, including labor strikes, third-party errors and other issues.
+Added: If the services of any of these third-party distributors become unsatisfactory, we may experience delays in meeting our customers’ demands and we may be unable to find a suitable replacement on a timely basis or on commercially reasonable terms.
+Added: Any failure to deliver products in a timely manner may damage our reputation and could cause us to lose potential customers.
+Added: If we engage in acquisitions to grow our business, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
+Added: If appropriate opportunities become available, we may seek to acquire businesses, assets, technologies or products to enhance our business.
+Added: In connection with any acquisitions, we could issue additional equity securities, which would dilute our stockholders, incur substantial debt to fund the acquisitions or assume significant liabilities.
+Added: Acquisitions involve many diverse risks and uncertainties, including problems evaluating or integrating the purchased operations, assets, technologies or products, as well as with unanticipated costs, liabilities, and economic, political, legal and regulatory challenges due to our inexperience operating in new regions or countries and we may fail to successfully integrate acquired companies or retain key personnel from the acquired company.
+Added: To date, we have limited experience with acquisitions and the integration of acquired technology and personnel.
+Added: Acquisitions may divert our attention from its core business.
+Added: Acquisitions may require us to record goodwill and non-amortizable intangible assets that will be subject to testing on a regular basis and potential period impairment charges, incur amortization expenses related to certain intangible assets, and incur write offs and restructuring and other related expenses, any of which could harm our operating results and financial condition.
+Added: New business strategies, especially those involving acquisitions, are inherently risky and may not be successful.
+Added: Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations.
+Added: We cannot guarantee we will optimally manage our lines of business or product lines.
+Added: Consistent with our strategy to emphasize growth in our core markets, we continually evaluate our businesses to ensure that they are aligned with our strategy and objectives.
+Added: Over the years, we have also reorganized certain of our product lines, for example, to de-emphasize products used primarily for biorisk applications as the impact of the global COVID-19 pandemic began to lessen, among other reasons.
+Added: We may not be able to realize efficiencies and cost savings from our reorganization activities.
+Added: There is no assurance that our efforts will be successful.
+Added: If we do not successfully manage our lines of business or product lines, or any other similar activities that we may undertake in the future, expected efficiencies and benefits might be delayed or not realized, and our operations and business could be disrupted.
+Added: Our ability to dispose of, exit or reconfigure businesses that may no longer be aligned with our growth strategy will depend on many factors, including the terms and conditions of any asset purchase and sale agreement or lease agreement, as well as industry, business and economic conditions.
+Added: We cannot provide any assurance that we will be able to sell non-strategic businesses on terms that are acceptable to us, or at all.
+Added: In addition, if the sale of any non-strategic business cannot be consummated or is not practical, alternative courses of action, including relocation of product lines or closure, may not be available to us or may be more costly than anticipated.
+Added: Risks Related to Our Customers and Suppliers
+Added: Certain of our commercial contracts with our customers, agreements with suppliers or co-development agreements with partners could be terminated or may not materialize into long-term contract partnership arrangements.
+Added: We have commercial contracts with our customers, agreements with suppliers and co-development agreements with partners.
+Added: Some of these arrangements are evidenced by memorandums of understandings, letters of intent or onboarding arrangements, each of which will require further negotiation at later stages of development to include additional terms relating to pricing, volume and payment terms, or replacement by production or master agreements that have yet to be implemented under separately negotiated statements of work, each of which could be terminated or might not materialize into next-stage contracts or long-term contract partnership arrangements.
+Added: If these arrangements are terminated or if we are unable to enter into next-stage contracts or long-term operational contracts, or if these arrangements get delayed or postponed, our business, prospects, financial condition and operating results may be materially adversely affected.
+Added: These arrangements may also be subject to renegotiation, which may affect product pricing or operating expenses.
+Added: Therefore, even if we are successful in entering into long-term contract partnership arrangements, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular product or technology package for which we are a significant supplier or an unfavorable adjustment in terms could mean that the expected sales of our products, or cost of inputs, will not materialize on the expected timeline or terms or will be less favorable than anticipated, potentially materially and adversely affecting our business and prospects.
+Added: The loss of large customers could result in a material adverse effect to our financial results.
+Added: For the years ended December 31, 2023 and 2022, our top customers represented approximately 44% and 17% of our revenue, respectively, which percentages may increase going forward as we continue to grow or develop additional relationships with new large customers.
+Added: The loss of business from our large customers (whether by lower overall demand for our products, cancellation of existing contracts or product orders or the failure to incorporate our product designs or award us new business) could have a material adverse effect on our business.
+Added: There can be no assurance that we will be able to maintain our relationships with our large customers and secure orders for our products.
+Added: If we are unable to maintain our relationships with our large customers, or if arrangements are modified so that the economic terms become less favorable to us, then our business, financial results and position could be materially adversely affected.
+Added: We generate revenue from companies in certain industries that may be subject to significant levels of volatility.
+Added: We generate revenue from companies in certain industries that may be subject to significant levels of volatility, such as the oil and gas industry.
+Added: The oil and gas industry has historically been cyclical and characterized by significant changes in the levels of exploration and development activities, with resulting changes in midstream activities.
+Added: We manufacture products used in the detection of gas or liquid leaks, monitoring of tank levels and flares, detection of pipeline leaks and safety monitoring of gas processing activities.
+Added: When crude oil and natural gas prices are low, the level of midstream oil and gas activity typically decreases, potentially resulting in reduced demand for our products used in such activities.
+Added: In addition, a decline in the level of capital spending by oil and natural gas companies may result in a reduced rate of development of new energy reserves, which could adversely affect demand for our products related to energy production, and, in certain instances, result in the cancellation, modification or rescheduling of existing orders and a reduction in customer-funded research and development related to next generation products.
+Added: Other of our end markets are similarly subject to potential volatility, including as a result of general economic factors.
+Added: We are exposed to credit risk on our trade accounts receivable, supplier non-trade receivables, prepayments to manufacturers and software as a service subscription agreements, and this risk is heightened during periods when economic conditions worsen.
+Added: We sell certain of our products directly to small and mid-sized businesses and other customers.
+Added: Our outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements or credit insurance.
+Added: Our exposure to credit and collectability risk on our trade receivables is higher in certain markets and our ability to mitigate such risks may be limited.
+Added: If one or more of our major customers would be unable to pay our invoices as they become due or a customer simply refuses to make such payments if it experiences financial difficulties, our business would be adversely affected.
+Added: If a major customer were to enter into bankruptcy proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of legal or other modification, we could be forced to record a substantial loss.
+Added: We also have unsecured supplier non-trade receivables resulting from purchases of components by contract manufacturers and other vendors that manufacture sub-assemblies or assemble final products for us.
+Added: In addition, from time to time, we may make prepayments associated with long-term supply agreements to secure supply of inventory components.
+Added: While we are implementing procedures to monitor and limit exposure to credit risk on our trade and supplier non-trade receivables, there can be no assurance such procedures will effectively limit our credit risk and avoid losses.
+Added: We may not be able to anticipate changing customer and consumer preferences or respond quickly enough to changes in technology and standards to be able to develop and introduce commercially viable products.
+Added: Our ability to maintain and improve existing products, anticipate changes in technology, regulatory and other standards, and to successfully develop and introduce new and enhanced technologies and products on a timely basis will be a significant factor in our ability to be competitive and gain market acceptance.
+Added: If we are unsuccessful or less successful than our competitors in predicting the course of market development, developing innovative products, processes, and/or use of materials, or adapting to new technologies or evolving regulatory, industry or customer requirements, we will suffer from a competitive disadvantage.
+Added: We may need to adjust our strategy and projected timelines based on how certain technological challenges evolve over time.
+Added: There is a risk that these challenges will not be overcome, and that our investments in research and developments initiatives will not lead to successful new products and a corresponding increase in revenue, which could have a material adverse effect on our business, results of operations and financial condition.
+Added: We currently target many customers that are large corporations with substantial negotiating power and exacting product standards.
+Added: Many of our current and potential customers are large corporations that often possess significant leverage over their suppliers, and can successfully demand contract terms favorable to themselves, such as reserving the right to terminate their supply contracts for convenience.
+Added: This disparate power has required, and may require in the future, that we accept less favorable contract terms.
+Added: These large corporations also have exacting technical specifications and requirements that we may be unable to meet, thereby precluding its ability to secure sales.
+Added: Meeting the technical requirements to secure and maintain significant contracts with any of these companies will require a substantial investment of our time and resources, and if we fail to comply with our customers’ technical specifications and standards, we may lose existing and future business.
+Added: Even when we succeed in securing contracts, these large companies have been and may continue to be uncertain about their technical specifications for our products and terminate its agreement or make a later determination that our products are not satisfactory.
+Added: We therefore have no assurance that we can establish relationships with these companies, that our products will meet the needs of these or other companies, or that a contract with these companies will culminate in significant, or any, product sales.
+Added: Even when we secure agreements with these companies, we may not be effective in negotiating contract terms or managing such relationships, which could adversely affect our future results of operations.
+Added: Furthermore, in some instances, these large companies may have internally developed products and solutions that are competitive to our products.
+Added: These companies may have substantial research and development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies.
+Added: Such activities may foreclose significant sales opportunities for our products.
+Added: Our revenue from U.S.
+Added: government contracts depends on the continued availability of funding from the U.S.
+Added: government, and, accordingly, we have the risk that funding for our existing contracts may be canceled or diverted to other uses or delayed or that funding for new programs will not be available.
+Added: We have performed, and may in the future perform, work on contracts with the Department of Health and Human Services and other federal agencies and departments of the U.S.
+Added: government, including subcontracts with government prime contractors.
+Added: Sales under contracts with the U.S.
+Added: government, including sales under contracts with an agency or department acting as prime contractor or subcontractor, represented approximately 2.5% and 5.2% of our total revenue for the years ended December 31, 2023 and 2022, respectively.
+Added: Performance under government contracts has inherent risks that could have a negative effect on our business, results of operations, and financial condition.
+Added: Government contracts are conditioned upon the continuing availability of congressional appropriations and the failure of Congress to appropriate funds for programs in which we participate could negatively affect our results of operations.
+Added: government shutdowns have resulted in delays in anticipated contract awards and delayed payments of invoices for several of its businesses and any new shutdown could have similar or worse effects.
+Added: The failure by Congress to approve future budgets on a timely basis could delay procurement of our products and services and cause us to lose future revenues.
+Added: Any renewed emphasis on federal deficit and debt reduction could lead to a further decrease in overall defense spending.
+Added: Budgetary concerns could result in future contracts being awarded more on price than on other competitive factors, and smaller budgets could result in government in-sourcing of programs and more intense competition on programs that are not in-sourced, which could result in lower revenues and profits.
+Added: Also, government spending does not necessarily correlate to continued business for us, because not all of the programs in which we have participated, or may participate, or have current capabilities may be provided with continued funding.
+Added: It is also not uncommon for the U.S.
+Added: government to delay the timing of awards or change orders for major programs for six to twelve months.
+Added: These delays by the U.S.
+Added: government could impact our revenues.
+Added: Uncertainty over budgets or priorities with the U.S.
+Added: presidential administration could result in further delays in funding and the timing of awards, and changes in funded programs that could have a material impact on our revenues.
+Added: government operation under a continuing resolution could impact the business by preventing new programs from starting as planned and by limiting funding on existing programs.
+Added: A significant shift in U.S.
+Added: government priorities related to programs and acquisition strategies could have a material impact to our financial results.
+Added: Termination for convenience provisions provides only for the recovery of costs incurred or committed, settlement expenses, and profit on work completed prior to termination.
+Added: Termination for default clauses imposes liability on the contractor for excess costs incurred by the U.S.
+Added: government in re-procuring undelivered items from another source.
+Added: Our suppliers could raise prices on key components, which may adversely affect our profitability.
+Added: Significant increases in the cost of certain components used in our products, to the extent they are not timely reflected in the price we charge our customers, could materially and adversely impact our results.
+Added: For example, we have experienced significant increases in prices for certain electronic components, as well as significantly increased lead times.
+Added: We sought to address these increases by carrying safety stock of critical components on deposit with our suppliers, evaluating alternative components, suppliers and processes, reviewing component substitution opportunities, and aggressively negotiating larger quantities with our vendors to ensure adequate supply.
+Added: Certain of our key component manufacturers and suppliers have the ability, in our contracts, to periodically increase their prices.
+Added: Accordingly, we cannot assure that it will not face increased prices in the future or, if we do, whether we will be effective in containing margin pressures from any further component price increases.
+Added: Key components in our products come from limited or single source third party suppliers.
+Added: Interruptions in our relationships with these third parties could adversely impact our business.
+Added: We rely on third parties to supply key components of our products.
+Added: If any of our major third-party component suppliers experience interruptions, delays or disruptions in supplying their products or services, including by natural disasters, health epidemics and outbreaks, or work stoppages or capacity constraints, our ability to ship products to distributors and customers may be delayed.
+Added: In addition, unfavorable economic conditions could result in financial distress among third-party suppliers upon which we rely, thereby increasing the risk of disruption of supplies necessary to fulfill our production requirements and meet customer demands.
+Added: Additionally, if any of these third parties on whom we rely were to experience quality control problems in their operations and our products do not meet customer or regulatory requirements, we could be required to cover the cost of repair or replacement of any defective products.
+Added: These delays or product quality issues could have an immediate and material adverse effect on our ability to fulfill orders and could have a negative effect on our operating results.
+Added: In addition, such delays or issues with product quality could adversely affect our reputation and our relationship with our customers and distributors.
+Added: If these third parties experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, our supply may be disrupted, we may be required to seek alternate suppliers and we may be required to re-design our products.
+Added: It would be time-consuming, and could be costly and impracticable, to begin to use new suppliers and such changes could cause significant interruptions in supply.
+Added: Such changes could also have an adverse effect on our ability to meet our scheduled product deliveries and may subsequently lead to the loss of sales.
+Added: While we take measures to protect our trade secrets, the use of third-party suppliers may also risk disclosure of our innovative and proprietary manufacturing methodologies, which could adversely affect our business.
+Added: We believe there are a limited number of competent, high-quality suppliers in the industry that meet our strict quality and control standards, and as we seek to obtain additional or alternative supplier arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all.
+Added: Our suppliers could also discontinue or modify components used in our products.
+Added: In some cases, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules.
+Added: Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to meet our requirements or to fill customer orders in a timely manner.
+Added: Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect our ability to meet our scheduled product deliveries to our customers.
+Added: This could adversely affect our relationships with customers and distributors and could cause delays in shipment of our products and adversely affect our operating results.
+Added: Risks Related to Our Products
+Added: Components used in our sensors may fail as a result of manufacturing, design or other defects over which we have no control and render our devices permanently inoperable.
+Added: We rely on third-party component suppliers to provide certain functionalities needed for the operation and use of our devices.
+Added: Any errors or defects in such third-party technology could result in errors in our sensors that could harm our business.
+Added: If these components have a manufacturing, design or other defect, they can cause our sensors to fail and render them permanently inoperable.
+Added: As a result, we may have to replace these sensors at our sole cost and expense.
+Added: Should we have a widespread problem of this kind, our reputation in the market could be adversely affected and our replacement of these sensors would harm our business.
+Added: Product integration could face complications or unpredictable difficulties, which may adversely impact customer adoption of our products and our financial performance.
+Added: Our products are typically integrated into customer workflows, applications and other technology solutions.
+Added: Required integration efforts can be time-consuming and costly and there is no guarantee that results will be satisfactory to the end customer.
+Added: While we work with system integrators that lend their experience to these workstreams, there is no guarantee that unforeseen delays or setback would not arise that would impair our ability to launch with key programs across our sectors of focus.
+Added: In addition to the technical risks of integrating our products into our customers’ workflows, applications and other technology solutions, our customers must be comfortable with the cybersecurity and software integrity of our products, including the SmartIR system.
+Added: Our customers must also be comfortable that the integration of our products will not disrupt our supply chain operations, which are typically continuous in nature.
+Added: The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors or reliability issues in hardware or software that could reduce the market adoption of our new products, damage our reputation with current or prospective customers, expose us to product liability and other claims and adversely affect our operating costs.
+Added: Our products are highly technical and very complex.
+Added: They require high standards to manufacture and have in the past, and will likely in the future, experience defects, errors or reliability issues at various stages of development.
+Added: We may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct such problems to our customers’ satisfaction.
+Added: Additionally, undetected errors, defects or reliability issues, especially as new products are introduced or as new versions are released, could result in serious injury to the end users of technology incorporating our products, or those in the surrounding area, our customers never being able to commercialize technology incorporating our products, litigation against us, negative publicity and other consequences.
+Added: Some errors or defects in our products may only be discovered after they have been tested, commercialized and deployed by customers.
+Added: If that is the case, we may incur significant additional development costs and product recall, repair or replacement costs.
+Added: These problems may also result in claims, including class actions, against us by its customers or others.
+Added: Our reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy our products, which could adversely affect our ability to retain existing customers and attract new customers and could adversely affect our financial results.
+Added: In addition, we could face material legal claims for breach of contract, product liability, fraud, tort or breach of warranty as a result of these problems.
+Added: Defending a lawsuit, regardless of its merit, could be costly and may divert management’s attention and adversely affect the market’s perception of us and our products.
+Added: In addition, our business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all.
+Added: These product-related issues could result in claims against us and our business could be adversely affected.
+Added: The markets in which we compete are characterized by technological change, which requires us to continue to develop new products and product innovations and could adversely affect market adoption of our products.
+Added: While we intend to invest substantial resources to remain on the forefront of technological development, continuing technological changes in sensing technology and the markets for these products could adversely affect adoption of our products, either generally or for particular applications.
+Added: Our future success will depend upon our ability to develop and introduce a variety of new capabilities and innovations to our existing product offerings, as well as introduce a variety of new product offerings, to address the changing needs of the markets in which we offer our products.
+Added: Delays in delivering new products that meet customer requirements could damage our relationships with customers and lead them to seek alternative sources of supply.
+Added: Delays in introducing products and innovations, the failure to choose correctly among technical alternatives or the failure to offer innovative products or configurations at competitive prices may cause existing and potential customers to purchase our competitors’ products or turn to alternative sensing technology.
+Added: If we are unable to devote adequate resources to develop products or cannot otherwise successfully develop products or system configurations that meet customer requirements on a timely basis or that remain competitive with technological alternatives, our products could lose market share, our revenue will decline, we may experience operating losses and our business and prospects will be adversely affected.
+Added: We may incur significant direct or indirect liabilities in connection with its product warranties which could adversely affect our business and operating results.
+Added: We typically offer a limited product warranty that requires our products to conform to the applicable specifications and be free from defects in materials and workmanship for a limited warranty period.
+Added: As a result of increased competition and changing standards in our target markets, it may be required to increase our warranty period length and the scope of our warranty.
+Added: To be competitive, we may be required to implement these increases before we are able to determine the economic impact of an increase.
+Added: Accordingly, we may be at risk that any such warranty increase could result in foreseeable and unforeseeable losses.
+Added: In particular, the usage of our products by target customers could make us liable for warranty claims and pecuniary and reputational damages.
+Added: In our target markets, our products may be placed in physical locations and environments that present harsh operating conditions, or that present a risk of product damage due to accidents or vandalism.
+Added: This may result in more product failures than we anticipate, and may require us to provide warranties for our products beyond our knowledge of their performance.
+Added: This could increase the rate of customer returns and warranty claims, resulting in higher than expected operating costs for us.
+Added: Product failures may also affect market acceptance of our products and our ability to win future business.
+Added: Any negative publicity related to the perceived quality of our products could affect our brand image, partner and customer demand, and adversely affect our operating results and financial condition.
+Added: Risks Related to Our Financial Statements and Accounting
+Added: Our history of net losses, negative cash flows from operations and negative net working capital raise substantial doubt about our ability to continue as a going concern.
+Added: We have experienced recurring net losses, negative cash flows from operations and negative net working capital.
+Added: We may continue to incur losses or limited income in the future.
+Added: As a result, in connection with the preparation of the audited consolidated financial statements for the year ended December 31, 2023 we have included in this Annual Report on Form 10-K, we determined that there was substantial doubt about our ability to continue as a going concern for a period of 12 months.
+Added: In response to these conditions, our plans to obtain additional liquidity include:
+Added: raising additional funds from investors (in the form of debt, equity or equity-like instruments), and continuing to manage operating expenses.
+Added: Our future capital requirements will depend on many factors, including:
+Added: ● the timing, receipt and amount of sales from our current and future products and services;
+Added: ● the cost and timing of expanding our sales, marketing and distribution capabilities;
+Added: ● the terms and timing of any other partnership, licensing and other arrangements that we may establish;
+Added: ● the expenses needed to attract, hire and retain skilled personnel;
+Added: ● the costs associated with being a public company;
+Added: ● the impact of macroeconomic events, such as inflation, recessions or depressions;
+Added: ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio;
+Added: ● the extent to which we acquire or invest in businesses, products or technologies.
+Added: We may seek funds through borrowings or through additional rounds of financing, including private or public equity or debt offerings, or by other means.
+Added: However, these plans are subject to market conditions, and are not within our control, and therefore, cannot be deemed probable.
+Added: There is no assurance that we will be successful in implementing these plans.
+Added: If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity preferred securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.
+Added: Any debt financing, if available, may involve restrictive covenants and could reduce our operational flexibility or profitability.
+Added: If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, financial condition and results of operations could be materially adversely affected.
+Added: Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
+Added: Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
+Added: Our financial results may fluctuate as a result of a variety of factors, including:
+Added: ● the timing of ultimate end market and customer adoption of our products and particular versions of our products;
+Added: ● the varying length of time required for our customers to integrate its products into their broader platforms;
+Added: ● supply chain constraints and considerations and impacts on our costs of goods sold, such as shortages of semiconductor chips;
+Added: ● our product mix and average selling prices, including negotiated selling prices and long-term strategic customer agreements;
+Added: ● the cost of raw materials or supplied components critical for the manufacture of our products;
+Added: ● the timing and cost of, and level of investment in, research and development relating to our thermal infrared technology and related software;
+Added: ● developments involving our competitors;
+Added: ● changes in governmental regulations affecting us or applications in which our customers use our products;
+Added: ● future accounting pronouncements or changes in our accounting policies;
+Added: ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
+Added: Many of these factors are outside of our control and may not fully reflect the underlying performance of our business.
+Added: The individual or cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results.
+Added: As a result, comparing our operating results on a period-to-period basis may not be meaningful.
+Added: This variability and unpredictability could also result in failure to meet the expectations of industry or financial analysts or investors for any period.
+Added: If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our common stock could decline substantially.
+Added: Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.
+Added: If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.
+Added: We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, and the rules and regulations of Nasdaq.
+Added: We expect that the requirements of these rules and regulations will increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly and place significant strain on our personnel, systems, and resources.
+Added: The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: We are continuing to establish, develop and refine its disclosure controls, internal control over financial reporting, and other procedures that are designed to ensure that information required to be disclosed in the reports that we will file with the SEC are recorded, processed, summarized, and reported within the time periods specified in the rules of and on the forms required by the SEC, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
+Added: In connection with the preparation of the audited consolidated financial statements for the years ended December 31, 2023 and 2022, we identified material weaknesses in our internal controls over financial reporting.
+Added: Specifically, these weaknesses related to having an insufficient number of personnel with an appropriate degree of accounting and internal controls knowledge, experience and training to appropriately analyze, record and disclose accounting matters commensurate with its accounting and reporting requirements, which resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives.
+Added: “Controls and Procedures” in Part II of this Annual Report on Form 10-K.
+Added: Any new controls that we develop may be inadequate because of changes in conditions in our business.
+Added: Further, additional weaknesses in our internal controls may be discovered in the future.
+Added: Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect our operating results or cause us to fail to meet our reporting obligations, and may result in a restatement of our financial statements for prior periods.
+Added: Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in the periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act.
+Added: Ineffective disclosure controls and procedures and a lack of internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information.
+Added: In order to maintain and improve the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and provide significant management oversight.
+Added: Any failure to maintain the adequacy of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially and adversely affect our ability to operate our business.
+Added: If our internal controls are perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results.
+Added: Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an emerging growth company or smaller reporting company.
+Added: At such time, our independent registered public accounting firm may issue a report that is adverse in the event we are not satisfied with the level at which our controls are documented, designed, or operating.
+Added: Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results.
+Added: Since many of the markets in which we compete are new and rapidly evolving, it is difficult to forecast long-term end-customer adoption rates and demand for our products.
+Added: We are pursuing opportunities in markets that are undergoing rapid changes, including technological and regulatory changes, and it is difficult to predict the timing and size of the opportunities.
+Added: We are in the process of developing necessary relationships with commercial partners that may not result in the commercialization of our technology immediately, or at all.
+Added: Regulatory, safety or reliability developments, many of which are outside of our control, could also cause delays or otherwise impair commercial adoption of these new technologies, which will adversely affect our growth.
+Added: Our future financial performance will depend on our ability to make timely investments in emerging market opportunities.
+Added: If one or more of these markets experience a shift in customer or prospective customer demand, our products may not compete as effectively, if at all, and they may not be designed into commercialized products.
+Added: Given the evolving nature of the markets in which we operate, it is difficult to predict customer demand or adoption rates for our products or the future growth of these markets.
+Added: If demand does not develop or if we cannot accurately forecast customer demand, the size or timing of our markets, inventory requirements, or our future financial results, our business, results of operations, and financial condition will be adversely affected.
+Added: Our estimate of total addressable market is subject to numerous uncertainties.
+Added: If we have overestimated the size of our total addressable market now or in the future, our future growth rate may be limited.
+Added: Our estimates of total addressable market are based on a combination of the total number of estimated potential customers in a given market, our expectations regarding the scope of potential use cases for our thermal infrared technology solutions in such markets, our estimates of average selling prices for our products in those markets and the potential opportunity for software solutions to increase the utility of thermal infrared technology solutions.
+Added: We cannot assure you of the accuracy or completeness of our estimates.
+Added: While we believe our market size estimates are reasonable, such information is inherently imprecise.
+Added: If internally-generated data used in our estimates proves to be inaccurate or we make errors in our assumptions based on such data, our actual market may be more limited than our estimates.
+Added: In addition, these inaccuracies or errors may cause us to misallocate capital and other critical business resources, which could harm our business.
+Added: Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.
+Added: Our growth is subject to many factors, including the successful implementation of our business strategy, which is subject to many risks and uncertainties.
+Added: Accordingly, the estimates of our total addressable market included in this Annual Report on Form 10-K should not be taken as indicative of our ability to grow.
+Added: We are exposed to the risk of write-downs on the value of our inventory and other assets, in addition to purchase commitment cancellation risk.
+Added: We write down our inventories that exceed anticipated demand, or for which cost exceeds net realizable value.
+Added: We review long-lived assets, including capital assets held at our suppliers’ facilities, for impairment whenever events or circumstances indicate the assets may not be recoverable.
+Added: If we determine that an impairment has occurred, we record a write-down equal to the amount by which the carrying value of the asset exceeds its fair value.
+Added: For example, we recorded an inventory write-down of $1.7 million, which was charged to costs of goods sold in the Consolidated Statements of Operations for the year ended December 31, 2023, related to products that are not expected to be sold in one year based on customer demand and current market conditions.
+Added: Although we believe that our remaining inventory, capital assets, and other assets and purchase commitments are currently recoverable, no assurance can be given that we will not incur write-downs, fees, impairments and other charges.
+Added: We order components for our products and build inventory in advance of product manufacturing and shipments.
+Added: Because our target markets are volatile, competitive and subject to rapid technology and price changes, and because we have limited sales history in certain new end-markets, there is a risk we will forecast incorrectly and order or produce excess or insufficient amounts of components or products or not fully utilize our purchase commitments.
+Added: Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
+Added: As of December 31, 2023, we had $16.8 million of U.S.
+Added: federal net operating loss carryforwards available to reduce future taxable income.
+Added: federal operating loss carryforwards will be carried forward indefinitely for U.S.
+Added: federal tax purposes.
+Added: Of MSAI’s U.S.
+Added: state net operating loss carryforwards, the earliest that any will expire is 2027.
+Added: It is possible that MSAI will not generate taxable income in time to use these net operating loss carryforwards before their expiration (or that it will not generate taxable income at all).
+Added: Under legislative changes made in December 2017, U.S.
+Added: federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such net operating losses is limited.
+Added: It is uncertain if and to what extent various states will conform to these in federal tax laws.
+Added: In addition, our federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the Code, respectively, and similar provisions of state law.
+Added: Under those sections of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited.
+Added: In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period.
+Added: Similar rules may apply under state tax laws.
+Added: There has been no limitation or loss of net operating losses or tax credits as of December 31, 2023.
+Added: It has been determined that the Business Combination did not give rise to an “ownership change” for purposes of Section 382 and Section 383 of the Code.
+Added: However, we may experience an ownership change in the future as a result of subsequent shifts in our stock ownership (some of which shifts are outside of our control).
+Added: As a result, our ability to use our pre-change federal NOLs and other tax attributes to offset future taxable income and taxes could be subject to limitations.
+Added: For these reasons, we may be unable to use a material portion of our NOLs and other tax attributes, which could adversely affect our future net income and cash flows.
+Added: Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.
+Added: We are subject to income taxes in the United States, and our tax liabilities are subject to the allocation of expenses in differing jurisdictions.
+Added: Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
+Added: ● changes in the valuation of our deferred tax assets and liabilities;
+Added: ● expected timing and amount of the release of any tax valuation allowances;
+Added: ● tax effects of share-based compensation;
+Added: ● costs related to intercompany restructurings;
+Added: ● changes in tax laws, regulations or interpretations thereof;
+Added: ● lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
+Added: In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities.
+Added: Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
+Added: Risks Related to Our Intellectual Property, Information Technology and Cybersecurity
+Added: We are subject to cybersecurity risks to operational systems, security systems, infrastructure, firmware in our thermal infrared technology and customer data processed by us or third-party vendors or suppliers and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent us from effectively operating our business.
+Added: We have experienced and expect to continue to experience actual and attempted cyberattacks of our IT networks, such as through phishing scams and ransomware.
+Added: Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the future.
+Added: For example, we are at risk for interruptions, outages and breaches of:
+Added: operational systems, including business, financial, accounting, product development, data processing or production processes, owned by us or our third-party vendors or suppliers;
+Added: facility security systems, owned by us or our third-party vendors or suppliers;
+Added: in-product technology owned by us or our third-party vendors or suppliers;
+Added: the integrated software in our thermal infrared solutions;
+Added: or customer data that we process or our third-party vendors or suppliers process on our behalf.
+Added: Such cyber incidents could materially disrupt operational systems;
+Added: result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information;
+Added: compromise certain information of customers, employees, suppliers, or others;
+Added: jeopardize the security of our facilities;
+Added: or affect the performance of in-product technology and the integrated software in its thermal infrared solutions.
+Added: A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state-supported actors) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, trickery or other forms of deception.
+Added: The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time.
+Added: Although we maintain information technology measures designed to protect us against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and it cannot guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents.
+Added: The implementation, maintenance, segregation and improvement of these systems requires significant management time, support and cost.
+Added: Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including the disruption of our data management, procurement, production execution, finance, supply chain and sales and service processes.
+Added: These risks may affect our ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and service its solutions, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts.
+Added: We cannot be sure that the systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned.
+Added: If we do not successfully implement, maintain or expand these systems as planned, our operations may be disrupted, our ability to accurately and timely report our financial results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to certify our financial results.
+Added: Moreover, our proprietary information or intellectual property could be compromised or misappropriated and our reputation may be adversely affected.
+Added: If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
+Added: A significant cyber incident could impact production capability, harm our reputation, cause us to breach its contracts with other parties or subject us to regulatory actions or litigation, any of which could materially affect its business, prospects, financial condition and operating results.
+Added: In addition, our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of a cyber-incident.
+Added: Any problems with our third-party cloud hosting providers, whether due to cyber security failures or other causes, could result in lengthy interruptions in our business.
+Added: Furthermore, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
+Added: Our intellectual property applications may not issue or be registered, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
+Added: We cannot be certain that we are the first inventor of the subject matter to which we have filed any particular patent application, or if we are the first party to file such a patent application.
+Added: If another party has filed a patent application to, or otherwise publicly disclosed, subject matter that we are seeking to protect in a given patent application, we may not be entitled to the protection sought by the patent application.
+Added: We also cannot be certain whether the claims included in a patent application will ultimately be granted as an issued patent since the patent office of the jurisdiction in which a patent application is filed may rule that the subject matter we are seeking to patent is not novel or is obvious or otherwise non-inventive or rule that the patent application and/or claims of the patent application do not comply with one or more other requirements of the patent laws of the jurisdiction.
+Added: Further, the scope
+Added: of protection of issued patent claims is often difficult to determine.
+Added: As a result, we cannot be certain that our issued patents will afford protection against competitors with similar technology.
+Added: In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition and operating results.
+Added: Claims that we are infringing third-party intellectual property, whether successful or not, could subject us to costly and time-consuming litigation or expensive licenses, and adversely affect our business.
+Added: Any intellectual property and related contractual litigation, if it is initiated in the future by us or a third party, would result in substantial costs and diversion of management resources, either of which could materially and adversely affect our business, operating results and financial condition.
+Added: Such claims may also divert management resources and attention away from other business efforts and force us to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments that may not be acceptable to us.
+Added: Further, a party making such a claim against us, if successful, could secure a judgment that requires us to pay substantial damages or such a party could obtain an injunction.
+Added: An adverse determination also could invalidate our intellectual property rights and adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense.
+Added: Even if we obtain favorable outcomes in any such litigation, we may not be able to obtain adequate remedies, or may have incurred costs that threaten our financial stability.
+Added: Assertions of our attempts to enforce our rights against third parties could also lead these third parties to assert their own intellectual property or other rights against us or seek invalidation or a narrowed scope of our rights, in whole or in part.
+Added: Any of these events could adversely affect our business, operating results, financial condition and prospects.
+Added: Thermal infrared technology is a heavily populated intellectual property field, in which many companies, both within and outside of the industry, hold patents covering such products and other adjacent technologies.
+Added: In addition to patents, companies in the thermal infrared technology industry typically rely on copyrights and trade secrets to protect their technology.
+Added: As a result, there has been frequent litigation in the thermal infrared technology industry based on allegations of patent infringement, misappropriation or other violations of intellectual property rights.
+Added: We have received, and in the future may receive, inquiries from other intellectual property holders and we may become subject to claims that we infringe others’ intellectual property rights, particularly as our market presence increases, as our products expand to new use cases and geographies, and as we face increasing competition.
+Added: In addition, parties may claim that our name and the branding of our products infringe their trademark rights in certain territories.
+Added: If such a claim were to prevail, we may have to change the names of and branding of our products in the affected territories which would be costly and could cause market confusion.
+Added: Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our services.
+Added: Our products include services and functionality that utilize data connectivity to monitor performance and timely capture opportunities to enhance performance and functionality.
+Added: The availability and effectiveness of our services depend on the continued operation of information technology and communications systems.
+Added: Our systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to harm our systems.
+Added: We utilize reputable third-party service providers or vendors for our data other than our source code, and these providers could also be vulnerable to harms similar to those that could damage our systems, including sabotage and intentional acts of vandalism causing potential disruptions.
+Added: Some of our systems will not be fully redundant, and our disaster recovery planning cannot account for all eventualities.
+Added: Any problems with our third-party cloud hosting providers could result in lengthy interruptions in our business.
+Added: In addition, our product services and functionality are highly technical and complex technology which may contain errors or vulnerabilities that could result in interruptions in our business or the failure of our systems.
+Added: Under certain of our agreements, we are required to provide indemnification in the event our technology is alleged to infringe upon the intellectual property rights of third parties.
+Added: In certain of our agreements, we indemnify our licensees, manufacturing partners and suppliers.
+Added: We could incur significant expenses defending these partners if they are sued for patent infringement based on allegations related to our technology.
+Added: In addition, if a partner were to lose a lawsuit and in turn seek indemnification from us, we could be subject to significant monetary liabilities.
+Added: While such contracts typically give us multiple remedies for addressing instances of infringements, such remedies, such as product modification or the purchase of licenses, could be expensive and difficult to administer.
+Added: We employ third-party licensed software for use in our business, and the inability to maintain these licenses, errors in the software, or the terms of open-source licenses could result in increased costs or reduced service levels, which would adversely affect our business.
+Added: Our business relies on certain third-party software obtained under licenses from other companies.
+Added: We anticipate that we will continue to rely on such third-party software in the future.
+Added: Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, these alternatives may not always be available, or it may be difficult or costly to switch to an alternative.
+Added: In addition, integration of new third-party software may require significant work and require substantial investment of our time and resources.
+Added: Our uses of additional or alternative third-party software would require us to enter into license agreements with third parties, which may not be available on commercially reasonable terms, or at all.
+Added: Many of the risks associated with the use of third-party software cannot be eliminated, and these risks could negatively affect our business.
+Added: Some of the third-party software used by us is licensed under the terms of open-source software licenses.
+Added: Companies that incorporate open-source software into their technologies have, from time to time, faced claims challenging the use of open-source software and/or compliance with open-source license terms.
+Added: As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open-source software or claiming noncompliance with open-source licensing terms.
+Added: Some open-source software licenses require users who distribute such software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open-source code, which could include valuable proprietary code of the user, on unfavorable terms or at no cost.
+Added: While we monitor the use of open-source software and attempt to ensure that open-source software is not used in a manner that would require us to disclose our internally developed source code or that would otherwise breach the terms of an open-source agreement, such use could inadvertently occur.
+Added: The terms of many open-source software licenses have not been interpreted by U.S.
+Added: courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to sell our products.
+Added: Any requirement to disclose our internally developed source code or pay damages for breach of contract could have a material adverse effect on our business, financial condition, and results of operations and could help our competitors develop services that are similar to or better than ours.
+Added: We may not be able to adequately protect or enforce our intellectual property rights or prevent competitors or other unauthorized parties from copying or reverse engineering our technology.
+Added: Our success depends in part on our ability to obtain patents and other intellectual property rights covering our technology and products, and to maintain adequate legal protection for our technology and products in the United States.
+Added: We rely primarily on trade secret protections and, to a lesser extent, on patent, trademark and copyright laws, along with confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protections.
+Added: We can make no assurances whether any of our pending patent applications will mature into issued patents, or that any of our pending trademark applications will be registered, in a manner that gives us any or adequate defensive protection or competitive advantages.
+Added: We also do not know whether any patents issued to us or any trademarks registered by us will not be challenged, invalidated or circumvented.
+Added: Our portfolio of currently-issued patents and registered trademarks, and any patents that may be issued, any copyrights and trademarks that may be registered in the future, may not provide sufficiently broad protections to us, or may not prove to be enforceable in actions against alleged infringers.
+Added: We cannot be certain that the actions we have undertaken to protect our technology and products will prevent unauthorized use of our technology or the reverse engineering of our products.
+Added: Moreover, others may independently develop technologies and products that compete with ours, or infringe our intellectual property.
+Added: We have filed for patents and trademarks in the United States, but such protections may not be available, and we may not have applied for protections in all jurisdictions in which we operate or sell our products.
+Added: Though we may have obtained, or may in the future obtain, intellectual property and related proprietary rights in various jurisdictions, it may prove difficult to enforce our intellectual property rights in practice.
+Added: Discovering and protecting against unauthorized use of our intellectual property, products and other proprietary rights is expensive and difficult.
+Added: We intend to enforce our intellectual property rights.
+Added: Competitors and other unauthorized parties may attempt to copy or reverse engineer our technology and other aspects of our solutions that we consider proprietary.
+Added: Litigation may be necessary in the future to enforce or defend our intellectual property rights, to prevent unauthorized parties from copying or reverse engineering our products, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States or other markets.
+Added: Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage, market share and a decrease in our revenue, which would adversely affect our business, operating results, financial condition and prospects.
+Added: In addition to patented technology, we rely on our unpatented proprietary technology, copyrights, trade secrets, proprietary processes and know-how.
+Added: We rely on proprietary information (including, for example, trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable or subject to copyright or trademark protection, or that we believe is best protected by means that do not require public disclosure.
+Added: We may seek to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors and third parties.
+Added: We may fail, however, to enter into the necessary agreements, and even if properly executed and entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information.
+Added: Additionally, we have limited control over the protection of trade secrets used by our current or future manufacturing partners and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs.
+Added: In addition, our proprietary information may otherwise become known or be independently developed by our competitors or other third parties.
+Added: To the extent that our employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
+Added: Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain protection for our proprietary information could adversely affect our competitive business position.
+Added: Furthermore, laws regarding trade secret rights in certain markets where we operate may afford little or no protection to our trade secrets.
+Added: We also rely on security measures, both physical and electronic, to protect our proprietary information, but we cannot provide assurance that these security measures will not be breached or provide adequate protection for our property.
+Added: There is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage.
+Added: Also, we may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce our proprietary information.
+Added: We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.
+Added: We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of one or more of an employee’s former employers.
+Added: Litigation may be necessary to defend us against these claims.
+Added: If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
+Added: A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could severely harm our business.
+Added: Even if we are successful in defending against any such claims, litigation could result in substantial costs and demand on management resources.
+Added: Risks Related to Our Regulatory Compliance
+Added: If we fail to comply with the laws and regulations relating to the collection of sales tax and payment of income taxes in the various states in which we do business, we could be exposed to unexpected costs, expenses, penalties and fees as a result of our non-compliance, which could harm our business.
+Added: By engaging in business activities in the United States, we become subject to various state laws and regulations, including requirements to collect sales tax from its sales within those states, and the payment of income taxes on revenue generated from activities in those states.
+Added: A successful assertion by one or more states that we were required to collect sales or other taxes or to pay income taxes where we did not could result in substantial tax liabilities, fees and expenses, including substantial interest and penalty charges, which could harm our business.
+Added: government contracting activities are subject to government contracting regulations, including increasingly complex regulations on cybersecurity, and our failure to comply with such laws and regulations could harm our operating results and prospects.
+Added: government contracting activities, like other government contractors, are subject to various audits, reviews and investigations (including private party “whistleblower” lawsuits) relating to our compliance with applicable federal and state laws and regulations.
+Added: More routinely, the U.S.
+Added: government may audit the costs we incur on our U.S.
+Added: government contracts, including allocated indirect costs.
+Added: Such audits could result in adjustments to our contract costs.
+Added: Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed would need to be refunded.
+Added: We have recorded contract revenues based upon costs we expect to realize after final audit.
+Added: In a worst-case scenario, should we be charged with wrongdoing, we could be temporarily suspended or, in the event of a conviction, could be debarred for up to three years from receiving new government contracts or government-approved subcontracts.
+Added: In addition, we could expend substantial amounts defending against such charges and in damages, fines and penalties if such charges were proven or were to result in negotiated settlements.
+Added: Routine audits by U.S.
+Added: government agencies of our various procurement and accounting systems have the potential to result in disapproval of the audited systems by the administrative contracting officer.
+Added: Disapproval could significantly impact cash flow, as up to 10% may be withheld from payments.
+Added: government contracting agencies have adopted rules and regulations requiring contractors to implement a set of cybersecurity measures to attain the safeguarding of contractor systems that process, store, or transmit certain information.
+Added: Implementation and compliance with these cybersecurity requirements is complex and costly, and could result in unforeseen expenses, lower profitability and, in the case of non-compliance, penalties and damages, all of which could have an adverse effect on our business.
+Added: The cybersecurity requirements also impact our supply base which could impact cost, schedule and performance on programs if suppliers do not meet the requirements and therefore, do not qualify to support the programs.
+Added: We are subject to U.S.
+Added: anti-corruption and anti-money laundering laws.
+Added: We can face criminal liability and other serious consequences for violations, which can harm our business.
+Added: We are subject to the U.S.
+Added: Foreign Corrupt Practices Act, the U.S.
+Added: domestic bribery statute contained in 18 U.S.C.
+Added: § 201, the U.S.
+Added: Travel Act, the Money Laundering Control Act 18 U.S.C.
+Added: §§ 1956 and 1957, and other anti-bribery and anti-money laundering laws.
+Added: Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector and failing to prevent bribery, and require that we keep accurate books and records and maintain internal accounting controls designed to prevent any such actions.
+Added: We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other collaborators, even if we do not explicitly authorize or have actual knowledge of such activities.
+Added: Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.
+Added: As we increase our international cross-border business and expand our operations abroad, we may continue to engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses and other regulatory approvals.
+Added: In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.
+Added: We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such
+Added: We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
+Added: As we increase our international business, the risks under these laws may increase.
+Added: Detecting, investigating and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources and attention from management.
+Added: In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences.
+Added: If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results and financial condition could be materially harmed.
+Added: Our products are frequently used in applications that are subject to evolving regulations and standards.
+Added: Our customers may use our products for regulated and standardized applications that require our products to comply with regulations and standards that are applicable to both our products and to those industries and applications, including functional safety and product reliability standards.
+Added: New regulations and industry standards may be adopted that result in delays or cancellations of programs.
+Added: If we decide not to pursue or fail to achieve these regulatory or industry certifications, we may lose existing or potential commercial opportunities or be exposed to legal liability from regulators.
+Added: We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of its products.
+Added: Some of our customers also require that we comply with their own unique requirements relating to these matters.
+Added: We manufacture and sell products that contain components, which may contain materials or capabilities that are subject to government regulation in both the locations where we manufacture and assemble our products, as well as the locations where we sell our products.
+Added: For example, we are subject to U.S.
+Added: Department of Commerce regulations on our high-resolution cameras, which prevents us from selling certain products to certain potential foreign customers.
+Added: Additionally, we are subject to U.S.
+Added: Food and Drug Administration (“FDA”) regulations on certain biorisk products cleared by the FDA under Section 510(k) biorisk products we have sold in the past.
+Added: Manufacturers are required to certify in product labeling and in reports to the FDA that their products comply with applicable performance standards as well as maintain manufacturing, testing, and distribution records for their products.
+Added: Failure to comply with these requirements could result in enforcement action by the FDA, which could require us to cease distribution of such products, recall or remediate products already distributed to customers, or subject us to FDA enforcement.
+Added: Navigating these various regulatory regimes may be a complex process requiring continual monitoring of regulations and an ongoing compliance process to ensure that we and our suppliers are in compliance with existing regulations in each market where we operate.
+Added: If there is an unanticipated new regulation that significantly impacts our uses and sourcing of various components or requires more expensive components, that regulation could materially adversely affect our business, results of operations and financial condition.
+Added: If we are not currently in compliance with existing regulations, or we fail to adhere to new regulations or fail to continually monitor the updates, we may incur costs in remedying its non-compliance and it may disrupt our operations.
+Added: In addition, current or proposed regulations may adversely impact the availability of supplies needed to manufacture our products.
+Added: For example, the U.S.
+Added: Senate has passed a bill to effectively ban all products from China’s Xinjiang province due to concerns that the goods were produced with forced labor, which, if enacted, is expected to have adverse impacts on global supply chains.
+Added: In such circumstances, we may also be subject to litigation, lose customers, suffer negative publicity and our business, results of operations, and financial condition could be adversely affected.
+Added: Failures, or perceived failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate may adversely impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, our policies and operations.
+Added: Our current and potential future operations and sales subject us to laws and regulations addressing privacy and the collection, use, storage, disclosure, transfer and protection of a variety of types of data.
+Added: For example, the European Commission has adopted the General Data Protection Regulation and California recently enacted the California Consumer Privacy Act of 2018, both of which provide for potentially material penalties for non-compliance.
+Added: These regimes may, among other things, impose data security requirements, disclosure requirements, and restrictions on data collection, uses, and sharing that may impact our operations and the
+Added: development of our business.
+Added: While, generally, we do not have access to, collect, store, process, or share information collected by our customers using our products unless our customers choose to proactively provide such information to us, our products may evolve to address potential customer requirements or to add new features and functionality.
+Added: Therefore, the full impact of these privacy regimes on our business is rapidly evolving across jurisdictions and remains uncertain at this time.
+Added: We are assessing the continually evolving privacy and data security regimes and measures it believes are appropriate in response.
+Added: Since these data security regimes are evolving, uncertain and complex, we may need to update or enhance our compliance measures as our products, markets and customer demands further develop, and these updates or enhancements may require implementation costs.
+Added: In addition, we may not be able to monitor and react to all developments in a timely manner.
+Added: The compliance measures we do adopt may prove ineffective.
+Added: Any failure, or perceived failure, by us to comply with current and future regulatory or customer-driven privacy, data protection, and information security requirements, or to prevent or mitigate security breaches, cyberattacks, or improper access to, use of, or disclosure of data, or any security issues or cyberattacks affecting us, could result in significant liability, costs (including the costs of mitigation and recovery), and a material loss of revenue resulting from the adverse impact on its reputation and brand, loss of proprietary information and data, disruption to our business and relationships, and diminished ability to retain or attract customers and business partners.
+Added: Such events may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity, and could cause customers and business partners to lose trust in us, which could have an adverse effect on our reputation and business.
+Added: We are subject to governmental export and import controls and economic sanctions laws and regulations.
+Added: Our failures to comply with these laws and regulations could have an adverse effect on our business, prospects, financial condition and results of operations.
+Added: Our products and solutions are subject to certain U.S.
+Added: and foreign export controls, trade sanctions, and import laws and regulations, including the U.S.
+Added: Export Administration Regulations, U.S.
+Added: Customs regulations and various economic and trade sanctions regulations administered by the U.S.
+Added: Treasury Department’s Office of Foreign Assets Controls.
+Added: For example, exporting our thermal cameras, infrared cameras, or infrared sensors to certain countries may be restricted by the U.S.
+Added: government’s thermal camera export restrictions and many fall under International Traffic in Arms Regulations (“ITAR”).
+Added: export control laws and regulations and economic sanctions prohibit or restrict the shipment of certain products and services to countries, governments, and persons targeted by U.S.
+Added: Even though we take precautions to prevent our productions and solutions from being provided to entities subject to these restrictions, our products could find their way to such prohibited entities.
+Added: Any such provision could have negative consequences, including government investigations, penalties, or reputational harm.
+Added: In addition, complying with export control and sanctions regulations for a particular sale may be time-consuming and create delays in the introduction of our products and solutions in some international markets, should we pursue such international expansion, and, in some cases, prevent the export of our software and services to some countries altogether.
+Added: Exports of our products and technology must be made in compliance with these laws and regulations.
+Added: If a license or approval is required from a government agency prior to sale, no exports may occur until the appropriate approvals are obtained.
+Added: If we fail to comply with these laws and regulations, penalties could be imposed, including substantial monetary fines and/or denial of export privileges.
+Added: In addition, in extreme cases responsible employees or managers can be held criminally liable for such violations.
+Added: Changes to trade policy, tariffs and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
+Added: Any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or changes in global, political, regulatory and economic conditions affecting U.S.
+Added: trade, manufacturing, development or investment, could result in additional restrictions on our ability to conduct business.
+Added: In recent years, the U.S.
+Added: has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S.
+Added: (including from China, where we source certain of our supplies), economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S.
+Added: and other countries where we conduct our business.
+Added: A number of other nations have proposed or instituted similar measures directed at trade with the United States in response.
+Added: As a result of these developments, there may be greater restrictions and economic disincentives on international trade that could adversely affect our business.
+Added: As additional trade-related policies are instituted, we need to modify our business operations to comply and adapt to such developments, which may be time-consuming and expensive.
+Added: Failing to comply with increasing environmental regulations, as well as the effects of potential environmental liabilities, could have a material adverse effect on our business, results of operations or financial condition.
+Added: We, like other industry participants, are subject to various federal, state, local and international environmental laws and regulations.
+Added: We may be subject to increasingly stringent environmental standards in the future, particularly as greenhouse gas (“GHG”) emissions and climate change regulations and initiatives increase.
+Added: Future developments, administrative actions or liabilities relating to environmental and climate change matters could have a material adverse effect on our business, results of operations or financial condition.
+Added: Our manufacturing operations, including former operations, could expose us to material environmental liabilities.
+Added: Additionally, companies that we acquire may have environmental liabilities that might not be accurately assessed or brought to our attention at the time of the acquisition.
+Added: Environmental Protection Agency (“EPA”) has focused on GHGs, maintaining GHGs threaten the public health and welfare of the American people.
+Added: The EPA also maintains that GHG emissions from on-road vehicles contribute to that threat.
+Added: The EPA’s endangerment finding covers emissions of six GHGs.
+Added: The EPA’s continuing efforts to limit GHG emissions could adversely affect our manufacturing operations, increase prices for energy, fuel and transportation, require us to accommodate changes in parameters, such as the way parts are manufactured, and may, in some cases, require us to redesign certain of our products.
+Added: This, or other federal or state regulations, could lead to increased costs, which we may not be able to recover from customers, delays in product shipments and loss of market share to competitors.
+Added: Regulatory changes or failure by a business to meet applicable requirements could disrupt that business or force a closure or relocation of the business.
+Added: Regulations associated with climate change could adversely affect our business.
+Added: Legislative and regulatory measures currently under consideration or being implemented by government authorities to address climate change could require reductions in our GHG or other emissions, establish a carbon tax or increase fuel or energy taxes.
+Added: These legal requirements, in addition to emission reduction efforts that we may voluntarily undertake, are expected to result in increased capital expenditures and compliance costs, and could result in higher costs required to operate and maintain our facilities, procure raw materials and energy, and may require us to acquire emission credits or carbon offsets.
+Added: These costs and restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our operations and product design activities.
+Added: The inconsistent international, regional and/or national requirements associated with climate change regulations also create economic and regulatory uncertainty.
+Added: Additional Risks Relating to Ownership of Our Securities
+Added: We are currently a controlled company within the meaning of the Nasdaq listing standards, and, as a result, qualify for, and may rely on, exemptions from certain corporate governance requirements.
+Added: You may not have the same protections afforded to stockholders of companies that are subject to such requirements.
+Added: As of the date of this Annual Report on Form 10-K, Mr.
+Added: Strahan, our chief executive officer and a member of our board of directors, owns approximately 51% of our outstanding common stock.
+Added: As a result, we are considered a “controlled company” within the meaning of the Nasdaq listing standards.
+Added: Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements of Nasdaq, including those that would otherwise require our Board to have a majority of independent directors and require that we either establish compensation and nominating and corporate governance committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or recommended to our Board by the independent members of our Board.
+Added: While we do not currently intend to rely on any of these exemptions, for so long as we qualify as a “controlled company,” we may, at our sole discretion, rely on some or all of these exemptions.
+Added: Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq (or any other national exchange on which our securities are listed).
+Added: Additionally, under the terms of our certificate of incorporation, for so long as we are considered a “controlled company,” a special meeting of the stockholders can also be called by our Secretary at the request of any holder of record of at least 25% of the voting power of the issued and outstanding shares of our capital stock, and our stockholders may act by written consent in lieu of a meeting.
+Added: The Nasdaq Stock Market LLC has commenced delisting procedures for our securities, subject to an opportunity for us to cure the deficiency or enact a remediation plan.
+Added: If we are not able to maintain or establish a listing on a national exchange for our securities, the trading market for our securities will be adversely affected.
+Added: Our Nasdaq listing application was not approved prior to the Closing of the Business Combination in December 2023, and we received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that we had not complied with all of the requirements of the Nasdaq Rule IM-5101-2 since we had not demonstrated compliance with the requirement to have a minimum of 1.1 million “unrestricted publicly held shares” and a minimum of 400 “round lot holders” as required by the Nasdaq Listing Rule 5405(a) for initial listing on the Nasdaq Global Market.
+Added: In January 2024, we received a separate notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that we were not in compliance with the requirement to maintain a minimum market value of listed securities of $50 million.
+Added: These notices did not immediately impact the listing of our common stock or warrants on the Nasdaq Global Market.
+Added: However, Nasdaq has commenced delisting procedures for our securities, subject to an opportunity for us to cure the deficiency or enact a remediation plan.
+Added: On March 24, 2024 we attended a hearing before a Nasdaq Hearing Panel during which we presented a plan of compliance and we requested an exception through May 15, 2024 to evidence compliance with all applicable requirements for initial and continued listing on The Nasdaq Capital Market.
+Added: There can be no assurance that our request will be granted, or if granted, that we will be successful in evidencing compliance with the listing standards by May 15, 2024.
+Added: Moreover, if the requested relief is not granted our securities could be immediately delisted.
+Added: If our securities fail to remain listed on The Nasdaq Stock Market or any other national exchange, the trading market for our securities will be adversely affected, which may impact the trading price of our securities and the liquidity of the market for such securities.
+Added: Due to their ownership of our stock, our directors and executive officers are able to control or exert substantial influence over all matters submitted to our stockholders for approval, including the election of directors and amendments of our organizational documents, and an approval right over any acquisition or liquidation of our company.
+Added: As of March 18, 2024, our directors and executive officers collectively held a majority of our outstanding common stock.
+Added: Accordingly, they are able to control or exert substantial influence over all matters Accordingly, they are able to control or exert substantial influence over all matters submitted to our stockholders for approval, including the election of directors and amendments of our organizational documents, and an approval right over any acquisition or liquidation of our company.
+Added: These stockholders may have interests that differ from those of the other stockholders and, subject to their fiduciary duties, may vote in a way with which the other stockholders disagree and which may be adverse to their interests.
+Added: This concentrated control may have the effect of delaying, preventing or deterring a change in control of our, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and might ultimately affect the market price of shares of our common stock.
+Added: We will incur significant expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
+Added: We face legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company.
+Added: For example, we are subject to the reporting requirements of the Exchange Act, and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations of the SEC and Nasdaq, including the establishment and maintenance of effective disclosure and financial controls, changes in corporate governance practices and required filing of annual, quarterly and current reports with respect to our business and results of operations.
+Added: Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations.
+Added: Compliance with public company requirements increases costs and makes certain activities more time-consuming.
+Added: A number of those requirements will require us to carry out activities we did not prior to the Business Combination.
+Added: Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of us.
+Added: It may also be more expensive to obtain director and officer liability insurance.
+Added: The price and trading volume of our common stock and warrants may be fluctuate dramatically.
+Added: The price and trading volume of our common stock, as well as our warrants, may fluctuate due to a variety of factors, including:
+Added: ● changes in the industries in which we and our customers operate;
+Added: ● developments involving our competitors;
+Added: ● changes in laws and regulations affecting our business;
+Added: ● variations in our operating performance and the performance of our competitors in general;
+Added: ● actual or anticipated fluctuations in our quarterly or annual operating results;
+Added: ● publication of research reports by securities analysts about us or our competitors or our industry;
+Added: ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
+Added: ● actions by stockholders, including the sale by significant stockholders of any of their shares of our common stock;
+Added: ● additions and departures of key personnel;
+Added: ● commencement of, or involvement in, litigation involving our company;
+Added: ● changes in our capital structure;
+Added: ● the volume of shares of our common stock available for public sale;
+Added: ● general economic and political conditions, such as recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
+Added: Since the Business Combination, the trading price of our securities and the trading volume of our securities has fluctuated dramatically, and may continue to do so, including for the reasons described above or reasons unrelated to our business or industry, such as retail investor interest driven by activity on social media or in online forums.
+Added: We may redeem any unexpired SPAC Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
+Added: We have the ability to redeem outstanding SPAC Warrants at any time after they become exercisable and prior to their expiration at a price of $0.01 per warrant, provided that the last reported sales price of our shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met.
+Added: We may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
+Added: We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us.
+Added: Redemption of the outstanding SPAC Warrants could force you (i) to exercise your SPAC Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your SPAC Warrants at the then-current market price when you might otherwise wish to hold your SPAC Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding SPAC Warrants are called for redemption, is likely to be substantially less than the market value of your SPAC Warrants.
+Added: Notice of any redemption will be mailed by first class mail, postage prepaid, by us not less than 30 days prior to the redemption date to the registered holders of the SPAC Warrants to be redeemed at their last addresses as they appear on the registration books.
+Added: Any notice mailed in such manner will be conclusively presumed to have been duly given whether or not the registered holder received such notice.
+Added: In addition, beneficial owners of the SPAC Warrants will be notified of such redemption by our posting of the redemption notice to DTC.
+Added: A substantial number of warrants are exercisable for our common stock, which will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
+Added: SPAC Warrants to purchase an aggregate of 9,131,250 shares of our common stock are exercisable in accordance with the terms of the Warrant Agreement governing those securities.
+Added: Additionally, in connection with the Financing, we issued the Financing Warrants to purchase an aggregate of 340,250 Financing Warrant Shares, which Financing Warrants are exercisable for the five-year period following the consummation of the Business Combination.
+Added: The exercise price of both the SPAC Warrants and the Financing Warrants is $11.50 per share.
+Added: To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of shares eligible for resale in the public market.
+Added: Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of our Common Stock.
+Added: However, there is no guarantee that the warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.
+Added: The SPAC Warrants may never be in the money and they may expire worthless, and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment.
+Added: The Public Warrants were issued in registered form pursuant to the Warrant Agreement.
+Added: The Warrant Agreement provides that the terms of the Public Warrants and Private Placement Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or mistakes, but requires the approval of the holders of 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants or Private Placement Warrants.
+Added: Accordingly, we may amend the terms of the Public Warrants and Private Placement Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment.
+Added: We may receive up to an aggregate of approximately $108.9 million from the cash exercise of our warrants outstanding as of December 31, 2023.
+Added: The exercise price of both our SPAC Warrants and our Financing Warrants is $11.50 per warrant.
+Added: However, the likelihood that holders of warrants will exercise their warrants, and therefore any amount of cash proceeds that we may receive, is dependent upon the trading price of our common stock.
+Added: If the trading price for our common stock is less than $11.50 per share, we do not expect holders to exercise their warrants.
+Added: We expect to use the net proceeds from the exercise of such securities, if any, for general corporate purposes, which may include acquisitions or other strategic investments.
+Added: We will have broad discretion over the use of any proceeds from the exercise of such securities.
+Added: Any proceeds from the exercise of such securities would increase our liquidity, but we are not currently budgeting for any cash proceeds from the exercise of Warrants when planning for our operational funding needs.
+Added: Because there are no current plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell our common stock for a price greater than that which you paid for it.
+Added: We may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay any cash dividends for the foreseeable future.
+Added: Any decision to declare and pay dividends as a public company in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.
+Added: In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness it or its subsidiaries incur.
+Added: As a result, you may not receive any return on an investment in our common stock unless you sell your shares of Common Stock for a price greater than that which you paid for it.
+Added: The future exercise of registration rights may adversely affect the market price of our common stock.
+Added: Pursuant to a registration rights agreement, we are required to file and maintain an effective registration statement under the Securities Act covering the resale our securities by certain holders, including our executive officers and certain members of our board of directors, and in some cases facilitate underwritten offerings of those securities by those holders.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our common stock.
−Removed: In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
−Removed: This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common stock that is expected when the securities owned by our initial stockholders or their respective permitted transferees are registered.
−Removed: Holders of warrants will not participate in liquidating distributions if we are unable to complete an initial business combination within the required time period.
−Removed: If we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the trust account, the warrants will expire and holders will not receive any of such proceeds with respect to the warrants.
−Removed: In this case, holders of warrants are treated in the same manner as holders of warrants of blank check companies whose units are comprised of shares and warrants, as the warrants in those companies do not participate in liquidating distributions.
−Removed: Nevertheless, the foregoing may provide a financial incentive to public stockholders to vote in favor of any proposed initial business combination as their warrants would entitle the holder to purchase one share of common stock, resulting in an increase in their overall economic stake in our company.
−Removed: If a business combination is not approved, the warrants will expire and will be worthless.
−Removed: If we do not maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a “cashless basis” which would result in a fewer number of shares being issued to the holder had such holder exercised the warrants for cash.
−Removed: If we do not maintain a current and effective prospectus relating to the common stock issuable upon exercise of the public warrants at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided that an exemption from registration is available.
−Removed: As a result, the number of shares of common stock that a holder will receive upon exercise of its public warrants will be fewer than it would have been had such holder exercised its warrant for cash.
−Removed: Further, if an exemption from
−Removed: registration is not available, holders would not be able to exercise their warrants on a cashless basis and would only be able to exercise their warrants for cash if a current and effective prospectus relating to the common stock issuable upon exercise of the warrants is available.
−Removed: Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants.
−Removed: However, we cannot assure our stockholders that we will be able to do so.
−Removed: If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless.
−Removed: Notwithstanding the foregoing, the private warrants may be exercisable for unregistered common stock for cash even if the prospectus relating to the common stock issuable upon exercise of the warrants is not current and effective.
−Removed: A warrant holder will only be able to exercise a warrant if the issuance of common stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
−Removed: No public warrants will be exercisable for cash and we will not be obligated to issue common stock unless the common stock issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants.
−Removed: At the time that the warrants become exercisable, we expect to have our securities listed on a national securities exchange, which would provide an exemption from registration in every state.
−Removed: However, we cannot assure our stockholders of this fact.
−Removed: If the common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
−Removed: Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
−Removed: If we call our public warrants for redemption after the redemption criteria have been satisfied, our management will have the option to require any holder that wishes to exercise his warrant (including the private units and any other warrants held by our initial stockholders or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash.
−Removed: This will have the effect of reducing the potential “upside” of the holder’s investment in our company.
−Removed: We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.
−Removed: Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
−Removed: The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision.
−Removed: The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including the private units) in order to make any change that adversely affects the interests of the registered holders.
−Removed: Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
−Removed: Our warrant agreement provides that, subject to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York.
−Removed: We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
−Removed: Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
−Removed: Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement.
−Removed: If any action, the subject matter of which is within the scope of the forum provisions of our warrant agreement, is filed in a court other than a court of the State of New York or the United
−Removed: States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to:
−Removed: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
−Removed: This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
−Removed: Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
−Removed: Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.
−Removed: Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
−Removed: These provisions include the ability of the board of directors to designate the terms of and issue new series of preferred stock, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
−Removed: We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
−Removed: Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
−Removed: Provisions in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
−Removed: Our amended and restated certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction.
−Removed: If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel.
−Removed: Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
−Removed: Notwithstanding the foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
−Removed: Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
−Removed: Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
−Removed: If we do not hold an annual meeting until after the consummation of our initial business combination, stockholders will not be afforded an opportunity to appoint directors and to discuss company affairs with management until such time.
−Removed: In accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq.
−Removed: Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting.
−Removed: We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus, we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.
−Removed: Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
−Removed: We currently maintain all of our working capital cash and cash equivalents with one financial institution and, therefore, our cash and cash equivalents could be adversely affected if the financial institution in which we hold our cash and cash equivalents fails.
−Removed: We currently maintain all of our working capital cash and cash equivalents with one financial institution.
−Removed: Our cash balance in the future with any financial institution may be above the Federal Deposit Insurance Corporation insurance (“FDIC Insurance”) limit.
−Removed: As a result of the recent inability of certain businesses with accounts at Silicon Valley Bank to gain access to their deposits and the greater focus on the concerns of potential failures of other financial institutions, in the future, we may consider diversifying a portion of our cash and cash equivalents with other financial institutions in order to reduce the risks associated with maintaining all of our cash and cash equivalents at one financial institution.
−Removed: Notwithstanding the foregoing, the failure of one or more of the financial institutions in which our cash and cash equivalents are held, the resulting inability for us to obtain the return of our funds from any of those financial institutions, or any other adverse condition suffered by any of those financial institutions, could impact access to our cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
+Added: We may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Common Stock.
+Added: We may issue additional shares of our common stock or other equity securities of equal or senior rank in the future in connection with, among other things, grants under our equity incentive plan, upon the exchange or conversion of outstanding warrants, future acquisitions or repayment of outstanding indebtedness, without additional stockholder approval, in a number of circumstances.
+Added: The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:
+Added: ● existing stockholders’ proportionate ownership interest in us will decrease;
+Added: ● the amount of cash available per share, including for payment of dividends in the future, may decrease;
+Added: ● the relative voting strength of each previously outstanding share of our common stock may be diminished;
+Added: ● the market price of our common stock may decline.
+Added: Anti-takeover provisions in our certificate of incorporation and under Delaware law could make an acquisition of our company, which may be beneficial to its stockholders, more difficult and may prevent attempts by its stockholders to replace or remove our current management.
+Added: Our certificate of incorporation contains provisions that may delay or prevent an acquisition of our company or a change in our management.
+Added: These provisions may make it more difficult for stockholders to replace or remove members of our board of directors.
+Added: Because the board of directors is responsible for appointing the members of the management team, these provisions could in turn frustrate or prevent any attempt by our stockholders to replace or remove our current management.
+Added: In addition, these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock.
+Added: Among other things, these provisions include the limitation of the liability of, and the indemnification of, our directors and officers and the ability of the board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board of directors.
+Added: Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the DGCL, which prohibits a person who owns 15% or more of its outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired 15% or more of our outstanding voting stock, unless such merger or combination is approved in a prescribed manner.
+Added: This could discourage, delay or prevent a third party from acquiring or merging with us, whether or not it is desired by, or beneficial to, our stockholders.
+Added: This could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in its stockholders’ best interests.
+Added: Finally, these provisions establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.
+Added: These provisions would apply even if the offer may be considered beneficial by some stockholders.
+Added: Our certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
+Added: Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
+Added: ● any derivative action or proceeding brought on our behalf;
+Added: ● any action asserting a breach of fiduciary duty;
+Added: ● any action asserting a claim against us arising under the DGCL, our certificate of incorporation or our bylaws;
+Added: ● any action asserting a claim against us that is governed by the internal-affairs doctrine or otherwise related to our internal affairs.
+Added: To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
+Added: This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.
+Added: Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
+Added: Accordingly, both state and federal courts have jurisdiction to entertain such claims.
+Added: While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.
+Added: In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our certificate of incorporation.
+Added: This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
+Added: These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
+Added: If a court were to find either exclusive forum provision in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business.
+Added: We may be subject to securities litigation, which is expensive and could divert management attention.
+Added: The market price of our securities has been and may continue to be volatile and, in the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
+Added: We may be the target of this type of litigation in the future.
+Added: Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business.
General Risk Factors
−Removed: We are a blank check company with no operating history and no revenues, and stockholders have no basis on which to evaluate our ability to achieve our business objective.
−Removed: We are a blank check company with no operating results.
−Removed: Because we lack an operating history, stockholders have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
−Removed: We have no plans, arrangements or understandings with any prospective target business concerning our initial business combination and may be unable to complete our initial business combination.
−Removed: If we fail to complete our initial business combination, we will never generate any operating revenues.
−Removed: If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
−Removed: If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including restrictions on the nature of our investments and restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
−Removed: In addition, we may have imposed upon us burdensome requirements, including registration as an investment company, adoption of a specific form of corporate structure and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
−Removed: If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination.
−Removed: Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
−Removed: We are subject to laws and regulations enacted by national, regional and local governments.
−Removed: In particular, we will be required to comply with certain SEC and other legal requirements.
−Removed: Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
−Removed: Those laws and regulations and their interpretation and application also may change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.
−Removed: In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
−Removed: Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing a business combination.
−Removed: Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2022.
−Removed: Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
−Removed: Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
−Removed: The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls.
−Removed: The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
−Removed: We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.
−Removed: We are an “emerging growth” within the meaning of the Securities Act, as modified by the JOBS Act, and we may 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 nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: As a result, our stockholders may not have access to certain information they may deem important.
−Removed: We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier.
−Removed: We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
−Removed: If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
−Removed: Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.
−Removed: The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
−Removed: We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
−Removed: This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
−Removed: Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
−Removed: We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal.
−Removed: Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data.
−Removed: As an early state company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
−Removed: We may not have sufficient resources to adequately protect against or to investigate and remediate any vulnerability to, cyber incidents.
−Removed: It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
−Removed: UNRESOLVED STAFF COMMENTS
+Added: If we were to lose the services of members of our senior management team, we may not be able to execute our business strategy.
+Added: Our success depends in large part upon the continued service of key members of our senior management team.
+Added: In particular, each of our Chief Executive Officer, Gary Strahan, President, Steven Winch, and Chief Financial Officer, Peter Baird, is critical to our overall management, as well as the continued development of our thermal infrared technology, our culture and our strategic direction.
+Added: All of our executive officers are at-will employees.
+Added: The loss of any member of our senior management team could harm our business.
+Added: Our future success depends, in part, on recruiting and retaining key personnel and, if we fail to do so, it may be more difficult for us to execute our business strategy.
+Added: We are currently a small organization and will need to hire additional qualified personnel to effectively implement our strategic plan.
+Added: Our success depends on our ability to attract, retain and motivate highly qualified management, technical, manufacturing, engineering and sales personnel.
+Added: In particular, our success may depend on our ability to recruit and retain management personnel who are qualified to manage a public company.
+Added: All of our employees are at-will employees.
+Added: In addition, our ability to successfully execute on our strategic plan depends in part on our ability to continue to build our organization and hire qualified personnel, especially with engineering, sales, technical and manufacturing expertise.
+Added: We may not be able to attract and retain qualified personnel on acceptable terms given the competition for such personnel.
+Added: If we are unsuccessful in our recruitment efforts, it may adversely affect our business and our growth prospects.
+Added: Climate change may have a long-term impact on our business.
+Added: Climate change may have an increasingly adverse impact on our business and those of our customers, partners and suppliers.
+Added: While we seek to mitigate the risks associated with climate change on our operations, there are inherent climate-related risks globally.
+Added: Some of our manufacturing facilities are located in regions that may be impacted by severe weather events, like hurricanes or unexpected cold snaps, the frequency and severity of which may increase as a result of climate change.
+Added: These events could result in potential damage to our physical assets as well as disruptions in manufacturing activities.
+Added: Moreover, some of our manufacturing
+Added: facilities are in areas that could experience decreased access to water and reliable energy due to climate issues.
+Added: Severe weather events may impair the ability of our employees to work effectively.
+Added: Climate change, including the increasing frequency and intensity of extreme weather events, its impact on our supply chain and critical infrastructure worldwide and its potential to increase political instability in regions where we, our customers, partners and suppliers do business, may disrupt our business and may cause us to experience higher employee attrition and higher costs to maintain or resume operations.
+Added: The effects of climate change also may impact our decisions to construct new facilities or maintain existing facilities in the areas most prone to physical risks, which could similarly increase its operating and material costs.
+Added: We could also face indirect financial risks passed through the supply chain that could result in higher prices for our products and the resources needed to produce them.
+Added: We sell products to customers directly engaged in oil and gas exploration and production.
+Added: Changes to regulations, social practices and preferences, energy generation and transportation technologies that may occur or be implemented to mitigate climate change could result in reduced demand for hydrocarbon products, which could result in a reduction in sales to these customers.
+Added: Investor sentiment towards climate change and sustainability could adversely affect our business.
+Added: Increased investor focus and activism related to climate change and sustainability may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our sustainability practices.
+Added: We may face increasing pressure regarding our sustainability disclosures and practices.
+Added: Additionally, members of the investment community may screen companies such as us for sustainability performance before investing in our securities.
+Added: If we are unable to meet the sustainability standards set by these investors, or if we are unable to meet any GHG reduction targets we communicate to the public, we may lose investors, the price of our securities may be negatively impacted and our reputation may be negatively affected.
+Added: We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing Israel-Hamas and Russia-Ukraine military conflicts.
+Added: Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from such conflicts or any other geopolitical tensions.
+Added: and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflicts between Israel and Hamas and Russia and Ukraine.
+Added: Although the length and impact of the ongoing military conflicts is highly unpredictable, such conflicts could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
+Added: We are continuing to monitor the conflicts and assessing their potential impact on our business.
+Added: Additionally, the recent military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia.
+Added: Additional potential sanctions and penalties have also been proposed and/or threatened.
+Added: Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.
+Added: It is impossible to predict the extent to which our operations, or those of our suppliers and manufacturers, will be impacted in the short or long term, or the ways in which the conflict may impact our business.
+Added: The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.
+Added: Any such disruptions may also magnify the impact of other risks described herein.
+Added: Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as terrorism.
+Added: Material disruptions of our business or information systems resulting from these events could adversely affect our operating results.
+Added: A significant natural disaster, such as an earthquake, fire, flood, hurricane or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, could have an adverse effect on our business and operating results.
+Added: For example, in October 2022, our production facility in Beaumont, Texas was impacted by a flood that damaged certain of our inventory.
+Added: In addition, natural disasters, acts of terrorism or war could cause disruptions in our manufacturing operations, our or our customers’ or channel partners’ businesses, our suppliers or the economy as a whole.
+Added: We also rely on information technology systems to communicate among our workforce and with third parties.
+Added: Any disruption to our communications, whether caused by a natural disaster or by man-made problems, such as power disruptions, could adversely affect our business.
+Added: We do not have a formal disaster recovery plan or policy in place and do not currently require that our suppliers’ partners have such plans or policies in place.
+Added: extent that any such disruptions result in delays or cancellations of orders or impede our suppliers’ ability to timely deliver product components, or the deployment of our products, our business, operating results and financial condition would be adversely affected.
+Added: Adverse conditions in our target markets or the global economy more generally could have adverse effects on our results of operations.
+Added: While we make our strategic planning decisions based on the assumption that the markets we are targeting will grow, our business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the industries we serve.
+Added: Our target markets are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates and credit availability, consumer confidence, inflation, environmental impact, governmental incentives and regulatory requirements, political volatility, labor relations issues, trade agreements and other factors.
+Added: We have been and may in the future become involved in legal and regulatory proceedings and commercial or contractual disputes, which could have a material adverse effect on our profitability and consolidated financial position.
+Added: We have been and may in the future be, from time to time, involved in litigation, regulatory proceedings and commercial or contractual disputes and these matters may be significant.
+Added: These matters may include, without limitation, disputes with our distributors, suppliers and customers, intellectual property claims, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes and employment and tax issues.
+Added: In addition, we have in the past and could face in the future a variety of labor and employment claims against us, which could include but is not limited to general discrimination, wage and hour, privacy, ERISA or disability claims.
+Added: In such matters, government agencies or private parties may seek to recover from us large, indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or seek to limit our operations in some way.
+Added: These types of lawsuits could require significant management time and attention or could involve substantial legal liability, adverse regulatory outcomes, or substantial expenses to defend.
+Added: Often these cases raise complex factual and legal issues and create risks and uncertainties.
+Added: We could be forced to expend significant resources in the defense of these lawsuits or future ones, and we may not prevail.
+Added: No assurances can be given that any proceedings and claims will not have a material adverse impact on our operating results and consolidated financial position or that our available insurance will mitigate this impact.
+Added: If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the trading price or trading volume of our common stock could decline.
+Added: The trading market for our common stock will be influenced in part by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors.
+Added: If one or more analysts initiate research with an unfavorable rating or downgrade our common stock, provide a more favorable recommendation about our competitors or publish inaccurate or unfavorable research about our business, our common stock price would likely decline.
+Added: If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume of our common stock to decline.
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.