−Removed: RISK FACTORS.
−Removed: Risks Related to Our Search for, Consummation of, or Inability to Consummate, a Business Combination and Post-Business Combination Risks
−Removed: Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.
−Removed: We may choose not to hold a shareholder vote before we complete our initial business combination if the business combination would not require shareholder approval under applicable law or stock exchange listing requirements.
−Removed: For instance, if we were seeking to acquire a target business where the consideration we were paying in the transaction was all cash, we would typically not be required to seek shareholder approval to complete such a transaction.
−Removed: Except as required by applicable law or stock exchange listing requirements, the decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders 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 shareholder approval.
−Removed: Accordingly, we may complete our initial business combination even if holders of a majority of our issued and outstanding ordinary shares do not approve of the business combination we complete.
−Removed: Please see the section entitled “Item 1.
−Removed: Business—Shareholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
−Removed: Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
−Removed: At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses.
−Removed: If our board of directors determines to complete a business combination without seeking shareholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your 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 shareholders in which we describe our initial business combination.
−Removed: If we seek shareholder approval of our initial business combination, our initial shareholders and members of our management team have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.
−Removed: Our initial shareholders own a significant portion of our outstanding ordinary shares.
−Removed: Our initial shareholders and members of our management team also may from time to time purchase Class A ordinary shares prior to our initial business combination.
−Removed: Our amended and restated memorandum and articles of association provide that, if we seek shareholder approval, we will complete our initial business combination only if it is approved by an ordinary resolution or such higher approval threshold as may be required by Cayman Islands law and pursuant to the amended and restated memorandum and articles of association.
−Removed: A quorum for such meeting will be present if the holders of one third of issued and outstanding shares entitled to vote at the meeting are represented in person or by proxy.Assuming that only one-third of our issued and outstanding ordinary shares, representing a quorum under our amended and restated memorandum and articles of association, are voted, we will not need any public shares in addition to our founder shares to be voted in favor of an initial business combination in order to have an initial business combination approved.
−Removed: Accordingly, if we seek shareholder approval of our initial business combination, the agreement by our initial shareholders and each member of our management team to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite shareholder approval for such initial business combination.
−Removed: The ability of our public shareholders 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 with a target.
−Removed: We may seek to enter into a business combination transaction 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 shareholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
−Removed: The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination and such amount of deferred underwriting commission is not available for us to use as consideration in an initial business combination.
−Removed: If we are able to consummate an initial business combination, the per-share value of shares held by non-redeeming shareholders will reflect our obligation to pay and the payment of the deferred underwriting commissions.
−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 upon consummation of our business combination and after payment of underwriter fees and commissions (so that we do not then become subject to the SEC’s “penny stock” rules).
−Removed: Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 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 will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
−Removed: The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
−Removed: At the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
−Removed: If a large number of shares are submitted for redemption, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for additional third-party financing.
−Removed: Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels.
−Removed: The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
−Removed: The amount of the deferred underwriting commission payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination.
−Removed: The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
−Removed: On January 18, 2023, in connection with the Extension Proposal, holders of 24,703,445 Class A ordinary shares of ESGEN properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.35 per share, for an aggregate redemption amount of $255,875,757.
−Removed: As a result, approximately $30 million remained in the Company’s trust account and 2,896,555 Class A ordinary shares remained outstanding immediately after the redemption.
−Removed: The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
−Removed: If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
−Removed: If our initial business combination is unsuccessful, you would not receive your pro rata portion of the funds in the trust account until we liquidate the trust account.
−Removed: If you are in need of immediate liquidity, you could attempt to sell your shares in the open market;
−Removed: however, at such time our shares may trade at a discount to the pro rata amount per share in the trust account.
−Removed: In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market.
−Removed: The requirement that we consummate an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination) may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our initial business combination deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.
−Removed: Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must consummate an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination).
−Removed: Additionally, our sponsor is under no obligation to fund any monies necessary to extend the duration of the trust account.
−Removed: Consequently, such target business may obtain leverage over us in negotiating a 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 time frame 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: 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 value of the assets in the trust account (excluding any taxes payable) at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies with which we may complete such a business combination.
−Removed: Pursuant to 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 value of the assets in the trust account (excluding any taxes payable) 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 a business combination with.
−Removed: If we are unable to locate a target business or businesses that satisfy this net assets test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account, which may be less than $10.20 per Class A ordinary share.
−Removed: Our ability to consummate a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 outbreak and the status of debt and equity markets.
−Removed: The COVID-19 pandemic has adversely impacted global commercial activity and supply chain operations and has contributed to significant volatility in the equity and debt markets.
−Removed: The business of any potential target business with which we consummate a business combination could be materially and adversely affected by the COVID-19 pandemic.
−Removed: Many countries, including the United States and states and municipalities in which we may operate, have issued (and may re-issue) orders requiring the closure of, or certain restrictions on the operation of, certain businesses.
−Removed: The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and may continue to cause, business shutdowns or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States.
−Removed: While many of the initial restrictions have been lifted, the risk of future COVID-19 outbreaks remains and restrictions have been or may continue to be reimposed to mitigate risks to public health both in the United States and globally.
−Removed: Moreover, even where restrictions are and remain lifted, certain groups of people may continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time, potentially further delaying global economic recovery.
−Removed: 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: We are continuing to monitor the impact of COVID-19 and related risks, including risks related to the ongoing spread of COVID-19 (including new variants) and efforts to mitigate the spread and deployment of vaccines.
−Removed: If the effects of the COVID-19 pandemic, including COVID-19 variants, remain uncertain and the disruptions posed by COVID-19 or other matters of global concern continue for an extensive 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: In addition, our ability to consummate a transaction may be dependent on our ability to raise equity and debt financing which may be impacted by COVID-19 and other events.
−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 an initial business combination, and there are still many special purpose acquisition companies preparing for an initial public offering, as well as many such companies currently in registration.
−Removed: As a result, at times, fewer attractive targets may be available to consummate an initial business combination.
−Removed: In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination 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: We may not be able to consummate an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), 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 may not be able to find a suitable target business and consummate an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination).
−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: For example, the outbreak of COVID-19 continues to grow both in the U.S.
−Removed: and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.
−Removed: Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek to acquire.
−Removed: If we have not consummated an initial business combination within such applicable time period, we will:
−Removed: (i) cease all operations except for the purpose of winding up;
−Removed: (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares (in a redemption that will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any)) at a per-share price, payable in cash, equal to (A) the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, less up to $100,000 of interest to pay winding up and dissolution expenses (net of any taxes payable), divided by (B) the number of the then-outstanding public shares;
−Removed: and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
−Removed: In either such case, our public shareholders may receive only $10.20 per public share, or less than $10.20 per public share, on the redemption of their shares, and our warrants will expire worthless.
−Removed: See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
−Removed: If we seek shareholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase public shares or warrants, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A ordinary shares or public warrants.
−Removed: If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so.
−Removed: However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
−Removed: None of the funds in the trust account will be used to purchase public shares or warrants in such transactions.
−Removed: In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares.
−Removed: The purpose of any such transaction could be to (1) vote in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination, (2) reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (3) 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 our initial business combination, where it appears that such requirement would otherwise not be met.
−Removed: Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
−Removed: In addition, if such purchases are made, the public “float” of our Class A ordinary shares or public warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
−Removed: Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
−Removed: See “Proposed Business-Permitted Purchases and Other Transactions with Respect to Our Securities” for a description of how our sponsor, directors, officers, advisors or their affiliates will select which shareholders to purchase securities from in any private transaction.
−Removed: If a shareholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
−Removed: We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination.
−Removed: Despite our compliance with these rules, if a shareholder fails to receive our proxy solicitation or tender offer materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares.
−Removed: In addition, the proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly redeem or tender public shares.
−Removed: In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed.
−Removed: See “Proposed Business-Business Strategy-Effecting Our Initial Business Combination-Tendering Share Certificates in Connection with a Tender Offer or Redemption Rights.”
−Removed: Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
−Removed: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
−Removed: Many of these individuals and entities are well established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
−Removed: Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
−Removed: While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will 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, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction with a shareholder vote or via a tender offer.
−Removed: Target companies will be aware that this may reduce the resources available to us for our initial business combination.
−Removed: Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
−Removed: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: See “- If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share” and other risk factors herein.
−Removed: If the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for the 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), it could limit the amount available to fund our search for a target business or businesses and our ability to complete our initial business combination, and we will depend on loans from our sponsor, its affiliates or members of our management team to fund our search and to complete our initial business combination.
−Removed: Of the net proceeds of our initial public offering and the sale of the private placement warrants, only approximately $1,800,000 was available to us initially outside the trust account to fund our working capital requirements.
−Removed: We believe that the funds available to us outside of the trust account, together with funds available from loans from our sponsor, its affiliates or members of our management team will be sufficient to allow us to operate for at least the 18 months following the closing of our initial public offering;
−Removed: however, we cannot assure you that our estimate is accurate, and our sponsor, its affiliates or members of our management team are under no obligation to advance funds to us in such circumstances.
−Removed: Of the funds available to us, we may use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business.
−Removed: We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so.
−Removed: If we entered into a letter of intent where we paid for the right to negotiate exclusively from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
−Removed: If we are required to seek additional capital, we would need to borrow funds from our sponsor, its affiliates, members of our management team or other third parties to operate or may be forced to liquidate.
−Removed: Neither our sponsor, members of our management team nor their affiliates is under any obligation to us in such circumstances.
−Removed: Any such advances may be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination.
−Removed: Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender.
−Removed: The warrants would be identical to the private placement warrants.
−Removed: Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor, its affiliates or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
−Removed: If we have not consummated our initial business combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
−Removed: Consequently, our public shareholders may only receive an estimated $10.20 per public share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
−Removed: Subsequent to our completion of our initial business combination, we may be required to 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 the price of our securities, which could cause you to lose some or all of your investment.
−Removed: Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues with 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: Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
−Removed: Such holders are unlikely to have a remedy for such reduction in value.
−Removed: If we have not consummated an initial business combination within 18 months from the closing of our initial public (or up to 24 months, if we extend the time to complete a business combination), our public shareholders may be forced to wait beyond such 18 months (or up to 24 months, as applicable) before redemption from our trust account.
−Removed: If we have not consummated an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, less up to $100,000 of interest to pay winding up and dissolution expenses (net of any taxes payable, will be used to fund the redemption of our public shares, as further described herein.
−Removed: Any redemption of public shareholders from the trust account will be effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding up.
−Removed: If we are required to wind up, liquidate the trust account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act.
−Removed: In that case, investors may be forced to wait beyond 18 months (or up to 24 months, as applicable) from the closing of our initial public offering 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: We have no obligation to return funds to investors prior to the date of their redemption or any liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have sought to redeem their Class A ordinary shares.
−Removed: Only upon their redemption or any liquidation will public shareholders be entitled to distributions if we do not complete our initial business combination and do not amend certain provisions of our amended and restated memorandum and articles of association.
−Removed: The warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security at this time.
−Removed: In certain situations, including if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security other than the Class A ordinary shares.
−Removed: As a result, if the surviving company redeems your warrants for securities pursuant to the warrant agreement, you may receive a security in a company of which you do not have information at this time.
−Removed: Pursuant to the warrant agreement, the surviving company will be required to use commercially reasonable efforts to register the issuance of the security underlying the warrants within 20 business days of the closing of an initial business combination.
−Removed: The grant of registration rights to our initial shareholders 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 Class A ordinary shares.
−Removed: Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial shareholders and their permitted transferees can demand that we register the resale of the Class A ordinary shares into which founder shares are convertible, the private placement warrants and the Class A ordinary shares issuable upon exercise of the private placement warrants, and warrants that may be issued upon conversion of working capital loans and the Class A ordinary shares issuable upon exercise of such warrants.
−Removed: The registration rights will be exercisable with respect to the founder shares and the private placement warrants and the Class A ordinary shares issuable upon exercise of such private placement warrants.
−Removed: We will bear the cost of registering these securities.
−Removed: 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 Class A ordinary shares.
−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 shareholders 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 securities that is expected when the securities owned by our initial shareholders or their permitted transferees are registered for resale.
−Removed: Additionally, pursuant to a letter agreement with us, our initial shareholders, directors and officers have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of:
−Removed: (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination (x) if the last reported sale price of shares of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
−Removed: Consequently, the founder shares may become transferable earlier than one year following our initial business combination if our Class A ordinary shares trade for a relatively small premium to the initial public offering price of $10.00 per share which may enhance the potential dilutive effect on holders of our public shares.
−Removed: Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
−Removed: We may pursue business combination opportunities in any sector, except that we will not, under our amended and restated memorandum and articles of association, be permitted to effectuate our initial business combination solely with another blank check company or similar company with nominal operations.
−Removed: Because we have not yet selected any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects.
−Removed: To the extent we complete 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 cannot assure you that we will 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 adversely impact a target business.
−Removed: We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target.
−Removed: Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
−Removed: Such holders are unlikely to have a remedy for such reduction in value.
−Removed: We may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
−Removed: We will consider a business combination outside of our management’s area of expertise if a business combination target is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company.
−Removed: Although our management will endeavor to evaluate the risks inherent in any particular business combination target, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors.
−Removed: We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment, if an opportunity were available, in a business combination target.
−Removed: In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire.
−Removed: As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors.
−Removed: Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
−Removed: Such holders are unlikely to have a remedy for such reduction in value.
−Removed: Although we have 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 general 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 complete 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 a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders 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 shareholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
−Removed: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: We may engage one or more of our underwriters of our initial public offering or one of their respective affiliates to provide additional services to us, which may include acting as M&A advisor in connection with an initial business combination or as placement agent in connection with a related financing transaction.
−Removed: Our underwriters are entitled to receive deferred underwriting commissions that will be released from the trust account only upon a completion of an initial business combination.
−Removed: These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services to us after our initial public offering, including, for example, in connection with the sourcing and consummation of an initial business combination.
−Removed: We may engage one or more of our underwriters of our initial public offering or one of their respective affiliates to provide additional services to us, including, for example, identifying potential targets, providing M&A advisory services, acting as a placement agent in a private offering or arranging debt financing transactions.
−Removed: We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined at that time in an arm’s length negotiation.
−Removed: The underwriters are also entitled to receive deferred underwriting commissions that are conditioned on the completion of an initial business combination.
−Removed: The underwriters’ or their respective affiliates’ financial interests tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing any such additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial business combination.
−Removed: We are not required to obtain an opinion from an independent accounting or investment banking firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our shareholders from a financial point of view.
−Removed: Unless we complete 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 shareholders from a financial point of view.
−Removed: If no opinion is obtained, our shareholders 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: Such standards used will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
−Removed: We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
−Removed: We may also issue Class A ordinary shares upon the conversion of the founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association.
−Removed: Any such issuances would dilute the interest of our shareholders and likely present other risks.
−Removed: Our amended and restated memorandum and articles of association authorizes the issuance of up to 250,000,000 Class A ordinary shares, par value $0.0001 per share, 25,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share.
−Removed: As of March 28, 2023, there were 247,103,445 and 18,100,000 authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B ordinary shares, if any.
−Removed: The Class B ordinary shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the trust account if we fail to consummate an initial business combination) at the time of our initial business combination or earlier at the option of the holders thereof as described herein and in our amended and restated memorandum and articles of association.
−Removed: There are no preference shares issued and outstanding.
−Removed: We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
−Removed: We may also issue Class A ordinary shares in connection with our redeeming the warrants or upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions as set forth herein.
−Removed: However, our amended and restated memorandum and articles of association provide, among other things, that prior to or in connection with our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination or on any other proposal presented to shareholders prior to or in connection with the completion of an initial business combination.
−Removed: These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote.
−Removed: The issuance of additional ordinary or preference shares:
−Removed: may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
−Removed: may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
−Removed: could cause a change in control if a substantial number of Class A ordinary shares are issued, which could result in the resignation or removal of our present officers and directors;
−Removed: may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;
−Removed: may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants;
−Removed: may not result in adjustment to the exercise price of our warrants.
−Removed: Unlike some other similarly structured blank check companies, our initial shareholders will receive additional Class A ordinary shares if we issue shares to consummate an initial business combination.
−Removed: The founder shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the trust account if we fail to consummate an initial business combination) at the time of our initial business combination or earlier at the option of the holders thereof at a ratio such that the number of Class A ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of our initial public offering, plus (ii) the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the company in connection with or in relation to the consummation of the initial business combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our initial shareholders, any of their affiliates or any members of our management team upon conversion of working capital loans.
−Removed: In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.
−Removed: This is different than some other similarly structured blank check companies in which the initial shareholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to the initial business combination.
−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: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−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 complete 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 have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: Transactions in connection with or in anticipation of our initial business combination and our structure thereafter may not be tax-efficient to our shareholders and warrantholders.
−Removed: As a result of our business combination, our tax obligations may be more complex, burdensome and uncertain.
−Removed: Although we will attempt to structure transactions in connection with our initial business combination in a tax-efficient manner, tax structuring considerations are complex, the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
−Removed: For example, in anticipation of or as a result of our initial business combination and subject to requisite shareholder approval under the Companies Act, we may enter into one or more transactions that require shareholders and/or warrant holders to recognize gain or income for tax purposes or otherwise increase their tax burden.
−Removed: We do not intend to make any cash distributions to shareholders or warrant holders to pay taxes in connection with our business combination or thereafter.
−Removed: Accordingly, a shareholder or a warrant holder may be required to satisfy any liability resulting from any such transactions with cash from its own funds or by selling all or a portion of such holder’s shares or warrants.
−Removed: Furthermore, we may effect a business combination with a target company that has business operations outside of the Cayman Islands and, possibly, business operations in multiple jurisdictions, and we may reincorporate in a different jurisdiction in connection therewith (including, but not limited to, the jurisdiction in which the target company or business is located).
−Removed: If we effect any such transaction, including such a conversion, we could be subject to significant income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions.
−Removed: Due to the complexity of tax obligations and filings in many jurisdictions, we may have a heightened risk related to audits or examinations by taxing authorities.
−Removed: This additional complexity and risk could have an adverse effect on our after-tax profitability and financial condition.
−Removed: In addition, shareholders and warrantholders may be subject to additional income, withholding or other taxes with respect to their ownership of us after any such transaction.
−Removed: After our initial business combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States;
−Removed: therefore investors may not be able to enforce federal securities laws or their other legal rights.
−Removed: It is possible that after our initial business combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States.
−Removed: As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.
−Removed: We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers or directors shareholders which may raise potential conflicts of interest.
−Removed: In light of the involvement of our sponsors, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers or directors.
−Removed: Our directors also serve as officers and board members for other entities, including, without limitation, those described under “Item 10.
−Removed: Directors, Executive Officers and Corporate Governance—Conflicts of Interest.” Our sponsor, officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business combination.
−Removed: Such entities may compete with us for business combination opportunities.
−Removed: Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity or entities.
−Removed: Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination as set forth in “Item 1.
−Removed: Business—Effecting Our Initial Business Combination—Evaluation of a Target Business and Structuring of Our Initial Business Combination” and such transaction was approved by a majority of our independent and disinterested directors.
−Removed: Despite our agreement to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our sponsor, officers or directors, 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 shareholders as they would be absent any conflicts of interest.
−Removed: Moreover, we may pursue an acquisition opportunity jointly with our sponsor, Energy Spectrum, one or more funds of Energy Spectrum and/or investors in funds of Energy Spectrum.
−Removed: Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the business combination by issuing to such parties a class of equity or equity-linked securities.
−Removed: Accordingly, such persons or entities may have a conflict between their interests and ours.
−Removed: Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination.
−Removed: The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
−Removed: Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel.
−Removed: The role of our key personnel in the target business, however, cannot presently be ascertained.
−Removed: Although some of our key personnel may remain with the target business in senior management, director 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, we cannot assure you that our assessment of these individuals will 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: Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel.
−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 our company after the completion 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 in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
−Removed: Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement.
−Removed: The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
−Removed: In addition, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for election to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement.
−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’s management may be limited due to a lack of time, resources or information.
−Removed: Our assessment of the capabilities of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected.
−Removed: Should the target business’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 holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
−Removed: Such holders are unlikely to have a remedy for such reduction in value.
−Removed: The officers and directors of an acquisition candidate may resign upon completion of our initial business combination.
−Removed: The loss of a business combination 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 completion 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 members of the management of an acquisition candidate will not wish to remain in place.
−Removed: We may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private placement warrants, 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 placement warrants was $281,520,000 that we may use to complete our initial business combination (after taking into account the $9,660,000 of deferred underwriting commissions being held in the trust account and the estimated non-reimbursed expenses of our initial public offering).
−Removed: As of December 31, 2022, $285,506,568 was available to complete our initial Business Combination.
−Removed: We may effectuate our initial business combination with a single-target business or multiple-target businesses simultaneously or within a short period of time.
−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 completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments.
−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;
−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 complete business combinations with multiple prospective targets, which may hinder our ability to complete 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 our 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 (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: We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
−Removed: In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company.
−Removed: Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
−Removed: Our management may not be able to maintain control of a target business after our initial business combination.
−Removed: Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
−Removed: We may structure our initial business combination so that the post-business combination company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for us not to be required to register as an investment company under the Investment Company Act.
−Removed: We will not consider any transaction that does not meet such criteria.
−Removed: Even if the post-business combination company owns 50% or more of the voting securities of the target, our shareholders prior to our initial 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.
−Removed: For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock of a target.
−Removed: In this case, we would acquire a 100% interest in the target.
−Removed: However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding Class A ordinary shares subsequent to such transaction.
−Removed: In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares 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: We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
−Removed: We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements.
−Removed: While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate.
−Removed: To the extent we complete our initial business combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy.
−Removed: Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business combination.
−Removed: If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate.
−Removed: Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business.
−Removed: Such combination may not be as successful as a combination with a smaller, less complex organization.
−Removed: We do not have a specified maximum redemption threshold.
−Removed: The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our shareholders do not agree.
−Removed: Our amended and restated memorandum and articles of association do not provide a specified maximum redemption threshold, except that 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 upon consummation of our business combination and after payment of underwriter fees and commissions (so that we do not then become subject to the SEC’s “penny stock” rules).
−Removed: As a result, we may be able to complete our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates.
−Removed: In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
−Removed: In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements.
−Removed: We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support.
−Removed: In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements.
−Removed: For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
−Removed: Amending our amended and restated memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman Islands law, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants.
−Removed: In addition, our amended and restated memorandum and articles of association require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination) or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares.
−Removed: To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities.
−Removed: The provisions of our amended and restated memorandum and articles of association that relate to the rights of holders of our Class A ordinary shares (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of a special resolution under Cayman Islands Law, which is a lower amendment threshold than that of some other blank check companies.
−Removed: It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association to facilitate the completion of an initial business combination that some of our shareholders may not support.
−Removed: Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to the rights of a company’s shareholders, without approval by a certain percentage of the company’s shareholders.
−Removed: In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company’s shareholders.
−Removed: Our amended and restated memorandum and articles of association provide that any of its provisions related to the rights of holders of our Class A ordinary shares (including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution under Cayman Islands law, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of at least 50% of our ordinary shares.
−Removed: Our initial shareholders and their permitted transferees, if any, who collectively beneficially own a significant portion of our Class A ordinary shares, will participate in any vote to amend our amended and restated memorandum and articles of association and/or trust agreement and will have the discretion to vote in any manner they choose.
−Removed: As a result, we may be able to amend the provisions of our amended and restated memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination of which you do not approve.
−Removed: Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
−Removed: Our initial shareholders, officers, directors and director nominees have agreed, pursuant to agreements with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination) or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares.
−Removed: Our shareholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our initial shareholders, officers, directors or director nominees for any breach of these agreements.
−Removed: As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
−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 have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: Although we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient to allow us to complete our initial business combination, because we have not yet selected 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 placement warrants 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 redeem for cash a significant number of shares from shareholders 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: We cannot assure you that such financing will be available on acceptable terms, if at all.
−Removed: The current economic environment may make it difficult for companies to obtain acquisition financing.
−Removed: To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate.
−Removed: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: In addition, even if we do not need additional financing to complete 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 shareholders is required to provide any financing to us in connection with or after our initial business combination.
−Removed: Because we must furnish our shareholders 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 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 may be required to be prepared in accordance with, or be reconciled to, GAAP, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB.
−Removed: These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
−Removed: Risks Related to Our Sponsor and Management Team
−Removed: Past performance by Energy Spectrum, our sponsor, our management team or their respective affiliates may not be indicative of future performance of an investment in us.
−Removed: Information regarding past performance is presented for informational purposes only.
−Removed: Any past experience or performance of Energy Spectrum, our sponsor, our management team or their respective affiliates is not a guarantee of either (i) our ability to successfully identify and execute a transaction or (ii) success with respect to any business combination that we may consummate.
−Removed: You should not rely on the historical record of Energy Spectrum, our sponsor, our management team or their respective affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.
−Removed: Our management has no experience in operating special purpose acquisition companies.
−Removed: Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
−Removed: This conflict of interest could have a negative impact on our ability to complete our initial business combination.
−Removed: Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses.
−Removed: We do not intend to have any full-time employees prior to the completion of our initial business combination.
−Removed: Each of our officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our officers are not obligated to contribute any specific number of hours per week to our affairs.
−Removed: Our independent directors also serve as officers and board members for other entities.
−Removed: If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
−Removed: Our officers and directors presently have, and any of them in the future may have, additional, fiduciary or contractual obligations to other entities, including other blank check companies, and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
−Removed: Following the completion of our initial public offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses or entities.
−Removed: Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities, including other blank check companies, pursuant to which such officer or director may be required to present a business combination opportunity to such entity.
−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 and a potential target business may be presented to another entity prior to its presentation to us.
−Removed: In addition, our sponsor, officers and directors may become affiliated with other blank check companies that may have acquisition objectives that are similar to ours.
−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 and a potential target business may be presented to such other blank check companies prior to its presentation to us.
−Removed: Our amended and restated memorandum and articles of association provide that, to the maximum extent permitted by law, we renounce any interest or expectancy in or in being offered an opportunity to participate in any business combination opportunity:
−Removed: (i) which may be a corporate opportunity for both us and our sponsor or its affiliates and any companies in which our sponsor or its affiliates have invested about which any of our officers or directors acquires knowledge;
−Removed: or (ii) the presentation of which would breach an existing legal obligation of a director or officer to another entity, and we will waive any claim or cause of action we may have in respect thereof.
−Removed: In addition our amended and restated memorandum and articles of association contain provisions to exculpate and indemnify, to the maximum extent permitted by law, such persons in respect of any liability, obligation or duty to the company that may arise as a consequence of such persons becoming aware of any business opportunity or failing to present such business opportunity.
−Removed: For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Item 10.
−Removed: Directors, Executive Officers and Corporate Governance” and “Item 13.
−Removed: Certain Relations and Related Transactions, and Director Independence.”
−Removed: Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
−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 fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so.
−Removed: Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us.
−Removed: Accordingly, such persons or entities may have a conflict between their interests and ours.
−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 best interests.
−Removed: If this were the case, it may be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we might have a claim against such individuals.
−Removed: However, we might not ultimately be successful in any claim we may make against them for such reason.
−Removed: In particular, Energy Spectrum and its affiliates also are focused on investments in the energy industry.
−Removed: As a result, there may be substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive target for such other affiliates.
−Removed: We are dependent upon our officers and directors and their loss could adversely affect our ability to operate.
−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 completed 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 their 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: Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed, and because our sponsor, officers and directors who have an interest in founder shares may profit substantially from a business combination even under circumstances where our public shareholders would experience losses in connection with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
−Removed: The personal and financial interests of the holders of our founder shares and our officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination and may result in a misalignment of interests between the holders of our founder shares and our officers and directors, on the one hand, and our public shareholders, on the other.
−Removed: In particular, because the founder shares were purchased at approximately $0.004 per share, the holders of our founder shares (including members of our management team that directly or indirectly own founder shares) could make a substantial profit after our initial business combination even if our public shareholders lose money on their investment as a result of a decrease in the post-combination value of their Class A ordinary shares (after accounting for any adjustments in connection with an exchange or other transaction contemplated by the business combination).
−Removed: For example, a holder of 1,000 founder shares would have paid approximately $3.50 to obtain such shares.
−Removed: At the time of an initial business combination, such holder would be able to convert such founder shares into 1,000 shares of our Class A ordinary shares, and would receive the same consideration in connection with our initial business combination as a public shareholder for the same number of shares of our Class A ordinary shares.
−Removed: If the value of the shares of our Class A ordinary shares on a post-combination basis (after accounting for any adjustments in connection with an exchange or other transaction contemplated by the business combination) were to decrease to $5.00 per share of our Class A ordinary shares, the holder of our founder shares would obtain a profit of $4,996 on account of the 1,000 founder shares that the holder had converted into Class A ordinary shares in connection with the initial business combination.
−Removed: By contrast, a public shareholder holding 1,000 Class A ordinary shares would lose approximately $5,000 in connection with the same transaction.
−Removed: Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included by a target business as a condition to any agreement with respect to our initial business combination.
−Removed: Certain of our officers and directors have direct and indirect economic interests in us and/or our sponsor after the consummation of our initial public offering and such interests may potentially conflict with those of our public shareholders as we evaluate and decide whether to recommend a potential business combination to our public shareholders.
−Removed: Certain of our officers and directors may own membership interests in our sponsor and indirect interests in our Class B ordinary shares and private placement warrants which may result in interests that differ from the economic interests of the investors in our initial public offering, which includes making a determination of whether a particular target business is an appropriate business with which to effectuate our initial business combination.
−Removed: There may be a potential conflict of interest between our officers and directors that hold membership interests in our sponsor and our public shareholders that may not be resolved in favor of our public shareholders.
−Removed: See “Item 10.
−Removed: Directors, Executive Officers and Corporate Governance—Conflicts of Interest.”
−Removed: Risks Related to Our Securities
−Removed: You will not have any rights or interests in funds from the trust account, except under certain limited circumstances.
−Removed: Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
−Removed: Our public shareholders will be entitled to receive funds from the trust account only upon the earliest to occur of:
−Removed: (i) our completion of an initial business combination, and then only in connection with those Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination) or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares, and (iii) the redemption of our public shares if we have not consummated an initial business within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), subject to applicable law and as further described herein.
−Removed: Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), with respect to such Class A ordinary shares so redeemed.
−Removed: In no other circumstances will a public shareholder have any right or interest of any kind in the trust account.
−Removed: Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants.
−Removed: Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
−Removed: The 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: We were approved to have our units listed on the Nasdaq on the date of our initial public offering and our Class A ordinary shares and warrants on or promptly after their date of separation.
−Removed: Although after giving effect to our initial public offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will be, or will continue to be, listed on the Nasdaq in the future or prior to our initial business combination.
−Removed: In order to continue listing our securities on the Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and share price levels.
−Removed: Generally, we must maintain a minimum amount in shareholders’ equity (generally $2,000,000) and a minimum number of holders of our securities (generally 300 public holders).
−Removed: Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the Nasdaq initial listing requirements, which are more rigorous than the Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on the Nasdaq.
−Removed: For instance, our share price would generally be required to be at least $4.00 per share and we would be required to have a minimum of 400 round lot holders of our securities, with at least 50% of such round lot holders holding unrestricted securities with a market value of at least $2,500.
−Removed: We cannot assure you that we will be able to meet those listing requirements at that time.
−Removed: If the Nasdaq delists any of our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect such 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: reduced liquidity for our securities;
−Removed: a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
−Removed: a limited amount of news and analyst coverage;
−Removed: a decreased ability to issue additional securities or obtain additional financing in the future.
−Removed: The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units, Class A ordinary shares and warrants are listed on the Nasdaq, our units, Class A ordinary shares and warrants are covered securities under the statute.
−Removed: Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
−Removed: While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
−Removed: Further, if we were no longer listed on the Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
−Removed: You are not entitled to protections normally afforded to investors of many other blank check companies.
−Removed: Since the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws.
−Removed: However, because we have net tangible assets in excess of $5,000,000 after the completion of our initial public offering and the sale of the private placement warrants, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419.
−Removed: Accordingly, investors will not be afforded the benefits or protections of those rules.
−Removed: Among other things, this means our units were immediately tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419.
−Removed: Moreover, if our initial public offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
−Removed: If we seek shareholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
−Removed: If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares,” without our prior consent.
−Removed: However, such restriction does not affect our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
−Removed: Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
−Removed: Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination.
−Removed: As a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
−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 shareholders may be less than $10.20 per share.
−Removed: The funds in the trust account will be invested only in U.S.
−Removed: government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S.
−Removed: government obligations.
−Removed: While short-term U.S.
−Removed: government treasury bills 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 memorandum and articles of association, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income not released to us, net of taxes payable.
−Removed: Negative interest rates could impact the per share redemption amount that may be received by public shareholders.
−Removed: Our shareholders 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: If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business.
−Removed: As a result, a liquidator could seek to recover some or all amounts received by our shareholders.
−Removed: Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors.
−Removed: We cannot assure you that claims will not be brought against us for these reasons.
−Removed: We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our trust account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a fine of approximately $18,000 and imprisonment for five years in the Cayman Islands.
−Removed: If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per public share.
−Removed: Our placing of funds in the trust account may not protect those funds from third-party claims against us.
−Removed: Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account.
−Removed: Seeking such waivers from third parties, including prospective business combination targets, may deter such parties from entering into agreements with us.
−Removed: If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
−Removed: Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
−Removed: In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
−Removed: Upon redemption of our public shares, if we have not consummated an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption.
−Removed: Accordingly, due to claims of such creditors, the per-share redemption amount received by public shareholders could be less than the $10.20 per public share initially held in the trust account.
−Removed: Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account if less than $10.20 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our income tax obligations, provided that such liability will not apply to any claims by a third party or prospective target business that executed a waiver of any and all rights to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
−Removed: Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
−Removed: However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets are securities of our company.
−Removed: Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
−Removed: As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.20 per public share.
−Removed: In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares.
−Removed: None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
−Removed: Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.
−Removed: In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account if less than $10.20 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our income tax obligations, 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 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 against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance.
−Removed: If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.20 per public share.
−Removed: We may not have sufficient funds to satisfy indemnification claims of our directors and officers, or of our sponsor and its affiliates.
−Removed: We have agreed to indemnify our officers and directors to the fullest extent permitted by law.
−Removed: Additionally, we have agreed under our administrative services agreement to indemnify our sponsor, Energy Spectrum and its affiliates in connection with any by claims by the company or a third party in respect of any investment opportunities sourced by them, any liability arising with respect to their activities in connection with our affairs, and that are provided without a separate written agreement between us and any such party.
−Removed: However, our officers and directors, sponsor and its affiliates have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever (except to the extent they are entitled to funds from the trust account due to their ownership of public shares).
−Removed: Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
−Removed: Our obligation to indemnify our officers and directors, sponsor, Energy Spectrum and their affiliates may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty, or against our sponsor, Energy Spectrum and their affiliates for activities in connection with our affairs.
−Removed: These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, sponsor, Energy Spectrum and their affiliates even though such an action, if successful, might otherwise benefit us and our shareholders.
−Removed: Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
−Removed: If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
−Removed: If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our shareholders.
−Removed: In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors.
−Removed: If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
−Removed: If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders.
−Removed: To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
−Removed: We may not hold an annual meeting of shareholders until after the consummation of our initial business combination.
−Removed: In accordance with the Nasdaq corporate governance requirements, we are required to hold an annual general meeting no later than one year after our first fiscal year end following our listing on the Nasdaq.
−Removed: There is no requirement under the Companies Act for us to hold annual or extraordinary general meetings to elect directors.
−Removed: Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to discuss company affairs with management.
−Removed: Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
−Removed: Holders of Class A ordinary shares will not be entitled to vote on any election of directors we hold prior to our initial business combination.
−Removed: Prior to our initial business combination, only holders of our founder shares will have the right to vote on the election and removal of directors.
−Removed: Holders of our public shares will not be entitled to vote on the election and removal of directors during such time.
−Removed: Incumbent directors shall also have the ability to appoint additional directors or to appoint replacement directors in the event of a casual vacancy.
−Removed: Accordingly, you may not have any say in the management of our company prior to the consummation of an initial business combination.
−Removed: Registration of Class A ordinary shares issuable upon exercise of the warrants under the Securities Act may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis.
−Removed: If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
−Removed: We have agreed that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement filed in connection with our initial public offering or file a new registration statement for the registration under the Securities Act of the Class A ordinary shares issuable upon exercise of the warrants and thereafter will use our commercially reasonable efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement.
−Removed: We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.
−Removed: If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis.
−Removed: However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
−Removed: Notwithstanding the foregoing, if a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption is available.
−Removed: If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
−Removed: We will use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
−Removed: In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available.
−Removed: If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
−Removed: In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the Class A ordinary shares included in the units.
−Removed: If and when the warrants become redeemable by us, 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.
−Removed: There may be a circumstance where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption does not exist for holders of the warrants included as part of units sold in our initial public offering.
−Removed: In such an instance, our initial shareholders and their respective transferees (which may include our directors and officers) would be able to sell the ordinary shares underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying ordinary shares.
−Removed: We will use our commercially reasonable efforts to register or qualify such ordinary shares under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering.
−Removed: However, there may be instances in which holders of our public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
−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:
−Removed: restrictions on the nature of our investments;
−Removed: 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:
−Removed: registration as an investment company with the SEC;
−Removed: adoption of a specific form of corporate structure;
−Removed: reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
−Removed: In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S.
−Removed: government securities and cash items) on an unconsolidated basis.
−Removed: Our business is to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long term.
−Removed: We do not plan to buy businesses or assets with a view to resale or profit from their resale.
−Removed: We do not plan to buy unrelated businesses or assets or to be a passive investor.
−Removed: We do not believe that our anticipated principal activities will subject us to the Investment Company Act.
−Removed: To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
−Removed: government treasury obligations.
−Removed: Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets.
−Removed: By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act.
−Removed: Our initial public offering was not intended for persons who are seeking a return on investments in government securities or investment securities.
−Removed: The trust account is intended as a holding place for funds pending the earliest to occur of either:
−Removed: (i) the completion of our initial business combination;
−Removed: (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination) or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares;
−Removed: or (iii) absent our completing an initial business combination within 18 months from the closing of our initial public offering (or up to 24 months, if we extend the time to complete a business combination), our return of the funds held in the trust account to our public shareholders as part of our redemption of the public shares.
−Removed: If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.
−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 complete a business combination.
−Removed: If we have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.20 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
−Removed: Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
−Removed: We are subject to laws and regulations enacted by national, regional and local governments.
−Removed: In particular, we are 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 may also 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, including our ability to negotiate and complete our initial business combination, and results of operations.
−Removed: We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
−Removed: Although we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial public offering, we may choose to incur substantial debt to complete our initial business combination.
−Removed: We and our officers 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 the 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 an 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 is payable on demand;
−Removed: our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
−Removed: our inability to pay dividends on our Class A ordinary shares;
−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 Class A ordinary shares, 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: Our sponsor controls a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
−Removed: Our sponsor owns a significant portion of our issued and outstanding ordinary shares as of March 28, 2023.
−Removed: Accordingly, it may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association.
−Removed: If our sponsor purchases any additional Class A ordinary shares in the aftermarket or in privately negotiated transactions, this would increase its control.
−Removed: Neither our sponsor nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this Report.
−Removed: Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A ordinary shares.
−Removed: Assuming that only one-third of our issued and outstanding ordinary shares, representing a quorum under our amended and restated memorandum and articles of association, are voted, we will not need any public shares in addition to our founder shares to be voted in favor of an initial business combination in order to have an initial business combination approved.
−Removed: In addition, our board of directors, whose members were elected by our sponsor, is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year.
−Removed: We may not hold an annual meeting of shareholders to elect new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the business combination.
−Removed: If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our sponsor, because of its ownership position, will control the outcome, as only holders of our Class B ordinary shares will have the right to vote on the election of directors and to remove directors prior to our initial business combination.
−Removed: Accordingly, our sponsor will continue to exert control at least until the completion of our initial business combination.
−Removed: In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
−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 at least 50% of the then-outstanding public warrants.
−Removed: As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of our Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all without your approval.
−Removed: Our warrants were 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 for the purpose of (i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this Report, or defective provision (ii) amending the provisions relating to cash dividends on ordinary shares as contemplated by and in accordance with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not materially adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the interests of the registered holders of public warrants.
−Removed: Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants.
−Removed: Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
−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, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, 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, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim.
−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 the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United 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: We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
−Removed: We have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, if certain conditions are met, including the condition that the closing price of our Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption.
−Removed: If and when the warrants become redeemable by us, 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.
−Removed: As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants.
−Removed: Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
−Removed: In addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption if certain conditions are met, including the conditions that the closing price of our Class A ordinary shares equals or exceeds $10.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and that holders will be able to exercise their warrants prior to redemption for a number of Class A ordinary shares determined based on the redemption date and the fair market value of our Class A ordinary shares.
−Removed: The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants, including because the number of ordinary shares received is capped at 0.361 Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
−Removed: In addition, our ability to redeem the outstanding warrants when the market value equals or exceeds $10.00, which is less than the $11.50 per share exercise price of the warrants, could result in holders having to exercise their warrants at a time when they are out-of-the-money or holders receiving nominal consideration for their warrants.
−Removed: None of the private placement warrants will be redeemable by us so long as they are held by our sponsor, the Salient Client Accounts or their permitted transferees.
−Removed: Our warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination.
−Removed: We issued 13,800,000 warrants to purchase our Class A ordinary shares as part of the units offered in our initial public offering and, simultaneously with the closing of initial public offering, we issued in a private placement an aggregate of 14,040,000 private placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share, subject to adjustment.
−Removed: In addition, if the sponsor, its affiliates or a member of our management team makes any working capital loans, it may convert up to $1,500,000 of such loans into up to an additional 1,500,000 private placement warrants, at the price of $1.00 per warrant.
−Removed: We may also issue Class A ordinary shares in connection with our redemption of our warrants.
−Removed: To the extent we issue ordinary shares for any reason, including to effectuate a business combination, the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business.
−Removed: Such warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares issued to complete the business transaction.
−Removed: Therefore, our warrants may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
−Removed: Because each unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
−Removed: Each unit contains one-half of one redeemable warrant.
−Removed: Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole units will trade.
−Removed: Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
−Removed: If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the warrant holder.
−Removed: This is different from other offerings similar to ours whose units include one ordinary share and one whole warrant to purchase one whole share.
−Removed: We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses.
−Removed: Nevertheless, this unit structure may cause our units to be worth less than if a unit included a warrant to purchase one whole share.
−Removed: A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
−Removed: Unlike most blank check companies, if (i) we issue additional Class A ordinary shares 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 ordinary share, (ii) 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 (iii) the Market Value is below $9.20 per share, 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 prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
−Removed: This may make it more difficult for us to consummate an initial business combination with a target business.
−Removed: Our warrants are expected to be accounted for as a warrant liability and will be recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Class A ordinary shares or may make it more difficult for us to consummate an initial business combination.
−Removed: Following the consummation of our initial public offering and the concurrent private placement of warrants, we issued an aggregate of 27,840,000 warrants (comprised of the 13,800,000 warrants included in the units and the 14,040,000 private placement warrants).
−Removed: We account for these as a warrant liability and will record at fair value upon issuance any changes in fair value each period reported in earnings as determined us based upon a valuation report obtained from its independent third party valuation firm.
−Removed: The impact of changes in fair value on earnings may have an adverse effect on the market price of our Class A ordinary shares.
−Removed: In addition, potential targets may seek a special purpose acquisition company that does not have warrants that are accounted for as a warrant liability, which may make it more difficult for us to consummate an initial business combination with a target business.
−Removed: We are an emerging growth company and a 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” or “smaller reporting 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: We are an “emerging growth company” 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 shareholder approval of any golden parachute payments not previously approved.
−Removed: As a result, our shareholders 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, including if the market value of our Class A ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31.
−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 accounting standards used.
−Removed: Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
−Removed: Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
−Removed: We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30.
−Removed: To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
−Removed: Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
−Removed: Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Report.
−Removed: We are 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 business with which we seek to complete our initial 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 acquisition.
−Removed: Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S.
−Removed: federal courts may be limited.
−Removed: We are an exempted company incorporated under the laws of the Cayman Islands.
−Removed: As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
−Removed: Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands, which we have designated as our exclusive forum for certain legal actions.
−Removed: We are subject to the federal securities laws of the United States.
−Removed: The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
−Removed: The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands.
−Removed: The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States.
−Removed: In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law.
−Removed: In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
−Removed: We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state;
−Removed: and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature.
−Removed: In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met.
−Removed: For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
−Removed: A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
−Removed: As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
−Removed: Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench management.
−Removed: Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests.
−Removed: These provisions include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of our initial business combination only holders of our Class B ordinary shares, which have been issued to our sponsor, are entitled to vote on the election of directors, 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: Our amended and restated memorandum and articles of association provide that the courts of the Cayman Islands are the exclusive forum for certain disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for complaints against us or our directors, officers or employees.
−Removed: Our amended and restated memorandum and articles of association provide that, unless the company consents in writing to the selection of an alternative forum (a) the federal courts of the United States shall have exclusive jurisdiction to hear, settle and/or determine any dispute, controversy or claim arising under the provisions of the Securities Act or the Exchange Act, which are referred to as the “U.S.
−Removed: Actions;” and (b) save for such U.S.
−Removed: Actions, the courts of the Cayman Islands shall have exclusive jurisdiction over any claim or dispute arising out of or in connection with the amended and restated memorandum and articles of association or otherwise related in any way to each member’s shareholding in the company, including but not limited to (i) any derivative action or proceeding brought on behalf of the company;
−Removed: (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the company to the company or the company’s members;
−Removed: (iii) any action asserting a claim arising pursuant to any provision of the Companies Act of the Cayman Islands or the amended and restated memorandum and articles of association;
−Removed: or (iv) any action asserting a claim against the company concerning its internal affairs.
−Removed: This choice of forum provision may increase a shareholder’s cost and limit the shareholder’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.
−Removed: Any person or entity purchasing or otherwise acquiring any of our shares or other securities, whether by transfer, sale, operation of law or otherwise, shall be deemed to have notice of and have irrevocably agreed and consented to these provisions.
−Removed: The enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings.
−Removed: It is possible that a court could find this type of provisions to be inapplicable or unenforceable, and if a court were to find this provision in our amended and restated memorandum and articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could have adverse effect on our business and financial performance.
−Removed: General Risks
−Removed: We are a recently incorporated company with limited operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
−Removed: We are a recently formed company, incorporated under the laws of the Cayman Islands with limited operating results.
−Removed: Accordingly, you have limited 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 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: 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 stage 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: Since only holders of our founder shares have the right to vote on the appointment or removal of directors, upon the listing of our shares on the Nasdaq, the Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
−Removed: Only holders of our founder shares have the right to vote on the appointment or removal of directors.
−Removed: As a result, the Nasdaq may consider us to be a “controlled company” within the meaning of the Nasdaq corporate governance standards.
−Removed: Under the Nasdaq corporate governance standards, a company of which more than 50% of the voting power for the directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that
−Removed: we have a board that includes a majority of “independent directors,” as defined under the rules of the Nasdaq;
−Removed: we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;
−Removed: we have a nominating committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
−Removed: We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of the Nasdaq, subject to applicable phase-in rules.
−Removed: However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.
−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: Fewer insurance companies are offering quotes for directors and officers liability coverage, 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 may 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: We may be a passive foreign investment company (a “PFIC”), which could result in adverse U.S.
−Removed: federal income tax consequences to U.S.
−Removed: If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S.
−Removed: Holder of our Class A ordinary shares or redeemable warrants, the U.S.
−Removed: holder may be subject to certain adverse U.S.
−Removed: federal income tax consequences and may be subject to additional reporting requirements.
−Removed: As used herein, the term “U.S.
−Removed: Holder” means a beneficial owner of Units, Class A ordinary shares or redeemable warrants that is for U.S.
−Removed: federal income tax purposes:
−Removed: (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S.
−Removed: federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S.
−Removed: federal income taxation regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (B) it has in effect a valid election to be treated as a United States person.
−Removed: Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception.
−Removed: Depending on the particular circumstances the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception.
−Removed: Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year.
−Removed: Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year.
−Removed: Moreover, if we determine we are a PFIC for any taxable year prior to our Business Combination, upon written request, we will endeavor to provide to a U.S.
−Removed: holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S.
−Removed: holder to make and maintain a qualified electing fund (“QEF”) election, but there can be no assurance that we will timely provide such required information, and such election would be unavailable with respect to our redeemable warrants in all cases.
−Removed: investors to consult their own tax advisors regarding the possible application of the PFIC rules.
−Removed: federal excise tax could be imposed on us in connection with redemptions of our shares.
−Removed: On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law.
−Removed: The IR Act provides for, among other things, a new U.S.
−Removed: federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations.
−Removed: If we were to acquire a domestic corporation or engage in a transaction in which a domestic corporation becomes our parent or our affiliate and our securities trade on a U.S.
−Removed: stock exchange, we may become a “covered corporation” within the meaning of the IR Act.
−Removed: The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased.
−Removed: The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase.
−Removed: However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.
−Removed: In addition, certain exceptions apply to the excise tax.
−Removed: Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
−Removed: The IR Act applies only to repurchases that occur after December 31, 2022.
−Removed: Whether and to what extent the company would be subject to the excise tax in connection with a business combination or otherwise, would depend on a number of factors, including (i) the structure of a business combination, (ii) the fair market value of the redemptions and repurchases in connection with the business combination or otherwise, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination but issued within the same taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury.
−Removed: In addition, because the excise tax would be payable by the company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.
−Removed: The foregoing could cause a reduction in the cash available on hand to complete a business combination or a reduction in the cash available for a redemption of the Public Shares in connection with a business combination or otherwise.
−Removed: An investment in our initial public offering may result in uncertain or adverse U.S.
−Removed: federal income tax consequences.
−Removed: An investment in our initial public offering may result in uncertain U.S.
−Removed: federal income tax consequences.
−Removed: For instance, there are no authorities that directly address instruments similar to the units we issued in our initial public offering, and the allocation an investor makes with respect to the purchase price of a unit between the underlying Class A ordinary share and the one-half of one warrant to purchase one Class A ordinary share could be challenged by the IRS or a court.
−Removed: Furthermore, the U.S.
−Removed: federal income tax consequences of a cashless exercise of our warrants are unclear under current law.
−Removed: It is also unclear whether the redemption rights with respect to our Class A ordinary shares suspend the running of the holding period of a U.S.
−Removed: holder for purposes of determining whether any gain or loss recognized by such U.S.
−Removed: holder on a sale or exchange of Class A ordinary shares is long-term capital gain or loss and for determining whether any dividends we pay would be considered “qualified dividend income” (within the meaning of section 1(h)(11) of the Code) for U.S.
+Added: Risks Related to the Solar Industry
+Added: The solar energy industry is an emerging market which is constantly
+Added: evolving and additional demand for solar energy systems may not develop to the size or at the rate we expect.
+Added: The solar energy industry is an emerging and constantly evolving market
+Added: We believe the solar energy industry is still developing and maturing, and we cannot be certain that additional demand for
+Added: solar energy systems will grow to the size or at the rate we expect.
+Added: Any future growth of the solar energy market and the success of our
+Added: solar service offerings depend on many factors beyond our control, including recognition and acceptance of the solar service market by
+Added: consumers, the pricing of alternative sources of energy, a favorable regulatory environment, the continuation of expected tax benefits
+Added: and other incentives, and our ability to provide our solar service offerings cost effectively.
+Added: If additional demand for solar energy systems
+Added: does not develop to the size or at the rate we expect, our business may be adversely affected.
+Added: Solar energy has yet to achieve broad market acceptance and depends
+Added: in part on continued support in the form of rebates, tax credits, and other incentives from federal, state and local governments or utilities.
+Added: If support diminishes materially for solar policy related to rebates, tax credits and other incentives, demand for our products and services
+Added: may decrease and our ability to obtain external financing on acceptable terms, or at all, could be materially adversely affected.
+Added: types of funding limitations could lead to inadequate financing support for the anticipated growth in our business.
+Added: Furthermore, growth
+Added: in residential solar energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of
+Added: which can change quickly.
+Added: Declining macroeconomic conditions, including in the job markets and residential real estate markets, could
+Added: contribute to instability and uncertainty among customers and impact their financial wherewithal, credit scores or interest in entering
+Added: into long-term contracts, even if such contracts would generate immediate and/or long-term savings.
+Added: Furthermore, market prices of retail electricity generated by utilities
+Added: or other energy sources could decline for a variety of reasons, as discussed further below.
+Added: Any such declines in macroeconomic conditions,
+Added: changes in retail prices of electricity or changes in customer preferences would adversely impact our business.
+Added: At the international level, the United Nations-sponsored Paris Agreement
+Added: requires member states, including the United States, to submit non -binding, individually-determined greenhouse gas reduction
+Added: goals known as “Nationally Determined Contributions” every five years after 2020.
+Added: President Biden has committed the United
+Added: States to a goal of reducing greenhouse gas emissions by 50-52% below 2005 levels by 2030, a target consistent with the Paris
+Added: Agreement’s goal of “net-zero” greenhouse gas emissions by 2050.
+Added: “Net zero” means that the amount
+Added: of greenhouse gases emitted into the atmosphere are balanced by an equal amount of greenhouse gases being removed from the atmosphere.
+Added: Achieving net zero emissions by 2050 will require an unprecedented transformation of American energy systems and the adoption of a wide
+Added: variety of clean energy, storage, and home electrification solutions.
+Added: Our successful deployment of such products will depend on several
+Added: factors outside our control, including shifting market conditions and policy frameworks.
+Added: Our failure to adapt to changing market conditions,
+Added: to compete successfully with existing or new competitors, and to adopt new or enhanced offerings could limit our growth and have a material
+Added: adverse effect on our business and prospects.
+Added: Further, additional international agreements or any legislation, regulation, or executive
+Added: action within the U.S.
+Added: addressing climate change, including any climate-related disclosure requirements and legislation or regulation
+Added: intended to support the goals of the Paris Agreement, may in the future result in increases in our compliance costs and other operating
+Added: Finally, if the United States were to exit the Paris Agreement, support from the U.S.
+Added: government and, as a result, consumer demand,
+Added: may decrease.
+Added: We face competition from electric utilities, retail electric
+Added: providers, independent power producers, renewable energy companies and other market participants.
+Added: The solar energy and renewable energy industries are both highly competitive
+Added: and continually evolving as participants strive to distinguish themselves within their markets and compete with large electric utilities.
+Added: We believe our primary competitors are the electric utilities that supply electricity to our potential customers.
+Added: We compete with these
+Added: electric utilities primarily based on price (cents per kWh), predictability of future prices (by providing pre-determined annual
+Added: price escalations) and the ease by which customers can switch to electricity generated by our solar energy systems.
+Added: We may also compete
+Added: based on other value-added benefits, such as reliability and carbon-friendly power.
+Added: If we cannot offer compelling value to our customers
+Added: based on these factors, our business may not grow.
+Added: Electric utilities generally have substantially greater financial,
+Added: technical, operational and other resources than we do.
+Added: As a result, these competitors may be able to devote more resources to the research,
+Added: development, promotion and sale of their products or services or respond more quickly to evolving industry standards and changes in market
+Added: conditions than we can.
+Added: Electric utilities could also offer other value-added products or services that could help them to compete with
+Added: us even if the cost of electricity they offer is higher than ours.
+Added: In addition, a majority of utilities’ sources of electricity
+Added: is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.
+Added: Electric utilities could also offer customers the option of purchasing electricity obtained from renewable energy resources, including
+Added: solar, which would compete with our offerings.
+Added: Moreover, regulated utilities are increasingly seeking approval to “rate-base”
+Added: their own solar energy system and energy storage system businesses.
+Added: Rate-basing means that utilities would receive guaranteed rates of
+Added: return for their solar energy system and energy storage system businesses.
+Added: This is already commonplace for utility-scale solar projects
+Added: and commercial solar projects.
+Added: While few utilities to date have received regulatory permission to rate-base residential solar energy systems
+Added: or energy storage systems, our competitiveness would be significantly harmed should more utilities receive such permission because we
+Added: do not receive guaranteed profits for our solar service offerings.
+Added: We also compete with retail electric providers and independent power
+Added: producers not regulated like electric utilities but which have access to the utilities’ electricity transmission and distribution
+Added: infrastructure pursuant to state, territorial and local pro-competition and consumer choice policies.
+Added: These retail electric
+Added: providers and independent power producers are able to offer customers electricity supply-only solutions that are competitive with our
+Added: solar energy system options on both price and usage of renewable energy technology while avoiding the physical installations our current
+Added: business model requires.
+Added: This may limit our ability to acquire new customers, particularly those who have an aesthetic or other objection
+Added: to putting solar panels on their roofs.
+Added: We also compete with solar companies with vertically integrated business
+Added: models like our own.
+Added: For example, some of our competitors offer their own consumer financing products to customers and/or produce one
+Added: or more components of the solar energy system or energy storage system.
+Added: In addition to financing and manufacturing, some other business
+Added: models also include sales, engineering, installation, maintenance and monitoring services.
+Added: Many of our vertically integrated competitors
+Added: are larger than we are and offer certain vertical services that we do not.
+Added: As a result, these competitors may be able to devote more resources
+Added: to the research, development, promotion and sale of their products or services or respond more quickly to evolving industry standards
+Added: and changes in market conditions than we can.
+Added: Solar companies with vertically integrated business models could also offer other value-added
+Added: products or services that could help them to compete with us.
+Added: Larger competitors may also be able to access financing at a lower cost
+Added: of capital than we are able to obtain.
+Added: In addition, we compete with other residential solar companies who
+Added: sell or finance products directly to consumers, inclusive of programs like Property-Assessed Clean Energy financing programs established
+Added: by local governments.
+Added: For example, we face competition from solar installation businesses that seek financing from external parties or
+Added: utilize competitive loan products or state and local programs.
+Added: We also compete with solar companies that are marketed to potential
+Added: customers by dealers, and we may also face competition from new entrants into the market as a result of the passage of the Inflation Reduction
+Added: Act of 2022 (the “ IRA ”) and its anticipated impacts and benefits to the solar industry.
+Added: Some of these competitors
+Added: specialize in the distributed solar energy market and some may provide energy at lower costs than we do.
+Added: Some of our competitors offer
+Added: or may offer similar services and products as we do, such as direct outright sales of solar energy systems.
+Added: Many of our competitors also
+Added: have significant brand name recognition, lower barriers to entry into the solar market, greater capital resources than we have and extensive
+Added: knowledge of our target markets.
+Added: In addition, some of our competitors have an established business of providing construction, electrical
+Added: contracting, or roofing services.
+Added: We also compete with community solar products offered by solar companies
+Added: or sponsored by local governments and municipal power companies, as well as utility companies that provide renewable power purchase programs.
+Added: Some customers might choose to subscribe to a community solar project or renewable subscriber programs instead of having a solar energy
+Added: system installed on their home or business, which could affect our sales.
+Added: Additionally, some utility companies (and some utility-like
+Added: entities, such as community choice aggregators) have generation portfolios that are increasingly renewable in nature.
+Added: As utility companies
+Added: offer increasingly renewable portfolios to retail customers, those customers might be less inclined to have a solar energy system installed
+Added: on their home or business, which could adversely affect our growth.
+Added: We have historically provided our services only to residential customers,
+Added: but we may expand to other markets, including commercial and industrial customers.
+Added: There is intense competition in the solar energy sector
+Added: in the markets in which we operate and the markets into which we may expand.
+Added: As new entrants continue to enter into these markets, and
+Added: as we enter into new markets, we may be unable to grow or maintain our operations and we may be unable to compete with companies that
+Added: have already established themselves in both the residential market and non-residential market.
+Added: As the solar industry grows and evolves, we will also face new competitors
+Added: and technologies who are not currently in the market (including those resulting from the consolidation of existing competitors).
+Added: is characterized by low technological barriers to entry, and well-capitalized companies, including utilities and integrated energy companies,
+Added: could choose to enter the market and compete with us.
+Added: Our failure to adapt to changing market conditions and to compete successfully with
+Added: existing or new competitors will limit our growth and will have a material adverse effect on our business, financial condition and results
+Added: of operations.
+Added: A material reduction in the retail price of electricity charged
+Added: by electric utilities or other retail electricity providers would harm our business, financial condition and results of operations.
+Added: Decreases in the retail price of electricity from electric utilities
+Added: or from other retail electric providers, including other renewable energy sources such as larger-scale solar energy systems, could make
+Added: our offerings less economically attractive.
+Added: The price of electricity from utilities could decrease as a result of:
+Added: the construction of a significant number of new power generation plants, whether generated by natural gas, nuclear power, coal or renewable energy;
+Added: the construction of additional electric transmission and distribution lines;
+Added: a reduction in the price of natural gas or other natural resources as a result of increased supply due to new drilling techniques or other technological developments, a relaxation of associated regulatory standards or broader economic or policy developments;
+Added: less demand for electricity due to energy conservation technologies and public initiatives to reduce electricity consumption or to recessionary economic conditions;
+Added: development of competing energy technologies that provide less expensive energy.
+Added: A reduction in electric utilities’ rates or changes to peak hour
+Added: pricing policies or rate design (such as the adoption of a fixed or flat rate) could also make our offerings less competitive with the
+Added: price of electricity from the electrical grid.
+Added: If the cost of energy available from electric utilities or other providers were to decrease
+Added: relative to solar energy generated from solar energy systems or if similar events impacting the economics of our offerings were to occur,
+Added: we may have difficulty attracting new customers.
+Added: For example, large utilities in some states have started transitioning customers to time-of-use rates
+Added: and also have adopted a shift in the peak period for time-of-use rates to later in the day.
+Added: Unless grandfathered under a different
+Added: rate, customers with solar energy systems may be required to take service under time-of-use rates with the later peak period.
+Added: Moving utility customers to time-of-use rates or the shift in the timing of peak rates for utility-generated electricity to
+Added: include times of day when solar energy generation is less efficient or non-operable could also make our offerings less competitive.
+Added: Time-of-use rates
+Added: could also result in higher costs for our customers whose electricity requirements are not fully met by our offerings during peak periods.
+Added: Sales and installation of solar energy systems depend heavily
+Added: on suitable meteorological and environmental conditions.
+Added: If meteorological or environmental conditions are unexpectedly unfavorable, the
+Added: electricity production from our solar service offerings may be below our expectations, and our ability to timely deploy new systems may
+Added: be adversely impacted.
+Added: The energy produced and revenue and cash flows generated by a solar
+Added: energy system depend on suitable solar and weather conditions, both of which are beyond our control.
+Added: Furthermore, components of our systems,
+Added: such as panels and inverters, could be damaged by severe weather or natural catastrophes, such as hailstorms, tornadoes, fires, or earthquakes.
+Added: Homeowner insurance or homeowners generally bear the expense of repairing weather-related damage to solar energy systems.
+Added: these circumstances, we make our install teams available to remove, repair and reinstall the systems.
+Added: Sustained unfavorable weather or
+Added: environmental conditions also could unexpectedly delay the installation of our solar energy systems, leading to increased expenses and
+Added: decreased revenue and cash flows in the relevant periods.
+Added: Extreme weather conditions, including those associated with climate change,
+Added: as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation
+Added: of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze.
+Added: Weather patterns could change,
+Added: making it harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed.
+Added: This could make our solar service offerings less economical overall or make individual systems less economical.
+Added: Our economic model and
+Added: projected returns on our solar energy systems require achievement of certain production results from our systems and, in some cases, we
+Added: guarantee these results to our consumers.
+Added: If the solar energy systems underperform for any reason, our business could suffer.
+Added: events or conditions could harm our business, financial condition, and results of operations.
+Added: Climate change may have long-term impacts on our business, our
+Added: industry, and the global economy.
+Added: Climate change poses a systemic threat to the global economy, and we
+Added: believe it will continue to do so until our society transitions to renewable energy and decarbonizes.
+Added: While our core business model seeks
+Added: to accelerate this transition to renewable energy, there are inherent climate-related risks to our business operations.
+Added: Warming temperatures
+Added: throughout the United States, including Florida, our biggest market, have contributed to extreme weather, intense drought, and increased
+Added: wildfire risks.
+Added: These events have the potential to disrupt our business, the operations of our third-party suppliers, and our customers,
+Added: and may cause us to incur additional operational costs.
+Added: For instance, natural disasters and extreme weather events associated with climate
+Added: change can impact our operations by delaying the installation of our systems, leading to increased expenses and decreased revenue and
+Added: They can also cause a decrease in the output from our systems due to smoke or haze.
+Added: Additionally, if weather patterns significantly
+Added: shift due to climate change, it may be harder to predict the average annual amount of sunlight striking each location where our solar
+Added: energy systems are installed and energy output from our systems could be reduced in the short-term or long-term in certain areas.
+Added: could make our solar service offerings less economical overall, make individual systems less economical, or reduce demand for our products,
+Added: as well as damage our reputation to the extent energy generation from our products does not meet customer expectations.
+Added: For more information
+Added: regarding risks posed by meteorological conditions, see “— Sales and installation of solar energy systems depend heavily
+Added: on suitable meteorological and environmental conditions.
+Added: If meteorological or environmental conditions are unexpectedly unfavorable, the
+Added: electricity production from our solar service offerings may be below our expectations, and our ability to timely deploy new systems may
+Added: be adversely impacted.
+Added: Our business has benefited from the declining cost of solar energy
+Added: system and energy storage system components and may be harmed to the extent the cost of such components stabilizes or increases in the
+Added: Our business has benefited from the declining cost of solar energy
+Added: system and energy storage system components, and to the extent such costs stabilize, decline at a slower rate or increase, our future
+Added: growth rate may be negatively impacted.
+Added: The declining cost of solar energy system and energy storage system components and the raw materials
+Added: necessary to manufacture them has been a key driver in the price of solar energy systems and energy storage systems and customer adoption
+Added: of solar energy.
+Added: While historically solar energy system and energy storage system components and raw material prices have declined, the
+Added: cost of these components and raw materials have recently increased and may continue to increase in the future, and such products’
+Added: availability could decrease, due to a variety of factors, including growth in the solar energy system and energy storage system industries
+Added: and the resulting increase in demand for solar energy system and energy storage system components and the raw materials necessary to manufacture
+Added: them, supply chain disruptions, tariff penalties, duties, and trade barriers, export regulations, regulatory or contractual limitations,
+Added: industry market requirements and industry standards, changes in technology, the loss of or changes in economic governmental incentives,
+Added: inflation or other factors.
+Added: An increase in the prices of solar energy system components and raw materials could slow our growth and cause
+Added: our business and results of operations to suffer.
+Added: See “ — Increases in the cost or reduction in supply of solar energy system
+Added: and energy storage system components due to tariffs or trade restrictions imposed by the U.S.
+Added: government could have an adverse effect
+Added: on our business, financial condition and results of operations.
+Added: Risks Related to Operations
+Added: We may be unable to sustain our level of profitability in the
+Added: We may incur net losses as we increase our spending to finance the
+Added: expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, increase spending on our
+Added: brand awareness and other sales and marketing initiatives, make significant investments to drive future growth in our business and implement
+Added: internal systems and infrastructure to support our growth and operate as a publicly traded company.
+Added: We do not know whether our revenue
+Added: will grow rapidly enough to absorb these costs and our limited operating history makes it difficult to assess the extent of these expenses
+Added: or their impact on our results of operations.
+Added: Our ability to sustain profitability depends on a number of factors, including but not limited
+Added: growing our customer base;
+Added: reducing our operating costs by lowering our customer acquisition costs and optimizing our design and installation processes and supply chain logistics;
+Added: maintaining or further lowering our cost of capital;
+Added: reducing the cost of components for our solar service offerings;
+Added: growing and maintaining our sales network;
+Added: maintaining high levels of product quality, performance, and customer satisfaction;
+Added: growing our direct-to-consumer business to scale.
+Added: Even if we do sustain profitability, we may be unable to achieve positive
+Added: cash flows from operations in the future.
+Added: Our growth depends in part on the success of our relationships
+Added: with third parties such as our equipment suppliers, subcontractors and dealers, including dealers who market to customers and bring the
+Added: resulting solar contracts to us for fulfillment.
+Added: A key component of our growth strategy is to develop or expand our
+Added: relationships with third parties, such as our equipment suppliers, subcontractors and dealers.
+Added: A significant portion of our business depends
+Added: on attracting and retaining new and existing sales dealers who market to customers and bring the resulting contracts to us for fulfillment.
+Added: Negotiating relationships with subcontractors, dealers and other third parties, training such third parties, and monitoring them for compliance
+Added: with our standards require significant time and resources and may present greater risks and challenges than expanding our direct sales
+Added: and installation team.
+Added: If we are unsuccessful in establishing or maintaining our relationships with these third parties, our ability to
+Added: grow our business and address our market opportunity could be impaired.
+Added: Even if we are able to establish and maintain these relationships,
+Added: we may not be able to execute our goal of leveraging these relationships to meaningfully expand our business, brand recognition and customer
+Added: This would limit our growth potential and our opportunities to generate significant additional revenue or cash flows.
+Added: Due to the limited number of suppliers in our industry, the acquisition
+Added: of any of these suppliers by a competitor or any shortage, delay, price change, imposition of tariffs or duties or other limitation in
+Added: our ability to obtain components or technologies we use could result in sales and installation delays, cancellations and loss of customers.
+Added: We purchase solar panels, inverters, energy storage systems and other
+Added: system components and instruments from a limited number of suppliers, qualified and approved by our engineering and design teams, making
+Added: us susceptible to quality issues, shortages and price changes that may occur in the supply chain.
+Added: There are a limited number of suppliers
+Added: of solar energy system components, instruments and technologies, and our ability to obtain components or technologies we use could be
+Added: affected by circumstances beyond our control, including:
+Added: Industry-wide shortages of key components and instruments, including batteries and inverters, in times of rapid industry growth.
+Added: The manufacturing infrastructure for some of these components has a long lead-time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components.
+Added: The solar industry is currently experiencing rapid growth and, as a result, shortages of key components or instruments, including solar panels, may be more likely to occur, which in turn may result in price increases for such components.
+Added: Even if industry-wide shortages do not occur, suppliers may decide to allocate key components or instruments with high demand or insufficient production capacity to more profitable customers, customers with long-term supply agreements or customers other than us.
+Added: As a result, our ability to originate solar energy systems and energy storage systems may be reduced.
+Added: Natural disasters and other events beyond our control (such as earthquakes, wildfires, flooding, hurricanes, freezes, tsunamis, typhoons, volcanic eruptions, droughts, tornadoes, power outages or other natural disasters, the effects of climate change and related extreme weather, public health issues and pandemics, war, terrorism, government restrictions or limitations on trade, impediments to international shipping and geopolitical unrest and uncertainties).
+Added: Human rights and forced labor issues in foreign countries and the U.S.
+Added: government’s response to them .
+Added: In particular, the withhold release order issued by U.S.
+Added: Customs and Border Protection in June 2021 applicable to certain silica-based products manufactured in the Xinjiang Uyghur Autonomous Region (“ XUAR ”) of China, and any other allegations regarding forced labor in China and U.S.
+Added: trade regulations to prohibit the importation of any goods derived from forced labor, could affect our operations.
+Added: Further, the Uyghur Forced Labor Prevention Act (“ UFLPA ”) that President Biden signed into law on December 23, 2021, which took effect on June 21, 2022, has affected and may continue to affect our supply chain and operations.
+Added: Intensive examinations, withhold release orders, and related governmental procedures have resulted in supply chain and operational delays throughout the industry.
+Added: These and other similar trade restrictions that may be imposed in the future could cause delivery and installation delays and restrict the global supply of polysilicon and solar products.
+Added: While we believe the items described above have contributed to price increases for components that we purchase, we believe that these increases to the cost of our components were also due to a combination of other factors, including general supply chain issues resulting from COVID-19, other supply chain constraints, increased demand for solar systems in the U.S.
+Added: and Europe, rising inflation, and higher labor, material, and shipping costs.
+Added: We do not have information that allows us to quantify the specific amount of price increases attributable to the tariffs and trade regulations described.
+Added: For more information regarding UFLPA and risks related thereto, see “— Increases in the cost or reduction in supply of solar energy system and energy storage system components due to tariffs or trade restrictions imposed by the U.S.
+Added: government could have an adverse effect on our business, financial condition and results of operations.
+Added: Russia’s war on Ukraine.
+Added: We do not materially rely directly or indirectly on goods or services sourced in Russia, Ukraine or Belarus, or have any material business relationships, connections to, or assets in, Russia, Belarus, or Ukraine.
+Added: While we believe Russia’s war on Ukraine has contributed to price increases for components that we purchase, we believe that the increases to the cost of our components were also due to a combination of other factors, including general supply chain issues resulting from COVID-19, other supply chain constraints, tariffs and trade regulations, increased demand for solar systems in the U.S.
+Added: and Europe, U.S.
+Added: tariffs, rising inflation, and higher labor, material, and shipping costs.
+Added: We do not have information that allows us to quantify the specific amount of price increases attributable to Russia’s war on Ukraine.
+Added: Disruptions to global shipping.
+Added: Historically, we have
+Added: relied on foreign suppliers and manufacturers for a number of solar energy system components, instruments and technologies that we
+Added: Our success in the future may be dependent on our ability to import or transport such products from overseas vendors in a
+Added: timely and cost-effective manner.
+Added: We may rely heavily on third parties, including ocean carriers and truckers, both of which are
+Added: experiencing disruptions, shortages and rate increases, in that process.
+Added: The global shipping industry has experienced and may
+Added: continue to experience ocean shipping disruptions, trucking shortages, increased ocean shipping rates and increased trucking and
+Added: There has been and may in the future be a shortage of shipping capacity from China and other parts of Asia, among other
+Added: regions, and as a result, our receipt of imported products may be disrupted or delayed.
+Added: The shipping industry has also experienced
+Added: issues with port congestion and pandemic-related port closures and ship diversions.
+Added: The global shipping industry also experienced
+Added: unprecedented increases in shipping rates from the trans-Pacific and other ocean carriers due to various factors, including limited
+Added: availability of shipping capacity.
+Added: In 2020, 2021, and 2022, we experienced periods of temporary delay in obtaining supplies.
+Added: believe these delays reduced the number of installations in comparison to what we would have been able to install without the
+Added: In 2023, we did not experience any appreciable delays in supply.
+Added: We may find it necessary to rely on an increasingly expensive spot market and other alternative sources to make up any shortfall in shipping needs.
+Added: The COVID-19 pandemic .
+Added: For more information, see “— The COVID-19 pandemic, including its variants, has had, and it, along with other future pandemics, could continue to have an adverse impact on our business, operations, and the markets and communities in which we operate.”
+Added: If we cannot obtain substitute materials or components on a timely
+Added: basis or on acceptable terms, we could be prevented from installing our solar energy systems within the time frames required in our customer
+Added: Any such delays could increase our overall costs, reduce our profit, delay the timing for solar energy systems to be placed
+Added: in service and ultimately have a material adverse effect on our business, financial condition and results of operations.
+Added: We depend on a limited number of suppliers of solar energy system
+Added: components and technologies to adequately meet demand for our solar energy systems.
+Added: If we needed to identify alternative suppliers or
+Added: to qualify alternative products on commercially reasonable terms, our ability to satisfy demand may be adversely affected.
+Added: Our primary supplier is Consolidated Electrical Distributors, Inc (d/b/a
+Added: Greentech Renewables) (“ Greentech ”), from which we purchased approximately 98% of the equipment that we installed
+Added: If Greentech or one or more of our other suppliers we rely upon to meet anticipated demand (i) ceases or reduces production due
+Added: to its financial condition, acquisition by a competitor or otherwise, (ii) is unable to increase production as industry demand increases,
+Added: (iii) raises their prices to an extent that cannot be passed on to our customers without affecting demand or (iv) is otherwise unable
+Added: to allocate sufficient production to us, it may be difficult to quickly identify alternative suppliers or to qualify alternative products
+Added: on commercially reasonable terms.
+Added: As a result, our ability to satisfy demand may be adversely affected.
+Added: Although we buy the majority of our equipment through Greentech, we
+Added: believe that if our relationship with Greentech were terminated, we could readily obtain supplies from other distributors of the same
+Added: or similar equipment, though in some locations replacement distributors may take some time to develop efficient logistics with respect
+Added: to shipping equipment directly to job sites.
+Added: This could result in additional costs and delays in acquiring and deploying our solar energy
+Added: systems or energy storage systems.
+Added: Increased scrutiny of environmental, social, and governance (“ESG”)
+Added: matters could have an adverse effect on our business, financial condition and results of operations and damage our reputation.
+Added: In recent years, companies across all industries are facing increasing
+Added: scrutiny from a variety of stakeholders, including investor advocacy groups, proxy advisory firms, certain institutional investors and
+Added: lenders, investment funds and other influential investors and rating agencies, related to their ESG and sustainability practices.
+Added: do not adapt to or comply with investor or other stakeholder expectations and standards on ESG matters as they continue to evolve, or
+Added: if we are perceived to have not responded appropriately or quickly enough to growing concern for ESG and sustainability issues, regardless
+Added: of whether there is a regulatory or legal requirement to do so, we may suffer from reputational damage and our business, financial condition
+Added: and/or stock price could be materially and adversely affected.
+Added: In addition, organizations that provide information to investors on corporate
+Added: governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
+Added: are used by some investors to inform their investment and voting decisions.
+Added: Unfavorable ESG ratings could lead to increased negative investor
+Added: sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our
+Added: stock price and our access to and costs of capital.
+Added: We and our suppliers and subcontractors are subject to risks
+Added: associated with construction, cost overruns, delays, customer cancellations, regulatory compliance, and other contingencies, any of which
+Added: could have a material adverse effect on our business and results of operations.
+Added: We are a licensed contractor in certain communities that we service,
+Added: and we are ultimately responsible as the contracting party for every solar energy system installation we provide.
+Added: We may be liable, either
+Added: directly or through our subcontractors, to customers for any damage we cause to them, their home, belongings or property during the installation
+Added: of our systems.
+Added: For example, we, either directly or through our subcontractors, frequently penetrate customers’ roofs during the
+Added: installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of
+Added: construction.
+Added: In addition, because the solar energy systems we or our subcontractors deploy are high voltage energy systems, we may incur
+Added: liability for any failure to comply with electrical standards and manufacturer recommendations.
+Added: Legal proceedings that are not resolved
+Added: in our favor could potentially result in fines, public reprimand, probation, or the suspension or revocation of certain of our licenses.
+Added: Completing the sale and installation of a solar energy system requires
+Added: many different steps including a site audit, completion of designs, permitting, installation, electrical sign-off and interconnection.
+Added: Customers may cancel their customer agreement for a limited period, subject to certain conditions, and we have experienced increased customer
+Added: cancellations in certain geographic markets during certain periods in our operating history.
+Added: We or our dealers or subcontractors may face
+Added: customer cancellations, delays or cost overruns, which may adversely affect our or our dealers’ or contactors’ ability to
+Added: ramp up the volume of sales or installations in accordance with our plans.
+Added: These cancellations, delays or overruns may be the result of
+Added: a variety of factors, such as labor shortages or other labor issues, defects in materials and workmanship, adverse weather conditions,
+Added: transportation constraints, construction change orders, site changes or roof conditions, geographic factors and other unforeseen difficulties,
+Added: any of which could lead to increased cancellation rates, reputational harm and other adverse effects.
+Added: For example, some customer orders
+Added: are cancelled after a site visit if we determine that a customer needs to make repairs to or install a new roof, or that there is excessive
+Added: shading on their property.
+Added: If we continue to experience increased customer cancellations, our financial results may be materially and
+Added: adversely affected.
+Added: In addition, the installation of solar energy systems and other energy-related
+Added: products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and
+Added: ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and
+Added: related matters.
+Added: We also rely on certain of our and our subcontractors’ employees to maintain professional licenses in many of the
+Added: jurisdictions in which we operate, and our failure to employ properly licensed personnel could adversely affect our licensing status in
+Added: those jurisdictions.
+Added: It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations
+Added: and to design solar energy systems to comply with these varying standards.
+Added: Any new government regulations or utility policies pertaining
+Added: to our systems may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction
+Added: in demand for our solar service offerings.
+Added: As the demand for solar plus storage offerings grows, we anticipate
+Added: facing additional operational challenges associated with the complexity of deploying storage solutions.
+Added: For example, solar plus storage
+Added: offerings tend to have longer cycle times due to factors such as lengthened permitting and inspection times and potential need of a main
+Added: panel upgrade.
+Added: We have a variety of quality standards that we apply in the selection,
+Added: supervision, and oversight of our third-party suppliers and subcontractors.
+Added: However, because our suppliers and subcontractors are third
+Added: parties, ultimately, we cannot guarantee that they will follow applicable laws and regulations, any standards we impose, or ethical business
+Added: practices, such as fair wage practices and compliance with environmental, safety and other local laws, despite our efforts to hold them
+Added: accountable to our standards.
+Added: A lack of demonstrated compliance with contractual obligations, applicable laws and regulations or our standards
+Added: could lead us to seek alternative suppliers or subcontractors, which could increase our costs and result in delayed delivery or installation
+Added: of our products, product shortages or other disruptions of our operations.
+Added: Violation of labor or other laws by our suppliers and subcontractors
+Added: or the divergence of a supplier’s or subcontractor’s labor or other practices from those generally accepted as ethical in
+Added: the United States or other markets in which we do business could also attract negative publicity for us and harm our business, brand and
+Added: reputation in the market.
+Added: We use subcontractors to perform certain services, which makes
+Added: us vulnerable to the extent we rely on them.
+Added: We rely on subcontractors to install some of the solar energy systems
+Added: we sell, as well as install energy efficiency equipment such as hybrid electric water heaters and pool pumps and provide roofing and insulation
+Added: We currently do not have long term agreements with our subcontractors.
+Added: In addition, either the subcontractor or Zeo can terminate
+Added: the relationship for convenience.
+Added: If a subcontractor terminates their relationship with us or refuses to continue working with us on reasonable
+Added: terms, and we cannot find a suitable replacement subcontractor on a timely basis, our business may be adversely affected.
+Added: Compliance with occupational safety and health requirements and
+Added: best practices can be costly, and noncompliance with such requirements may result in potentially significant penalties, operational delays
+Added: and adverse publicity.
+Added: The installation and ongoing operations and maintenance of solar energy
+Added: systems and energy storage systems requires our employees or those of third-party contractors to work with complicated and potentially
+Added: dangerous electrical systems and/or at potentially dangerous heights.
+Added: The evaluation and modification of buildings as part of the installation
+Added: process requires these individuals to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other
+Added: materials known or believed to be hazardous to human health.
+Added: We also maintain large fleets of vehicles that these employees use in the
+Added: course of their work.
+Added: There is substantial risk of serious illness, injury, or death if proper safety procedures are not followed.
+Added: operations are subject to regulation under the U.S.
+Added: Occupational Safety and Health Act (“ OSHA ”), Department
+Added: of Transportation regulations, and equivalent state laws.
+Added: Changes to such regulatory requirements, or stricter interpretation or enforcement
+Added: of existing laws or regulations, could result in increased costs.
+Added: If we fail to comply with applicable workplace safety and health regulations,
+Added: even if no work-related serious illness, injury, or death occurs, we may be subject to civil or criminal enforcement and be required to
+Added: pay substantial penalties, incur significant capital expenditures, or suspend or limit operations.
+Added: Any accidents, citations, violations,
+Added: illnesses, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive
+Added: position and adversely affect our business.
+Added: Because individuals hired by us or on our behalf to perform installation and ongoing operations
+Added: and maintenance of our solar energy systems and energy storage systems, including our third-party contractors, are compensated on a per
+Added: project basis, they are incentivized to work more quickly than installers compensated on an hourly basis.
+Added: While we have not experienced
+Added: a high level of injuries to date, this incentive structure may result in higher injury rates than others in the industry and could accordingly
+Added: expose us to increased liability.
+Added: If we fail to manage our recent and future growth effectively,
+Added: we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges.
+Added: We have experienced significant growth in recent periods and we intend
+Added: to continue to expand our business within existing markets and in a number of new locations in the future.
+Added: This growth has placed, and
+Added: any future growth may continue to place, a significant strain on our management, operational and financial infrastructure.
+Added: In particular,
+Added: we have been in the past, and may in the future, be required to expand, train and manage our growing employee base and subcontractors.
+Added: Our management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract
+Added: new customers and suppliers, as well as to manage multiple geographic locations.
+Added: In addition, if customer growth results in a backlog of installation
+Added: projects, our installation capacity may be outpaced by the growth of such backlog.
+Added: An increase in backlog creates higher costs incurred
+Added: in the period relative to completed installations.
+Added: If we fail to appropriately manage our backlog in relation to the rate at which we
+Added: install, it could adversely affect our financial performance and hinder our ability to compete effectively.
+Added: Our current and planned operations, personnel, systems and procedures
+Added: might also be inadequate to support our future growth and may require us to make additional unanticipated investment in our infrastructure,
+Added: including additional costs for the expansion of our employee base and our subcontractors as well as marketing and branding costs.
+Added: success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and
+Added: efficient manner.
+Added: If we cannot manage our growth, we may be unable to take advantage of market opportunities, execute our business strategies
+Added: or respond to competitive pressures.
+Added: This could also result in declines in quality or customer satisfaction, increased costs, difficulties
+Added: in introducing new solar service offerings or other operational difficulties.
+Added: Any failure to effectively manage growth could adversely
+Added: impact our business, operating results, financial condition and reputation.
+Added: The execution of our growth strategy is dependent upon the continued
+Added: availability of third-party financing arrangements for our customers’ purchases and is affected by general economic conditions and
+Added: other factors.
+Added: Our growth strategy depends on third-party financing arrangements for
+Added: our customers’ purchases.
+Added: Most purchasers of our systems have entered into such third-party arrangements to finance their systems
+Added: over an extended period of time.
+Added: Credit markets are unpredictable, and if they become more challenging,
+Added: customers may be unable or unwilling to finance the cost of our products or the parties that have historically provided this financing
+Added: may cease to do so, or only do so on terms that are substantially less favorable for our customers, either of which could materially and
+Added: adversely affect our revenue and growth.
+Added: In addition, a rise in interest rates would likely increase our customers’ cost of financing
+Added: our products and could reduce their profits and expected returns on investment in our products.
+Added: The general reduction in available credit
+Added: to would-be borrowers or lessees, worldwide economic uncertainty, and the condition of worldwide housing markets could delay
+Added: or reduce our sales of products to new homebuilders and authorized resellers.
+Added: The COVID-19 pandemic, including its variants, has
+Added: had, and it, along with other future pandemics, could continue to have an adverse impact on our business, operations, and the markets
+Added: and communities in which we operate.
+Added: Our business and financial condition have been, and could continue
+Added: to be, affected by the COVID-19 pandemic, including its variants.
+Added: The COVID-19 pandemic has had an unprecedented impact
+Added: economy and has impacted our business.
+Added: The effects of COVID-19, such as the widespread growth in infections, travel
+Added: restrictions, quarantines, return-to-work restrictions, government regulations, supply chain disruptions, workforce shortages,
+Added: and site closures have impacted and may continue to impact our ability to staff sales and operations centers and install and maintain
+Added: solar energy systems in the field, as well as direct-to-home sales activities.
+Added: The rise and resurgence of increasingly infectious
+Added: variants, despite efforts to combat the virus with vaccinations, has presented additional challenges and unpredictability that have, and
+Added: may continue to have, resulted in workforce constraints, delays, and additional costs, particularly in regions experiencing significant
+Added: The COVID-19 pandemic has also led to significant volatility
+Added: in global financial markets, which could negatively affect our cost of and access to capital and could have an adverse impact on customer
+Added: demand and the financial health and credit risk associated with our customers.
+Added: Future disruptions or instability in capital markets could
+Added: also negatively impact our ability to raise capital from third parties, such as tax equity partners, to grow our business.
+Added: significant inflation, a recession or a market correction resulting from the impacts of the COVID-19 pandemic has and could
+Added: continue to adversely affect our business.
+Added: The full economic impact of the pandemic is still not known.
+Added: COVID-19 has caused disruptions to the supply chain across the
+Added: global economy, including within the solar industry.
+Added: Certain suppliers have experienced, and may continue to experience, delays related
+Added: to a variety of factors, including logistical delays and component shortages from upstream vendors.
+Added: In 2020, 2021, and 2022, we experienced
+Added: periods of temporary delay in obtaining supplies.
+Added: We believe these delays reduced the number of installations in comparison to what we
+Added: would have been able to install without the delays.
+Added: In 2023, we did not experience any appreciable delays in supply.
+Added: We continue to monitor
+Added: the situation and are working closely with our subcontractors and suppliers to develop contingency plans for potential operations and
+Added: supply chain interruptions.
+Added: Additionally, if the impacts of the COVID-19 pandemic worsen, or another
+Added: pandemic were to spread, the supply and pricing of our inverters and other goods and therefore our ability to sell new solar energy systems
+Added: could be adversely affected.
+Added: The extent of the impact of the COVID-19 pandemic or another pandemic on our business and operations will
+Added: depend on, among other factors, the duration and severity of the outbreak, travel restrictions and business closures imposed in China
+Added: or other countries and their ability to recover from such restrictions when they are lifted, the ability of our suppliers to increase
+Added: their production of goods in jurisdictions other than China, our ability to contract for supply from other sources on acceptable terms
+Added: and the willingness of our lenders to permit us to switch suppliers.
+Added: While we believe that COVID-19 has contributed to price increases
+Added: for components that we purchase, we believe that the increases to the cost of our components were also due to a combination of other factors,
+Added: including supply chain constraints, Russia’s war on Ukraine, increased demand for solar systems in the U.S.
+Added: and Europe, tariffs
+Added: and trade regulations, rising inflation, and higher labor, material, and shipping costs.
+Added: We do not have information that allows us to
+Added: quantify the specific amount of price increases attributable to COVID-19.
+Added: The ultimate impact of the COVID-19 pandemic or other future
+Added: pandemics is highly uncertain, beyond our control, dependent on future developments that cannot be accurately predicted, and subject to
+Added: We will continue to monitor developments affecting our workforce, our customers, and our business operations generally and will
+Added: take additional actions that we determine are necessary in order to mitigate the impacts;
+Added: however, any steps we take may be inadequate
+Added: and, as a result, our business may be harmed.
+Added: The cost of maintenance or repair of solar energy systems or
+Added: energy storage systems throughout the period for which we have offered warranties may be higher than projected today and adversely affect
+Added: our financial performance and valuation.
+Added: Prior to 2023, we generally provided a 25-year workmanship
+Added: warranty and 25-year roof penetration warranty to customers.
+Added: Beginning in 2023, we generally provide a 10-year workmanship
+Added: warranty and a roof penetration warranty of at least five and up to twenty-five years.
+Added: For the first two years of the workmanship warranty,
+Added: we cover all costs to repair failures covered by the warranty.
+Added: After two years, the customer is responsible for certain “truck roll”
+Added: or service fees, but we otherwise cover the costs of repair.
+Added: For leases, we provide a twenty five-year limited workmanship warranty and
+Added: cover all costs for repairs performed under such warranty.
+Added: If a solar system or energy storage system fails or malfunctions during
+Added: the period for which we have offered our workmanship warranty and the failure is covered by such warranty, or if roof damage is covered
+Added: by the roof penetration warranty, we will incur expenses for maintenance or repair.
+Added: While our subcontractors provide warranties as to
+Added: their workmanship, in the event such warranty providers file for bankruptcy, cease operations or otherwise become unable or unwilling
+Added: to fulfill their warranty obligations, we may not be adequately protected by such warranty obligations.
+Added: Even if such warranty providers
+Added: fulfill their obligations, the warranty obligations may not be sufficient to protect us against all of our losses.
+Added: Furthermore, it is difficult to predict how future environmental regulations
+Added: may affect the costs associated with the repair, removal, disposal or recycling of our solar energy systems.
+Added: This could materially impair
+Added: our future operating results.
+Added: Problems with product quality or performance may lower the residual
+Added: value of our solar energy systems and may damage our market reputation and cause our financial results to decline.
+Added: Because of our limited operating history and the length of the term
+Added: of our warranties, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated
+Added: rate of warranty claims and the durability, performance and reliability of our solar energy systems.
+Added: Any widespread product failures or
+Added: operating deficiencies may damage our market reputation and adversely impact our financial results.
+Added: Warranties provided by the manufacturers of equipment we sell
+Added: or service may be limited by the ability of a supplier and manufacturer to satisfy its warranty or performance obligations or by the expiration
+Added: of applicable time or liability limits, which could reduce or void the warranty protections of our customers and increase costs to customers
+Added: for the systems we offer.
+Added: Manufacturers of the equipment we sell currently provide a manufacturer’s
+Added: warranty for 25 years.
+Added: If there is a covered failure of equipment, the manufacturer will pay for replacement or repair.
+Added: These warranties
+Added: are subject to liability and other limits.
+Added: If a customer seeks warranty protection and a warranty provider is unable or unwilling to perform
+Added: its warranty obligations, whether as a result of its financial condition or otherwise, or if the term of the warranty obligation has expired
+Added: or a liability limit has been reached, there may be a reduction or loss of protection for the affected assets and an increase in costs
+Added: to the customer.
+Added: Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial
+Added: Product liability claims against us or accidents could result
+Added: in adverse publicity and potentially significant monetary damages.
+Added: It is possible the solar energy systems, energy storage systems or
+Added: other current or anticipated products or systems we sell could injure our customers or other third parties or those systems or products
+Added: could cause property damage as a result of product malfunctions, defects, improper installation, fire or other causes.
+Added: We rely on third-party
+Added: manufacturing warranties and our general liability insurance to cover product liability claims and have not obtained separate product
+Added: liability insurance.
+Added: Our solar energy systems, energy storage systems and other products or their components could be subject to recalls
+Added: either due to production defects or malfunctions.
+Added: Any product liability claim we face could be expensive to defend and may divert management’s
+Added: The successful assertion of product liability claims against us could result in potentially significant monetary damages, potential
+Added: increases in insurance expenses, penalties or fines, subject us to adverse publicity, damage our reputation and competitive position and
+Added: adversely affect sales of solar energy systems or energy storage systems.
+Added: In addition, product liability claims, injuries, defects or
+Added: other problems experienced by other companies in the solar industry could lead to unfavorable market conditions to the industry as a whole
+Added: and may have an adverse effect on our ability to expand our portfolio of solar energy systems and energy storage systems, thus affecting
+Added: our business, financial condition and results of operations.
+Added: Technical and regulatory limitations regarding the interconnection
+Added: of solar energy systems to the electrical grid may significantly delay interconnections and customer in-service dates, harming
+Added: our growth rate and customer satisfaction.
+Added: Technical and regulatory limitations regarding the interconnection
+Added: of solar energy systems to the electrical grid may curb or slow our growth in key markets.
+Added: Utilitie s throughout the country
+Added: follow different rules and regulations regarding interconnection and regulators or utilities have or could cap or limit the amount of
+Added: solar energy that can be interconnected to the grid.
+Added: Our solar energy systems generally do not provide power to a customer’s site
+Added: until they are interconnected to the grid.
+Added: With regard to interconnection limits, the Federal Energy Regulatory
+Added: Commission (“ FERC ”), in promulgating the first form of small generator interconnection procedures, recommended
+Added: limiting customer-sited intermittent generation resources, such as our solar energy systems, to a certain percentage of peak load on a
+Added: given electrical feeder circuit.
+Added: Similar limits have been adopted by many states as a de facto standard and could constrain our ability
+Added: to market to customers in certain geographic areas where the concentration of solar installations exceeds this limit.
+Added: Furthermore, in certain areas, we benefit from policies that allow
+Added: for expedited or simplified procedures related to connecting solar energy systems and energy storage systems to the electrical grid.
+Added: also are required to obtain interconnection permission for each solar energy system from the local utility.
+Added: In many states and territories,
+Added: by statute, regulations or administrative order, there are standardized procedures for interconnecting distributed solar energy systems
+Added: and related energy storage systems to the electric utility’s local distribution system.
+Added: However, approval from the local utility
+Added: could be delayed as a result of a backlog of requests for interconnection or the local utility could seek to limit the number of customer
+Added: interconnections or the amount of solar energy on the grid.
+Added: If expedited or simplified interconnection procedures are changed or cease
+Added: to be available, if interconnection approvals from the local utility are delayed or if the local utility seeks to limit interconnections,
+Added: this could decrease the attractiveness of new solar energy systems and energy storage systems to distributed solar power companies, including
+Added: us, and the attractiveness of solar energy systems and energy storage systems to customers.
+Added: Delays in interconnections could also harm
+Added: our growth rate and customer satisfaction scores.
+Added: Such limitations or delays could also adversely impact our access to capital and reduce
+Added: our willingness to pursue solar energy systems and energy storage systems due to higher operating costs.
+Added: Such limitations would negatively
+Added: impact our business, results of operations, future growth and cash flows.
+Added: As adoption of solar distributed generation rises, along with the increased
+Added: operation of utility-scale solar generation, the amount of solar energy being contributed to the electrical grid may surpass the capacity
+Added: anticipated to be needed to meet aggregate demand.
+Added: If solar generation resources reach a level capable of producing an over-generation
+Added: situation, some existing solar generation resources may have to be curtailed to maintain operation of the electrical grid.
+Added: such an over-generation situation were to occur, this could also result in a prohibition on the installation of new solar generation resources.
+Added: The adverse effects of such a curtailment or prohibition without compensation could adversely impact our business, results of operations,
+Added: future growth and cash flows.
+Added: Our headquarters and other facilities, the facilities of certain
+Added: subcontractors and suppliers, and our customers are concentrated in certain regions, putting us at risk of region-specific disruptions,
+Added: including hurricanes or other extreme weather events.
+Added: For the twelve months ended December 31, 2023, approximately 92% of
+Added: our sales were made in Florida.
+Added: This concentration of our customer base and operational infrastructure could lead to our business and
+Added: results of operations being particularly susceptible to adverse economic, regulatory, political, weather and other conditions in this
+Added: market and in other markets that may become similarly concentrated.
+Added: Our headquarters are also located in Florida, and we have offices and
+Added: operations in Texas and Arkansas, operations in Missouri, and sales, marketing and executive offices in Utah.
+Added: Any significant epidemic,
+Added: hurricane, earthquake, flood, fire, or other natural disaster in these areas or in countries where our suppliers or the manufacturers
+Added: of the products we sell are located could materially disrupt our operations, result in damage or destruction of all or a portion of our
+Added: facilities or result in our experiencing a significant delay in delivery, or substantial shortage, of our products and services.
+Added: We may not have adequate insurance, including business interruption
+Added: insurance, to compensate us for losses that may occur from any such significant events.
+Added: A significant natural disaster such as a hurricane,
+Added: a public health crisis such as a pandemic, or civil unrest could have a material adverse impact on our business, results of operations
+Added: and financial condition.
+Added: In addition, acts of terrorism or malicious computer viruses could cause disruptions in our or our subcontractors’
+Added: and suppliers’ businesses or the economy as a whole.
+Added: To the extent that these disruptions result in delays or cancellations of installations
+Added: or the deployment of our solar service offerings, our business, results of operations and financial condition would be adversely affected.
+Added: Expansion into new sales channels could be costly and time-consuming.
+Added: As we enter new channels, we could be at a disadvantage relative to other companies who have more history in these spaces.
+Added: If we expand into new sales channels, such as direct-to-home, homebuilder,
+Added: retail, and e-commerce channels, or adapt to a remote selling model, we may incur significant costs.
+Added: In addition, we may not
+Added: initially or ever be successful in utilizing these new channels.
+Added: Furthermore, we may not be able to compete successfully with companies
+Added: with a historical presence in such channels, and we may not realize the anticipated benefits of entering such channels, including efficiently
+Added: increasing our customer base and ultimately reducing costs.
+Added: Entering new channels also poses the risk of conflicts between sales channels.
+Added: If we are unable to successfully compete in new channels, our operating results and growth prospects could be adversely affected.
+Added: Obtaining a sales contract with a potential customer does not
+Added: guarantee that the potential customer will not decide to cancel or that we will not need to cancel due to a failed inspection, which could
+Added: cause us to generate no revenue despite incurring costs and adversely affect our results of operations.
+Added: Even after we secure a sales contract with a potential customer, we
+Added: (either directly or through our subcontractors) must perform an inspection to ensure the home, including the rooftop, meets our standards
+Added: and specifications.
+Added: If the inspection finds repairs to the rooftop are required in order to satisfy our standards and specifications to
+Added: install the solar energy system, and a potential customer does not want to make such required repairs, we would lose that anticipated
+Added: In addition, per the terms of our customer agreements, a customer maintains the ability to cancel for a limited time after execution
+Added: of the agreement, and in some other circumstances subject to specified conditions.
+Added: An accumulation of delays or cancellations of anticipated
+Added: sales could materially and adversely affect our financial results, as we may have incurred sales-related, design-related, and other expenses
+Added: and generated no revenue.
+Added: We may not realize the anticipated benefits of past or future
+Added: investments, strategic transactions, or acquisitions, and integration of these acquisitions may disrupt our business and management.
+Added: We have in the past and may in the future acquire one or more companies,
+Added: project pipelines, projects, solar renewable energy credits (“ SRECs ”), products, or technologies or enter into
+Added: joint ventures or other strategic transactions.
+Added: We may not realize the anticipated benefits of past or future investments, strategic transactions,
+Added: or acquisitions, and these transactions involve numerous risks that are not within our control.
+Added: These risks include the following, among
+Added: failure to satisfy the required conditions and otherwise complete a planned acquisition, joint venture or other strategic transaction on a timely basis or at all;
+Added: legal or regulatory proceedings, if any, relating to a planned acquisition, joint venture or other strategic transaction and the outcome of such legal proceedings;
+Added: difficulty in assimilating the operations, systems, and personnel of the acquired company;
+Added: difficulty in effectively integrating the acquired technologies or products with our current products and technologies;
+Added: difficulty in maintaining controls, procedures and policies during the transition and integration;
+Added: disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;
+Added: difficulty integrating the acquired company’s accounting, management information and other administrative systems;
+Added: inability to retain key technical and managerial personnel of the acquired business;
+Added: inability to retain key customers, vendors and other business partners of the acquired business;
+Added: inability to achieve the financial and strategic goals for the acquired and combined businesses;
+Added: incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations;
+Added: significant post-acquisition investments that may lower the actual benefits realized through the acquisition;
+Added: potential failure of the due diligence processes to identify significant issues with product quality, legal, and financial liabilities, among other things;
+Added: moderating and anticipating the impacts of inherent or emerging seasonality in acquired customer agreements;
+Added: potential inability to assert that internal controls over financial reporting are effective;
+Added: potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.
+Added: Our failure to address these risks, or other problems encountered in
+Added: connection with our past or future investments, strategic transactions, or acquisitions, could cause us to fail to realize the anticipated
+Added: benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
+Added: Future acquisitions
+Added: could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses,
+Added: incremental expenses or the write-off of goodwill, any of which could harm our financial condition or results of operations.
+Added: Mergers and acquisitions are inherently risky, may not produce the
+Added: anticipated benefits and could adversely affect our business, financial condition or results of operations.
+Added: Disruptions to solar production metering and energy storage solutions
+Added: could negatively impact customer experiences, which could damage our market reputation and adversely impact our financial results.
+Added: Our customers’ ability to monitor solar energy production for
+Added: various purposes depends on the operation of the metering solution.
+Added: For example, some meters and/or inverters operate on either the 3G
+Added: or 4G cellular data networks, which are expected to sunset in the near future, and newer technologies we use today may also become obsolete.
+Added: Disruptions to solar production metering and energy storage solutions could negatively impact customer experiences, which could damage
+Added: our market reputation and adversely impact our financial results.
+Added: Our business may be harmed if we fail to properly protect our
+Added: intellectual property, or if we are required to defend against claims or indemnify others against claims that we infringe on the intellectual
+Added: property rights of third parties.
+Added: We believe that the success of our business depends in part on our
+Added: proprietary information, processes and know-how.
+Added: We rely on copyright and trade secret protections to secure our intellectual
+Added: We also typically require employees, consultants, and third parties, such as our vendors and customers, with access to our proprietary
+Added: information to execute confidentiality agreements.
+Added: Although we may incur substantial costs in protecting our intellectual property, we
+Added: cannot be certain that we have adequately protected or will be able to adequately protect it because, among other reasons:
+Added: others may not be deterred from misappropriating our intellectual property despite the existence of laws or contracts prohibiting such misappropriation and information security measures designed to deter or prevent misappropriation of our intellectual property;
+Added: we have not obtained intellectual property assignment agreements from our founders or from a contract developer of certain software that we intend to use;
+Added: foreign intellectual property laws and associated foreign legal enforcement regimes may not adequately protect our intellectual property rights;
+Added: policing unauthorized use of our intellectual property may be difficult, expensive, and time-consuming, the remedy obtained may be inadequate to restore protection of our intellectual property, and moreover, we may be unable to determine the extent of any unauthorized use.
+Added: In addition, we cannot be certain that our intellectual property provides
+Added: us with a competitive advantage.
+Added: Despite our precautions, it may be possible for third parties to develop similar intellectual property
+Added: independently or obtain and use our intellectual property without our consent.
+Added: Reverse engineering, unauthorized copying, or other misappropriation
+Added: of our intellectual property could enable third parties to benefit from our intellectual property without compensating us for doing so.
+Added: Unauthorized use of our intellectual property by third parties, any other inability to adequately protect our proprietary rights, and
+Added: the expenses incurred in protecting our intellectual property rights may adversely affect our business.
+Added: In the future, we may also be required to defend against claims that
+Added: we have infringed on the intellectual property of third parties, and we cannot be certain that we will prevail in any intellectual property
+Added: Any future litigation required to enforce our intellectual property, to protect our trade secrets or know-how or to
+Added: defend us or indemnify others against claimed infringement of the rights of third parties could harm our business, financial condition,
+Added: and results of operations.
+Added: We use “open source” software components in our solutions
+Added: as well as other licensed software, which may require that we release the source code of certain software subject to open source licenses
+Added: or subject us to possible litigation or other actions that could adversely affect our business.
+Added: We utilize software that is licensed under so-called “open
+Added: source,” “free” or other similar licenses, or that contain components that are licensed in such manner.
+Added: Our use of open
+Added: source software may entail different or greater risks than use of third-party commercial software.
+Added: Open source licensors sometimes do
+Added: not provide warranties or other contractual protections regarding infringement claims or the quality of the code, and open source software
+Added: is sometimes made available to the general public on an “as-is” basis under the terms of a non-negotiable license.
+Added: In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source
+Added: licenses, be required to release the source code of our proprietary software to the public.
+Added: We do not believe we have combined any of
+Added: our proprietary software with open source software in such a manner, but if that were to occur this would allow our competitors to create
+Added: similar offerings with lower development effort and time.
+Added: We may also face claims alleging noncompliance with open source license
+Added: terms or other license terms, or infringement or misappropriation of proprietary software.
+Added: These claims could result in litigation, require
+Added: us to purchase a costly license or require us to devote additional research and development resources to change our software, any of which
+Added: would have a negative effect on our business and results of operations.
+Added: Few courts have interpreted open source licenses and these licenses
+Added: could be construed in a way that could impose unanticipated conditions or restrictions on our ability to use our proprietary software.
+Added: We cannot guarantee that we have incorporated or will incorporate open source or other software in our software in a manner that will
+Added: not subject us to liability or require us to release the source code of our proprietary software to the public.
+Added: Any security breach, unauthorized access or disclosure, or theft
+Added: of data, including personal information, we, our third party service providers, and suppliers gather, store, transmit, and use, or other
+Added: hacking, cyber-attack, phishing attack, and unauthorized intrusions into or through our systems or those of our third party service providers,
+Added: could harm our reputation, subject us to claims, litigation, financial harm, and have an adverse impact on our business.
+Added: In the ordinary course of business, we, our third party providers upon
+Added: which we rely and our suppliers receive, store, transmit and use data, including the personal information of customers, such as names,
+Added: addresses, email addresses, credit information and other housing and energy use information, as well as the personal information of our
+Added: Unauthorized disclosure of such personal information, whether through a breach of our or our third party service providers’
+Added: and suppliers’ systems by an unauthorized party, including, but not limited to hackers, threat actors, sophisticated nation-states,
+Added: nation-state-supported actors, personnel theft or misuse of information or otherwise, could harm our business.
+Added: In addition, we, our third
+Added: party service providers upon which we rely and our suppliers may be subject to a variety of evolving threats, such as computer malware
+Added: (including as a result of advanced persistent threat intrusions), ransomware, malicious code (such as viruses or worms), social engineering
+Added: (including spear phishing and smishing attacks), telecommunications failures, natural disasters and extreme weather events, general hacking
+Added: and other similar threats.
+Added: Cybersecurity incidents have become more prevalent.
+Added: As of the date of this Report, we have not experienced
+Added: a material cybersecurity incident.
+Added: However, cybersecurity incidents could occur on our systems and those of our third parties in the future.
+Added: Our team members who work remotely pose increased risks to our information technology systems and data, because many of them utilize less
+Added: secure network connections outside our premises.
+Added: Inadvertent disclosure of confidential data, such as personal information,
+Added: or unauthorized access to this type of data in our possession by a third party, could result in future claims or litigation arising from
+Added: damages suffered by those affected, government enforcement actions (for example, investigations, fines, penalties, audits and inspections),
+Added: additional reporting requirements and/or oversight, indemnification obligations, reputational harm, interruptions in our operations, financial
+Added: loss and other similar harms.
+Added: In addition, we could incur significant costs in complying with the multitude of federal, state and local
+Added: laws, and applicable independent security control frameworks, regarding the unauthorized disclosure of personal information.
+Added: to our knowledge we have not experienced a material information security breach, we cannot assure you that the systems and processes we
+Added: have to prevent or detect security breaches and protect the confidential information we receive, store, transmit and use, will provide
+Added: absolute security.
+Added: Finally, any perceived or actual unauthorized disclosure of such information, unauthorized intrusion or other cyberthreat
+Added: could harm our reputation, substantially impair our ability to attract and retain customers, interrupt our operations and have an adverse
+Added: impact on our business.
+Added: Our contracts may not contain limitations of liability, and even where
+Added: they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages
+Added: or claims related to our data privacy and security obligations.
+Added: Terrorist attacks or cyberattacks against centralized utilities
+Added: could adversely affect our business.
+Added: Assets owned by utilities such as substations and related infrastructure
+Added: have been physically attacked in the past and will likely be attacked in the future.
+Added: These facilities are often protected by limited security
+Added: measures, such as perimeter fencing.
+Added: Any such attacks may result in interruption to electricity flowing on the grid and consequently interrupt
+Added: service to our solar energy systems not combined with an energy storage system, which could adversely affect our operations.
+Added: cyberattacks, whether by individuals or nation states, against utility companies could severely disrupt their business operations and
+Added: result in loss of service to customers, which would adversely affect our operations.
+Added: We may be subject to information technology system failures or
+Added: network disruptions that could damage our business operations, financial conditions or reputation.
+Added: We may be subject to information technology system failures and network
+Added: These may be caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or
+Added: war, computer viruses, physical or electronic break-ins, or similar events or disruptions.
+Added: System redundancy may be ineffective
+Added: or inadequate, and our disaster recovery planning may not be sufficient for all eventualities.
+Added: Such failures or disruptions could result
+Added: in delayed or cancelled orders.
+Added: System failures and disruptions could also impede the manufacturing and shipping of products, delivery
+Added: of online services, transactions processing and financial reporting.
+Added: Such system failures or network disruptions could damage our business
+Added: operations, financial conditions or reputation.
+Added: Damage to our brand and reputation or failure to expand our brand would harm our business and results of operations.
+Added: We depend significantly on our brand and reputation for high-quality
+Added: solar service offerings, engineering and customer service to attract customers, contractors and dealers, and grow our business.
+Added: fail to continue to deliver our solar service offerings within the planned timelines, if our solar service offerings do not perform as
+Added: anticipated or if we damage any customers’ properties or cancel projects, our brand and reputation could be significantly impaired.
+Added: We also depend greatly on referrals from customers for our growth.
+Added: Therefore, our inability to meet or exceed customers’ expectations
+Added: would harm our reputation and growth through referrals.
+Added: We have at times focused particular attention on expeditiously growing our direct
+Added: sales force and our contractors, leading us in some instances to hire personnel or contractors who we may later determine do not fit our
+Added: company culture and standards.
+Added: Given the sheer volume of interactions our sales force, dealers and
+Added: contractors have with customers and potential customers, it is also unavoidable that some interactions will be perceived by customers
+Added: and potential customers as less than satisfactory and result in complaints.
+Added: If we cannot manage our hiring and training processes to limit
+Added: potential issues and maintain appropriate customer service levels, our brand and reputation may be harmed and our ability to grow our
+Added: business would suffer.
+Added: In addition, if we were unable to achieve a similar level of brand recognition as our competitors, some of which
+Added: may have a broader brand footprint, more resources and longer operational history, we could lose recognition in the marketplace among
+Added: prospective customers, suppliers and subcontractors, which could affect our growth and financial performance.
+Added: Our growth strategy involves
+Added: marketing and branding initiatives that will involve incurring significant expenses in advance of corresponding revenue.
+Added: We cannot assure
+Added: you that such marketing and branding expenses will result in the successful expansion of our brand recognition or increase our revenue.
+Added: We are also subject to marketing and advertising regulations in various jurisdictions, and overly restrictive conditions on our marketing
+Added: and advertising activities may inhibit the sales of the affected products.
+Added: The loss of one or more members of our senior management or key
+Added: personnel may adversely affect our operations.
+Added: We depend on our experienced management team, and the loss of one or
+Added: more key executives could have a negative impact on our business.
+Added: With any change in leadership, there is a risk to organizational effectiveness
+Added: and employee retention as well as the potential for disruption to our business.
+Added: We may be unable to replace key members of our management
+Added: team and key personnel in the event we lose their services.
+Added: Integrating new personnel into our management team could prove disruptive
+Added: to our operations, require substantial resources and management attention and ultimately prove unsuccessful.
+Added: An inability to attract and
+Added: retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts,
+Added: which could have a material adverse effect on our business, financial condition and results of operations.
+Added: A failure to hire and retain a sufficient number of employees
+Added: and service providers in key functions would constrain our growth and our ability to timely complete customers’ projects and successfully
+Added: manage customer accounts.
+Added: To support our growth, we need to hire, train, deploy, manage and retain
+Added: a substantial number of skilled employees, engineers, design techs, installers, electricians, operations and sales managers and sales
+Added: Competition for qualified personnel in our industry is increasing,
+Added: particularly for skilled personnel involved in the installation of solar energy systems.
+Added: We have in the past been, and may in the future
+Added: be, unable to attract or retain qualified and skilled installation personnel or installation companies to be our subcontractors, which
+Added: would have an adverse effect on our business.
+Added: We and our subcontractors also compete with the homebuilding and construction industries
+Added: for skilled labor.
+Added: As these industries grow and seek to hire additional workers, our cost of labor may increase.
+Added: The unionization of the
+Added: industry’s labor force could also increase our labor costs.
+Added: Shortages of skilled labor could significantly delay a project or otherwise
+Added: increase our costs.
+Added: Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost
+Added: overruns, delays or other execution issues may cause us to not achieve our expected margins or cover our costs for that project.
+Added: we need to continue to expand upon the training of our customer service team to provide high-end account management and service
+Added: to customers before, during and following the point of installation of our solar energy systems.
+Added: Identifying and recruiting qualified
+Added: personnel and training them requires significant time, expense and attention.
+Added: It can take several months before a new customer service
+Added: team member is fully trained and productive at the standards that we have established.
+Added: If we are unable to hire, develop and retain talented
+Added: technical and customer service personnel, we may not be able to realize the expected benefits of this investment or grow our business.
+Added: In addition, to support the growth and success of our direct-to-consumer channel,
+Added: we need to recruit, retain and motivate a large number of sales personnel on a continuing basis.
+Added: We compete with many other companies
+Added: for qualified sales personnel, and it could take many months before a new salesperson is fully trained on our solar service offerings.
+Added: If we are unable to hire, develop and retain qualified sales personnel or if they are unable to achieve desired productivity levels, we
+Added: may not be able to compete effectively.
+Added: If we or our subcontractors cannot meet our hiring, retention and efficiency
+Added: goals, we may be unable to complete customers’ projects on time or manage customer accounts in an acceptable manner or at all.
+Added: significant failures in this regard would materially impair our growth, reputation, business and financial results.
+Added: If we are required
+Added: to pay higher compensation than we anticipate, these greater expenses may also adversely impact our financial results and the growth of
+Added: our business.
+Added: Regulators may limit the type of electricians qualified to install
+Added: and service our solar and battery systems, or introduce other requirements on our installation staff, which may result in workforce shortages,
+Added: operational delays, and increased costs.
+Added: Regulators may limit the type of electricians qualified to install
+Added: and service our solar and battery systems, such as requiring that electricians installing such systems have a certain license, or introduce
+Added: other requirements that would apply to our installation staff.
+Added: While our workforce includes workers licensed to install and service our
+Added: solar and battery systems, if we are unable to hire, develop and retain sufficient certified electricians, we may face operational delays
+Added: and increased costs.
+Added: In addition, our growth may be significantly constrained, which would negatively impact our operating results.
+Added: We have previously been subject to, and we may in the future
+Added: be subject to, regulatory inquiries and litigation, all of which are costly, distracting to our core business and could result in an unfavorable
+Added: outcome, or a material adverse effect on our business, financial condition, results of operations, or the trading price of our securities.
+Added: We have previously been subject to regulatory inquiries and litigation,
+Added: and in the future, we may be involved in legal proceedings and receive inquiries from government and regulatory agencies from time to
+Added: In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we could
+Added: be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes.
+Added: Although outcomes of such actions
+Added: vary, any current or future claims or regulatory actions initiated by or against us, whether successful or not, could result in significant
+Added: costs, costly damage awards or settlement amounts, injunctive relief, increased costs of business, fines or orders to change certain business
+Added: practices, significant dedication of management time or diversion of significant operational resources, or otherwise harm our business.
+Added: If we are not successful in any legal proceedings and litigation, we
+Added: may be required to pay significant monetary damages, which could hurt our results of operations.
+Added: Lawsuits are time-consuming and expensive
+Added: to resolve and divert management’s time and attention.
+Added: Although we carry general liability insurance, our insurance may not cover
+Added: potential claims or may not be adequate to indemnify us for all liability that may be imposed.
+Added: We cannot predict how the courts will rule
+Added: in any potential lawsuit against us.
+Added: Decisions in favor of parties that bring lawsuits against us could subject us to significant liability
+Added: for damages, adversely affect our results of operations and harm our reputation.
+Added: If we are unsuccessful in selling new services and products,
+Added: our business, financial condition and results of operations could be adversely affected.
+Added: In the future, we may offer new products or services.
+Added: There is a risk
+Added: that such products or services may not work as intended, or that the marketing of the products or services may not be as successful as
+Added: The sale of new products and services generally requires substantial investment.
+Added: We intend to continue to make substantial
+Added: investments in new products and services, and it is possible that we may not acquire new products or product enhancements that compete
+Added: effectively within our target markets or differentiate our products based on functionality, performance or cost, and thus our new products
+Added: may not result in meaningful revenue.
+Added: In addition, any delays in releasing new or enhanced products or services could cause us to lose
+Added: revenue opportunities and potential customers.
+Added: Any technical flaws in product releases could diminish the innovative impact of our products
+Added: and have a negative effect on customer adoption and our reputation.
+Added: If we fail to introduce new products or services that meet the demands
+Added: of our customers or target markets or do not achieve market acceptance, or if we fail to penetrate new markets, our business, financial
+Added: conditions and results of operations could be adversely affected.
+Added: Our operating results and our ability to grow may fluctuate on
+Added: a seasonal basis and from quarter to quarter and year to year, which could make our future performance difficult to predict and could
+Added: cause our operating results for a particular period to fall below expectations.
+Added: Our quarterly and annual operating results and our ability to grow
+Added: are difficult to predict and may fluctuate significantly in the future.
+Added: Historically, our sales volume has been highest during late spring,
+Added: summer, and early fall.
+Added: During this time, consumers in many locations see greater energy needs due to operating air conditioning systems
+Added: and warm-weather appliances such as swimming pool pumps.
+Added: Our door-to-door sales efforts are also aided during these months by
+Added: increased daylight hours, and we have more sales personnel working during these months.
+Added: We typically have largely or entirely scaled down
+Added: our sales efforts during the late fall, winter and early spring.
+Added: Snow, cold weather or other inclement weather can delay our installation
+Added: of products and services.
+Added: We have experienced seasonal and quarterly fluctuations in the past
+Added: and expect to experience such fluctuations in the future.
+Added: In addition to the other risks described in this “ Risk Factors ”
+Added: section, the following factors could cause our operating results to fluctuate:
+Added: ● expiration or initiation of
+Added: any governmental rebates or incentives;
+Added: ● significant fluctuations in
+Added: customer demand for our solar energy services, solar energy systems and energy storage systems;
+Added: ● our subcontractors’ ability
+Added: to complete installations in a timely manner;
+Added: ● our and our subcontractors’
+Added: ability to gain interconnection permission for an installed solar energy system from the relevant utility;
+Added: ● the availability, terms and
+Added: costs of suitable financing;
+Added: ● our ability to continue to
+Added: expand our operations and the amount and timing of expenditures related to this expansion;
+Added: ● announcements by us or our
+Added: competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;
+Added: ● changes in our pricing policies
+Added: or terms or those of our competitors, including electric utilities;
+Added: ● actual or anticipated developments
+Added: in our competitors’ businesses, technology or the competitive landscape;
+Added: ● natural disasters or other
+Added: weather or meteorological conditions.
+Added: For these or other reasons, the results of any prior quarterly or annual
+Added: periods should not be relied upon as indications of our future performance.
+Added: We may be unable to generate sufficient cash flows or obtain
+Added: access to external financing necessary to fund our operations and make adequate capital investments as planned due to the general economic
+Added: environment, cost inflation, and/or the market pressure driving down the average selling prices of our products and services, among other
+Added: To acquire new products, support future growth, achieve operating efficiencies
+Added: and maintain product quality, we may need to make significant capital investments in product and process technology as well as enhancing
+Added: our digital capabilities.
+Added: The delayed disposition of such projects, or the inability to realize the full anticipated value of such projects
+Added: on disposition, could have a negative impact on our liquidity.
+Added: Certain municipalities where we install systems also require performance
+Added: bonds in cash, issued by an insurance company or bonding agency, or bank guarantees or letters of credit issued by financial institutions,
+Added: which are returned to us upon satisfaction of contractual requirements.
+Added: We manage our working capital requirements and fund our committed capital
+Added: expenditures with our current cash and cash equivalents and cash generated from operations.
+Added: If our capital resources are insufficient
+Added: to satisfy our liquidity requirements, we may seek to sell additional equity investments or debt securities or obtain debt financing.
+Added: Market conditions, however, could limit our ability to raise capital by issuing new equity or debt securities on acceptable terms, or
+Added: at all, and lenders may be unwilling to lend funds on acceptable terms, or at all.
+Added: The sale of additional equity investments may result
+Added: in additional dilution to our equity holders.
+Added: Debt financing would result in increased expenses and could impose new restrictive covenants.
+Added: Financing arrangements may not be available to us or may not be available in amounts or on terms acceptable to us.
+Added: If financing is not
+Added: available, we may be forced to seek to sell assets or reduce or delay capital investments, any of which could adversely affect our business,
+Added: results of operations, cash flows, and financial condition.
+Added: If we cannot generate sufficient cash flows, find other sources of
+Added: capital to fund our operations and projects, make adequate capital investments to remain technologically and price competitive, or provide
+Added: bonding or letters of credit required by our projects, we may need to sell additional equity investments or debt securities, or obtain
+Added: debt financings.
+Added: If adequate funds from these or other sources are not available on acceptable terms or at all, our ability to fund our
+Added: operations, including making digital investments, develop and expand our distribution network, maintain our research and development efforts,
+Added: meet any debt service obligations we take on in the future or otherwise respond to competitive pressures would be significantly impaired.
+Added: Our inability to do any of the foregoing could have a material adverse effect on our business, results of operations, cash flows and financial
+Added: Inflation could result in decreased value from future contractual
+Added: payments and higher expenses for labor and equipment, which, in turn, could adversely impact our reputation, business, financial condition,
+Added: cash flows and results of operations.
+Added: Any future increase in inflation may adversely affect our costs, including
+Added: our subcontractors’ cost of labor and equipment, and may result in a decrease in value in our future contractual payments.
+Added: factors could adversely impact our reputation, business, financial condition, cash flows and results of operations.
+Added: While we believe that inflationary pressures have contributed to increased
+Added: costs of labor and components that we purchase, we believe that the increased cost of these items were also due to a combination of other
+Added: factors, including general supply chain issues resulting from COVID-19, other supply chain constraints, increased demand for solar systems
+Added: and Europe and tariffs and trade regulations.
+Added: We do not have information that allows us to quantify the specific amount of
+Added: cost increases attributable to inflationary pressures.
+Added: Fluctuations in interest rates could adversely affect our business
+Added: and financial results.
+Added: We are exposed to interest rate risk because many of our customers
+Added: depend on debt financing to purchase our solar power systems.
+Added: An increase in interest rates could make it difficult for our customers
+Added: to obtain the financing necessary to purchase our solar power systems on favorable terms, or at all, and thus lower demand for our solar
+Added: power products, reduce revenue and adversely affect our results of operations and cash flow.
+Added: An increase in interest rates could lower
+Added: a customer’s return on investment in a system or make alternative investments more attractive relative to solar power systems, which,
+Added: in each case, could cause our customers to seek alternative investments that promise higher returns or demand higher returns from our
+Added: solar power systems, which could reduce our revenue and gross margin and adversely affect our financial results.
+Added: While we believe that
+Added: increases in interest rates have led to higher financing costs for our customers, lower demand for our products and lower revenue than
+Added: we would have otherwise experienced, we do not have information that allows us to quantify the adverse affects attributable to increased
+Added: interest rates.
+Added: We may incur debt in the future, which could introduce debt servicing
+Added: costs and risks to our business.
+Added: We and our subsidiaries may incur debt in the future, and such debt
+Added: arrangements may restrict our ability to incur additional indebtedness, including secured indebtedness.
+Added: These restrictions could inhibit
+Added: our ability to pursue our business strategies.
+Added: Furthermore, there is no assurance that we will be able to enter into debt instruments
+Added: on acceptable terms or at all.
+Added: If we were unable to satisfy financial covenants and other terms under new instruments, or obtain waivers
+Added: or forbearance from our lenders, or if we were unable to obtain refinancing or new financings for our working capital, equipment, and
+Added: other needs on acceptable terms if and when needed, our business would be adversely affected.
+Added: So long as the convertible
+Added: preferred units (the “ Convertible OpCo Preferred Units”) of OpCo remain outstanding, the Sponsor holds certain consent
+Added: rights over OpCo’s ability to incur indebtedness, which could adversely affect the future business and operations of OpCo and Zeo,
+Added: including by decreasing its business flexibility.
+Added: The terms of the amended and restated limited liability company agreement
+Added: of OpCo (the “ OpCo A&R LLC Agreement ”) grant Sponsor certain consent rights with respect to certain
+Added: actions, including OpCo’s incurrence of indebtedness for borrowed money, subject to certain enumerated exceptions, so long as the
+Added: Convertible OpCo Preferred Units remain outstanding.
+Added: As a result, OpCo needs to obtain the prior written consent of Sponsor before incurring
+Added: any additional indebtedness (subject to the terms of OpCo A&R LLC Agreement).
+Added: Because Sponsor has interests that are different than,
+Added: or in addition to and which may conflict with, the interests of OpCo and Zeo, there is no assurance that Sponsor will consent to any proposed
+Added: future incurrence of debt.
+Added: Therefore, Sponsor has the ability to influence the outcome of certain matters affecting OpCo and Zeo, and
+Added: OpCo may be unable to raise additional debt financing to operate during general economic or business downturns, take advantage of new
+Added: business opportunities, and/or pursue its business strategies.
+Added: We have suppliers that are based or manufacture the products
+Added: we sell outside the United States, which may subject us to additional business risks, including logistical complexity and political instability.
+Added: A portion of our supply agreements are with manufacturers and equipment
+Added: vendors located outside of the United States.
+Added: Risks we face in conducting business internationally include:
+Added: ● multiple, conflicting and changing
+Added: laws and regulations relating to employment, safety, environmental protection, international trade, and other government approvals, permits,
+Added: and licenses and regulatory requirements;
+Added: ● financial risks, such as longer
+Added: sales and payment cycles, greater difficulty enforcing rights and remedies and capital controls or other restrictions on the transfer
+Added: ● currency fluctuations, government-fixed
+Added: foreign exchange rates, the effects of currency hedging activity and the potential inability to hedge currency fluctuations;
+Added: ● the effects of Russia’s
+Added: war against Ukraine and other political and economic instability, including wars, acts of terrorism, political unrest, boycotts, curtailments
+Added: of trade, nationalization of assets, and other business restrictions;
+Added: ● trade barriers such as import
+Added: and export requirements or restrictions, licensing requirements, tariffs, taxes and other restrictions and expenses for which we may
+Added: have responsibility, which could increase the prices of our products;
+Added: ● liabilities associated with
+Added: compliance with laws (for example, the Foreign Corrupt Practices Act (“ FCPA ”) in the United States and similar
+Added: laws outside of the United States).
+Added: ● the effects of Russia’s
+Added: war on Ukraine, which, while we believe Russia’s war on Ukraine has contributed to price increases for components that we purchase,
+Added: we believe that the increases to the cost of our components were also due to a combination of other factors, including general supply
+Added: chain issues resulting from COVID-19, other supply chain constraints, increased demand for solar systems in the U.S.
+Added: and Europe, tariffs
+Added: and trade regulations, rising inflation, and higher labor, material, and shipping costs.
+Added: We do not have information that allows us to
+Added: quantify the specific amount of price increases attributable to Russia’s war on Ukraine and do not materially rely directly or
+Added: indirectly on goods or services sources in Russia, Ukraine or Belarus or have any material business relationships, connections to, or
+Added: assets in, Russia, Belarus or Ukraine.
+Added: We must work with our suppliers to effectively manage the flow of products
+Added: in light of these risks.
+Added: If we fail to do so, our available inventory may not correspond with product demand.
+Added: If we are unable to successfully
+Added: manage any such risks, any one or more could materially and adversely affect our business, results of operations, cash flows and financial
+Added: We are currently dependent on third-party leasing companies to
+Added: offer customers the option of leasing our solar energy systems.
+Added: As of the date of this Report, our customers who have entered into
+Added: leasing agreements have done so solely with third-party leasing companies established and managed by White Horse Energy.
+Added: Thus far, such
+Added: companies have had sufficient assets to finance the purchase of systems for each of our customers who have signed agreements for leased
+Added: solar energy systems to be installed on their home and for whom the installation processes have been completed.
+Added: However, no assurance
+Added: can be given that this will continue.
+Added: Additionally, if such companies decide not to continue to provide financing for leases due to general
+Added: market conditions, changes in tax benefits associated with our solar systems, concerns about our business or prospects, or any other reason,
+Added: or if they materially change the terms under which they are willing to pay us to install and service leased solar energy systems, we will
+Added: need to identify new leasing partners and negotiate new terms.
+Added: We intend to seek out additional third-party investors to provide
+Added: financing for customers wishing to lease their solar energy systems.
+Added: However, no assurance can be given that we will be able to successfully
+Added: System leases represented 8% of our installations in 2023, though we
+Added: expect that percentage to increase in 2024.
+Added: If (i) Solar terminates their relationship with us, (ii) Solar does not have sufficient assets
+Added: in the future to provide financing for customers wishing to lease their solar energy systems, or (iii) we cannot enter into new arrangements
+Added: with other third-party investors to provide financing for customers wishing to lease their solar energy systems, we may be unable to continue
+Added: to increase the size of our residential lease program, which could have a material, adverse effect on our business, results of operations,
+Added: cash flows, and financial condition in the future.
+Added: We typically bear the cost of maintenance and repair on solar
+Added: energy systems we install that are owned and leased by third-party leasing companies.
+Added: We are obligated through a maintenance services agreement to provide
+Added: maintenance and repair services for solar energy systems we install that are leased by third-party leasing companies to homeowners.
+Added: the maintenance services agreement, we have agreed to maintain the leased systems for a fixed fee that is calculated to cover our future
+Added: expected maintenance costs.
+Added: If our solar energy systems require an above-average amount of repairs or if the cost of repairing systems
+Added: were higher than our estimate, we may need to perform such services without additional compensation.
+Added: Members of our management team have interests in or are employed
+Added: by other business ventures that may divert their attention from our business.
+Added: Members of our management team presently have, and may in the future
+Added: have additional, ownership interests in, employment by and/or fiduciary or contractual obligations to other entities with which they are
+Added: affiliated with (such as Solar).
+Added: Such other ventures and entities could divert the attention of our management from our business or create
+Added: conflicts of interests.
+Added: Risks Related to Regulation and Policy
+Added: Our business currently depends on the availability of utility
+Added: rebates, tax credits and other benefits, tax exemptions and exclusions, and other financial incentives on the federal, state, and/or local
+Added: We may be adversely affected by changes in, and application of these laws or other incentives to us, and the expiration, elimination
+Added: or reduction of these benefits could adversely impact our business.
+Added: Our business depends on government policies that promote and support
+Added: solar energy and enhance the economic viability of owning solar energy systems.
+Added: federal, state and local governmental bodies provide
+Added: incentives to owners, distributors, installers and manufacturers of solar energy systems to promote solar energy.
+Added: These incentives include
+Added: an investment tax credit (“ Commercial ITC ”) and income tax credit offered by the federal government, as well
+Added: as other tax credits, rebates and SRECs associated with solar energy generation.
+Added: We rely on these incentives to lower our cost of capital
+Added: and to attract investors, all of which enable us to lower the price we charge customers for our solar service offerings.
+Added: These incentives
+Added: have had a significant impact on the development of solar energy but they could change at any time, as further described below.
+Added: incentives may also expire on a particular date, end when the allocated funding is exhausted, or be reduced, terminated or repealed without
+Added: The financial value of certain incentives may also decrease over time.
+Added: In December 2017, the Tax Cuts and Job Acts of 2017 (the “ Tax
+Added: Act ”) was enacted.
+Added: As part of the Tax Act, the corporate income tax rate was reduced, and there were other changes, including
+Added: limiting or eliminating various other deductions, credits and tax preferences.
+Added: The IRA implemented a corporate alternative minimum tax
+Added: of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholders;
+Added: similar to existing law, business credits (including Commercial ITCs) are limited to 75% of income in excess of $25,000 (with no limit
+Added: against the first $25,000).
+Added: We cannot predict whether and to what extent the U.S.
+Added: corporate income tax rate will change under the Biden
+Added: administration.
+Added: Congress is constantly considering changes to the tax code.
+Added: Further limitations on, or elimination of, the tax
+Added: benefits that support the financing of solar energy under current U.S.
+Added: law could significantly and adversely impact our business.
+Added: Our business model also relies on multiple tax exemptions offered at
+Added: the state and local levels.
+Added: For example, some states have property tax exemptions that exempt the value of solar energy systems in determining
+Added: values for calculation of local and state real and personal property taxes.
+Added: State and local tax exemptions can have sunset dates, triggers
+Added: for loss of the exemption, and can be changed by state legislatures and other regulators, and if solar energy systems were not exempt
+Added: from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings
+Added: Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of solar energy
+Added: systems, solar companies like us would be subject to higher costs.
+Added: In general, we rely on certain state and local tax exemptions that
+Added: apply to the sale of equipment, sale of power, or both.
+Added: These state and local tax exemptions can expire, can be changed by state legislatures,
+Added: or their application to us can be challenged by regulators, tax administrators, or court rulings.
+Added: Any changes to, or efforts to overturn,
+Added: federal and state laws, regulations or policies that are supportive of solar energy generation or that remove costs or other limitations
+Added: on other types of energy generation that compete with solar energy projects could materially and adversely affect our business.
+Added: We rely on certain utility rate structures, such as net metering,
+Added: to offer competitive pricing to customers, and changes to those policies may significantly reduce demand for electricity from our solar
+Added: energy systems.
+Added: As of December 31, 2023, a substantial majority of states have adopted
+Added: net metering policies, including Florida, Texas, Arkansas and Missouri.
+Added: Net metering policies allow homeowners to serve their own energy
+Added: load using on-site generation while avoiding the full retail volumetric charge for electricity.
+Added: Electricity that is generated
+Added: by a solar energy system and consumed on-site avoids a retail energy purchase from the applicable utility, and excess electricity
+Added: that is exported back to the electric grid generates a retail credit within a homeowner’s monthly billing period.
+Added: At the end of
+Added: the monthly billing period, if the homeowner has generated excess electricity within that month, the homeowner typically carries forward
+Added: a credit for any excess electricity to be offset against future utility energy purchases.
+Added: At the end of an annual billing period or calendar
+Added: year, utilities either continue to carry forward a credit, or reconcile the homeowner’s final annual or calendar year bill using
+Added: different rates (including zero credit) for the exported electricity.
+Added: Utilities, their trade associations, and fossil fuel interests in the
+Added: country are currently challenging net metering policies, and seeking to eliminate them, cap them, reduce the value of the credit provided
+Added: to homeowners for excess generation, or impose charges on homeowners that have net metering.
+Added: A few states have moved away from traditional full retail net metering
+Added: and instead values excess generation by customers’ solar systems in various ways.
+Added: For example, in 2017, Nevada enacted legislation
+Added: to restore net metering at a reduced credit and guarantee new customers the net metering rate in effect at the time they applied for interconnection
+Added: for 20 years.
+Added: In 2016, the Arizona Corporation Commission replaced retail net metering with a net-feed in tariff (a fixed export
+Added: Some states set limits on the total percentage of a utility’s customers that can adopt net metering or set a timeline to
+Added: evaluate net metering successor tariffs.
+Added: For example, South Carolina passed legislation in 2019 that required review of net metering after
+Added: In 2021, the South Carolina Public Service Commission approved a portion of Duke Energy’s proposal that maintains the
+Added: net metering framework with time-of-use rates and rejected a proposal from Dominion Energy to eliminate net metering altogether.
+Added: In 2021 legislation, Illinois changed its net metering threshold from a percentage of customers to full retail net metering offered to
+Added: a date certain (December 31, 2024) with a directed successor tariff that includes values that distributed resources provide to the distribution
+Added: New Jersey currently has no net metering cap;
+Added: however, it has a threshold that triggers commission review of its net metering policy.
+Added: States we serve now or in the future may adopt similar policies or net metering caps.
+Added: If the net metering caps in these jurisdictions
+Added: are reached without an extension of net metering policies, homeowners in those jurisdictions will not have access to the economic value
+Added: proposition net metering provides.
+Added: Our ability to sell our solar service offerings may be adversely impacted by the failure to extend
+Added: existing limits to net metering or the elimination of currently existing net metering policies.
+Added: The failure to adopt a net metering policy
+Added: where it currently is not in place would pose a barrier to entry in those states.
+Added: On April 26, 2022, Florida Governor DeSantis vetoed
+Added: legislation that would have established a threshold date and percentage trigger when retail net metering would have faced declines in
+Added: the immediate export rate.
+Added: Additionally, the imposition of charges that only or disproportionately
+Added: impact homeowners that have solar energy systems, or the introduction of rate designs mentioned above, would adversely impact our business.
+Added: Because fixed charges cannot easily be avoided with the installation of an on-site battery, which can mitigate or eliminate
+Added: the negative impacts of net metering changes, these fixed charges have the potential to cause a more significant adverse impact.
+Added: of 2021, two of four commissioners of FERC, including its chairperson, issued a letter stating there was a “strong case” such
+Added: fixed charges in Alabama “may be violating the Commission’s PURPA regulations, undermining the statute’s purpose of
+Added: encouraging Qualifying Facilities,” which is the Commission’s term for on-site generation.
+Added: Litigation regarding
+Added: the legality of these charges is ongoing in federal court.
+Added: Most recently, on April 26, 2022, Florida Governor DeSantis vetoed legislation
+Added: that would have allowed investor-owned utilities to petition the Public Service Commission for the ability to add fixed charges on solar
+Added: As part of the California Public Utilities Commission (“ CPUC ”) final decision on December 15, 2022,
+Added: the CPUC rejected a solar specific fixed charge on solar customers.
+Added: Electric utility policies, statutes, and regulations and changes
+Added: to such statutes or regulations may present technical, regulatory and economic barriers to the purchase and use of our solar energy offerings
+Added: that may significantly reduce demand for such offerings.
+Added: Federal, state and local government policies, statutes and regulations
+Added: concerning electricity heavily influence the market for our solar energy offerings and are constantly evolving.
+Added: These statutes, regulations,
+Added: and administrative rulings relate to electricity pricing, net metering, consumer protection, incentives, taxation, competition with utilities
+Added: and the interconnection of homeowner-owned and third party-owned solar energy systems to the electrical grid.
+Added: These policies, statutes
+Added: and regulations are constantly evolving.
+Added: Governments, often acting through state utility or public service commissions, change and adopt
+Added: different rates for residential customers on a regular basis and these changes can have a negative impact on our ability to deliver savings,
+Added: or energy bill management, to customers.
+Added: In addition, many utilities, their trade associations, and fossil fuel
+Added: interests in the country, which have significantly greater economic, technical, operational, and political resources than the residential
+Added: solar industry, are currently challenging solar-related policies to reduce the competitiveness of residential solar energy.
+Added: changes in solar-related policies could have a negative impact on our business and prospects.
+Added: We are not currently regulated as a utility under applicable
+Added: laws, but we may be subject to regulation as a utility in the future or become subject to new federal and state regulations for any additional
+Added: solar service offerings we may introduce in the future.
+Added: Most federal, state, and municipal laws do not currently regulate us
+Added: as a utility.
+Added: As a result, we are not subject to the various regulatory requirements applicable to U.S.
+Added: However, any federal,
+Added: state, local or other applicable regulations could place significant restrictions on our ability to operate our business and execute our
+Added: business plan by prohibiting or otherwise restricting our sale of electricity.
+Added: These regulatory requirements could include restricting
+Added: our sale of electricity, as well as regulating the price of our solar service offerings.
+Added: If we become subject to the same regulatory authorities
+Added: as utilities or if new regulatory bodies are established to oversee our business, our operating costs could materially increase.
+Added: Changes to the applicable laws and regulations governing direct-to-home sales
+Added: and marketing may limit or restrict our ability to effectively compete.
+Added: We utilize a direct-to-home sales model as a primary sales
+Added: channel and are vulnerable to changes in laws and regulations related to direct sales and marketing that could impose additional limitations
+Added: on unsolicited residential sales calls and may impose additional restrictions such as adjustments to our marketing materials and direct-selling
+Added: processes, and new training for personnel.
+Added: If additional laws and regulations affecting direct sales and marketing are passed in the markets
+Added: in which we operate, it would take time to train our sales professionals to comply with such laws, and we may be exposed to fines or other
+Added: penalties for violations of such laws.
+Added: If we fail to compete effectively through our direct-selling efforts, our financial condition,
+Added: results of operations and growth prospects could be adversely affected.
+Added: Increases in the cost or reduction in supply of solar energy
+Added: system and energy storage system components due to tariffs or trade restrictions imposed by the U.S.
+Added: government could have an adverse
+Added: effect on our business, financial condition and results of operations.
+Added: China is a major producer of solar cells and other solar products.
+Added: Certain solar cells, modules, laminates and panels from China are subject to various U.S.
+Added: antidumping and countervailing duty rates, depending
+Added: on the exporter supplying the product, imposed by the U.S.
+Added: government as a result of determinations that the U.S.
+Added: was materially injured
+Added: as a result of such imports being sold at less than fair value and subsidized by the Chinese government.
+Added: Historically, we and our subcontractors
+Added: regularly surveyed the market to identify multiple alternative locations for product manufacturers.
+Added: Nonetheless, many of the solar products
+Added: we purchase are from manufacturers in China or from manufacturers in other jurisdictions who rely, in part, on products sourced in China.
+Added: If alternative sources are not available on competitive terms in the future, we and our subcontractors may be required to purchase these
+Added: products from manufacturers in China.
+Added: In addition, tariffs on solar cells, modules and inverters in China may put upward pressure on prices
+Added: of these products in other jurisdictions from which we or our subcontractors currently purchase equipment, which could reduce our ability
+Added: to offer competitive pricing to potential customers.
+Added: The antidumping and countervailing duties discussed above are subject
+Added: to annual review and may be increased or decreased.
+Added: Furthermore, under Section 301 of the Trade Act of 1974, the Office of the United
+Added: States Trade Representative (“ USTR ”) imposed tariffs on $200 billion worth of imports from China, including
+Added: inverters and certain AC modules and non-lithium-ion batteries, effective September 24, 2018.
+Added: In May 2019, the tariffs were
+Added: increased from 10% to 25% and may be raised by the USTR in the future.
+Added: Since these tariffs impact the purchase price of the solar products,
+Added: these tariffs raise the cost associated with purchasing these solar products from China and reduce the competitive pressure on providers
+Added: of solar cells not subject to these tariffs.
+Added: In August 2021, an anonymous trade group filed a petition with the
+Added: Department of Commerce (the “ Department of Commerce ”) requesting an investigation into whether solar panels
+Added: and cells imported from Malaysia, Thailand and Vietnam are circumventing anti-dumping and countervailing duties imposed on solar products
+Added: manufactured in China.
+Added: The group also requested the imposition of tariffs on such imports ranging from 50%—250%.
+Added: In November 2021,
+Added: the Department of Commerce rejected the petition, citing the petitioners’ ongoing anonymity as one of the reasons for its decision.
+Added: In March 2022, the Department of Commerce announced it is initiating country-wide circumvention inquiries to determine whether imports
+Added: of solar cell and modules produced in Cambodia, Malaysia, Thailand and Vietnam that use components from China are circumventing anti-dumping
+Added: and countervailing duty orders on solar cells and modules from China.
+Added: The Department of Commerce’s inquiries were initiated pursuant
+Added: to a petition filed by Auxin Solar, Inc.
+Added: on February 8, 2022.
+Added: While the investigation remains ongoing, in December 2022, the Department
+Added: of Commerce announced its preliminary determination in the investigation.
+Added: In its determination, the Department of Commerce found that
+Added: certain Chinese solar manufacturers circumvented U.S.
+Added: import duties by routing some of their operations through Cambodia, Malaysia, Thailand
+Added: Given the Department of Commerce preliminarily found that circumvention was occurring through each of the four Southeast
+Added: Asian countries, the Department of Commerce made a “country-wide” circumvention finding, which designates each country as
+Added: one through which solar cells and modules are being circumvented from China.
+Added: However, companies in these countries will be permitted to
+Added: certify they are not circumventing the U.S.
+Added: import duties, in which case the circumvention findings may not apply.
+Added: The Department of Commerce
+Added: will take a number of additional steps before issuing a final determination.
+Added: In particular, the Department of Commerce will conduct in-person audits
+Added: to verify the information that was the basis of its preliminary determination.
+Added: Furthermore, the Department of Commerce will gather public
+Added: comments on the preliminary determination to consider before issuing its final determination.
+Added: Notably, however, on June 6, 2022, the President of the United States
+Added: issued an emergency declaration establishing a tariff exemption of two years for solar panels and cells imported from Cambodia, Malaysia,
+Added: Thailand and Vietnam, delaying the possibility of the imposition of dumping duties until the end of such two-year period.
+Added: September 2022, the Department of Commerce issued its final rule effectuating the two-year exemption period, and new dumping
+Added: duties will not be imposed on solar panels and cells imported from Cambodia, Malaysia, Thailand and Vietnam until the earlier of two years
+Added: after the date of the emergency declaration or when the emergency is terminated.
+Added: Tariffs may be reinstated following the exemption period,
+Added: but imports of solar cells and modules will not be subject to retroactive tariffs during the exemption period.
+Added: The addition of new dumping
+Added: duties would significantly disrupt the supply of solar cells and modules to customers in the U.S., as a large percentage of solar cells
+Added: and modules used in the U.S.
+Added: are imported from Cambodia, Malaysia, Thailand and Vietnam.
+Added: If imposed, these or similar tariffs could put
+Added: upward pressure on prices of these solar products, which could reduce our ability to offer competitive pricing to potential customers.
+Added: In addition, in December 2021, the U.S.
+Added: International Trade Commission
+Added: recommended the President extend tariffs initially imposed in 2018 on imported crystalline silicon PV cells and modules for another four
+Added: years, until 2026.
+Added: Under Presidential Proclamation 10339, published in February 2022, President Biden extended the tariff beyond the scheduled
+Added: expiration date of February 6, 2022, with an initial tariff of 14.75%, which will gradually be reduced to 14% by the eighth year of the
+Added: Since such actions increase the cost of imported solar products, to the extent we or our subcontractors use imported solar products
+Added: or domestic producers are able to raise their prices for their solar products, the overall cost of the solar energy systems will increase,
+Added: which could inhibit our ability to offer competitive pricing in certain markets.
+Added: Additionally, the U.S.
+Added: government has imposed various trade restrictions
+Added: on Chinese entities determined to be acting contrary to U.S.
+Added: foreign policy and national security interests.
+Added: For example, the Department
+Added: of Commerce’s Bureau of Industry and Security has added a number of Chinese entities to its entity list for enabling human rights
+Added: abuses in the XUAR or for procuring U.S.
+Added: technology to advance China’s military modernization efforts, thereby imposing severe trade
+Added: restrictions against these designated entities.
+Added: Moreover, in June 2021, U.S.
+Added: Customs and Border Protection issued a Withhold Release Order
+Added: pursuant to Section 307 of the Tariff Act of 1930 excluding the entry into U.S.
+Added: commerce of silica-based products (such as polysilicon)
+Added: manufactured by Hoshine Silicon Industry Co.
+Added: (“ Hoshine ”) and related companies, as well as goods made using
+Added: those products, based on allegations related to Hoshine labor practices in the XUAR to manufacture such products.
+Added: Additionally, in December
+Added: 2021, Congress passed the UFLPA, which, with limited exception, prohibits the importation of all goods or articles mined or produced in
+Added: whole or in part in the XUAR, or goods or articles mined or produced by entities working with the XUAR government to recruit, transport
+Added: or receive forced labor from the XUAR.
+Added: To date, intensive examinations, withhold release orders, and related governmental procedures have
+Added: resulted in supply chain and operational delays throughout the industry.
+Added: Although we maintain policies and procedures designed to maintain
+Added: compliance with applicable governmental laws and regulations, these and other similar trade restrictions that may be imposed in the future
+Added: may cause us to incur substantially higher compliance and due diligence costs in connection with procurement and have the effect of restricting
+Added: the global supply of, and raising prices for, polysilicon and solar products, which could increase the overall cost of solar energy systems,
+Added: reduce our ability to offer competitive pricing in certain markets and adversely impact our business and results of operations.
+Added: any operational delays or other supply chain disruption resulting from the human rights concerns or any of the supply chain risks articulated
+Added: above, associated governmental responses, or a desire to source products, components, or materials from other manufacturers or regions
+Added: could result in shipping, sales and installation delays, cancellations, penalty payments, or loss of revenue and market share, or may
+Added: cause our key suppliers to seek to re-negotiate terms and pricing with us, any of which could have a material adverse effect
+Added: on our business, results of operations, cash flows, and financial condition.
+Added: While we believe the tariffs and trade regulations described above
+Added: have contributed to price increases for components that we purchase, we believe that these price increases were due largely to a combination
+Added: of other factors, including supply chain constraints, increased demand for solar systems in the U.S.
+Added: and Europe, rising inflation, and
+Added: higher labor, material, and shipping costs.
+Added: We do not have information that allows us to quantify the specific amount of price increases
+Added: attributable to the tariffs and trade regulations described.
+Added: We cannot predict what additional actions the U.S.
+Added: may adopt with respect
+Added: to tariffs or other trade regulations or what actions may be taken by other countries in retaliation for such measures.
+Added: The tariffs described
+Added: above, the adoption and expansion of trade restrictions, the occurrence of a trade war or other governmental action related to tariffs,
+Added: trade agreements or related policies have the potential to adversely impact our supply chain and access to equipment, our costs and ability
+Added: to economically serve certain markets.
+Added: If additional measures are imposed or other negotiated outcomes occur, our ability or the ability
+Added: of our subcontractors to purchase these products on competitive terms or to access specialized technologies from other countries could
+Added: be further limited, which could adversely affect our business, financial condition and results of operations.
+Added: Any failure to comply with laws and regulations relating to interactions
+Added: by us or third parties (such as our dealers and subcontractors) with customers or with licensing requirements applicable to our business
+Added: could result in negative publicity, claims, investigations and litigation, and may adversely affect our financial performance.
+Added: Our business involves transactions with customers.
+Added: We and our subcontractors
+Added: and dealers must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with
+Added: customers, including those pertaining to privacy and data security, home improvement contracts, warranties and direct-to-home solicitation,
+Added: along with certain rules and regulations specific to the marketing and sale of residential solar products and services.
+Added: These laws and
+Added: regulations are dynamic and subject to potentially differing interpretations, and various federal, state and local legislative and regulatory
+Added: bodies may expand current laws or regulations, or enact new laws and regulations, regarding these matters.
+Added: Changes in these laws or regulations
+Added: or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from
+Added: and about current and prospective customers and the costs associated therewith.
+Added: We strive to comply with all applicable laws and regulations
+Added: relating to our interactions with customers.
+Added: It is possible, however, that these requirements may be interpreted and applied in a manner
+Added: that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.
+Added: Noncompliance with any such
+Added: laws or regulations, or the perception that we or our subcontractors or dealers have violated such laws or regulations or engaged in deceptive
+Added: practices that could result in a violation, could also expose us to claims, proceedings, litigation and investigations by private parties
+Added: and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our
+Added: We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation
+Added: of matters relating to our interactions with customers could require us to modify our operations and incur significant additional expenses,
+Added: which could have an adverse effect on our business, financial condition, and results of operations.
+Added: Any investigations, actions, adoption or amendment of regulations relating
+Added: to the marketing of our products could divert management’s attention from our business, require us to modify our operations and
+Added: incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations
+Added: or could reduce the number of our potential customers.
+Added: We cannot ensure that our sales professionals and other personnel will
+Added: always comply with our standard practices and policies, as well as applicable laws and regulations.
+Added: In any of the numerous interactions
+Added: between our sales professionals or other personnel and our customers or potential customers, our sales professionals or other personnel
+Added: may, without our knowledge and despite our efforts to effectively train them and enforce compliance, engage in conduct that is or may
+Added: be prohibited under our standard practices and policies and applicable laws and regulations.
+Added: Any such non-compliance, or the
+Added: perception of non-compliance, may expose us to claims, proceedings, litigation, investigations or enforcement actions by private
+Added: parties or regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect
+Added: our business and reputation.
+Added: We have incurred, and will continue to incur, significant expenses to comply with the laws, regulations and
+Added: industry standards that apply to us.
+Added: In addition, our affiliations with third-party dealers and subcontractors
+Added: may subject us to alleged liability in connection with actual or alleged violations of law by such third parties, whether or not actually
+Added: attributable to us, which may expose us to significant damages and penalties, and we may incur substantial expenses in defending against
+Added: legal actions related to third parties, whether or not we are ultimately found liable.
+Added: Compliance with environmental laws and regulations can be expensive,
+Added: and noncompliance with these laws and regulations may result in adverse publicity and potentially significant monetary damages and fines.
+Added: We are required to comply with all applicable foreign, U.S.
+Added: state, and local laws and regulations regarding pollution control and protection of safety and the environment.
+Added: These law and regulations
+Added: may include obligations relating to the release, emissions or discharge of materials into the air, water and ground, the generation, storage,
+Added: handling, use, transportation and disposal of hazardous materials and wastes and the health and safety of our employees and other persons.
+Added: Under some statutes and regulations, a government agency, or other parties, may seek recovery and response costs from owners or operators
+Added: of property where releases of hazardous substances have occurred or are ongoing, even if the owner or operator was not responsible for
+Added: such release or otherwise at fault.
+Added: We use solar energy system and energy storage components that may contain toxic, volatile and otherwise
+Added: hazardous substances in our operations.
+Added: Any failure by us to control the use of, transport of, or to restrict adequately the discharge
+Added: of, hazardous substances could subject us to, among other matters, potentially significant monetary damages and fines or liabilities or
+Added: suspensions of our business operations.
+Added: In addition, if more stringent laws and regulations are adopted in the future, the costs of compliance
+Added: with these new laws and regulations could be substantial.
+Added: If we fail to comply with present or future environmental laws and regulations,
+Added: we may be required to pay substantial fines, suspend production or cease operations, or be subjected to other sanctions.
+Added: Private parties
+Added: may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental
+Added: laws and regulations or for personal injury or property damage.
+Added: In addition, U.S.
+Added: legislation includes disclosure requirements regarding
+Added: the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries and procedures regarding
+Added: a manufacturer’s efforts to prevent the sourcing of such “conflict” minerals.
+Added: We have incurred and will incur additional
+Added: costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and
+Added: metals used in our products.
+Added: The implementation of these requirements could affect the sourcing and availability of minerals used in the
+Added: manufacture of solar products.
+Added: As a result, there may only be a limited pool of suppliers who provide conflict-free minerals, and we cannot
+Added: be certain that we will be able to obtain products in sufficient quantities or at competitive prices.
+Added: Since our supply chain is complex,
+Added: we have not been able to sufficiently verify, and in the future, we may not be able to sufficiently verify, the origins for these conflict
+Added: minerals used in our products.
+Added: As a result, we may face reputational challenges with our customers and other stakeholders if we are unable
+Added: to sufficiently verify the origins for all conflict minerals used in our products.
+Added: Compliance with health and safety laws and regulations can be
+Added: complex, and noncompliance with these laws and regulations may result in potentially significant monetary damages and fines .
+Added: We are subject to a number of federal and state laws and regulations,
+Added: including the federal Occupational Safety and Health Act (“ OSHA ”) and comparable state statues, establishing
+Added: requirements to protect the health and safety of workers.
+Added: The OSHA hazard communication standard, the US EPA community right-to-know regulations
+Added: under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes, require maintenance of information
+Added: about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities,
+Added: and citizens.
+Added: Other OSHA standards regulate specific worker safety aspects of our operations.
+Added: Substantial fines and penalties can be imposed,
+Added: and orders or injunctions limiting or prohibiting certain operations may be issued, in connection with any failure to comply with these
+Added: laws and regulations.
+Added: Our business is subject to complex and evolving U.S.
+Added: and international
+Added: privacy and data protection laws, rules, policies and other obligations.
+Added: Many of these laws and regulations are subject to change and
+Added: uncertain interpretation and could result in claims, increased cost of operations or otherwise harm our business.
+Added: Consumer personal privacy and data security have become significant
+Added: issues and the subject of rapidly evolving regulation.
+Added: Furthermore, federal, state and local government bodies or agencies have in the
+Added: past adopted, and may in the future adopt, more laws and regulations affecting data privacy.
+Added: For example, new California legislation and
+Added: regulations afford California consumers an array of new rights, including the right to be informed about what kinds of personal information
+Added: companies have collected and the purpose for the collection.
+Added: Complying with such laws or regulations, including in connection with any
+Added: future expansion into new states (e.g., California), may significantly impact our business activities and require substantial compliance
+Added: costs that adversely affect our business, operating results, prospects and financial condition.
+Added: To date, we have not experienced substantial
+Added: compliance costs in connection with fulfilling the requirements with any such laws or regulations.
+Added: However, we cannot be certain that
+Added: compliance costs will not increase in the future with respect to such laws or regulations.
+Added: Furthermore, if we expand to foreign markets
+Added: we will be subject to additional privacy and data protection laws, such as the General Data Protection Regulation in the European Union.
+Added: We operate a call center that uses personal information to conduct follow-up marketing
+Added: calls to prospective customers of our solar energy systems.
+Added: The out-going marketing calls we make are subject to the Telephone
+Added: Consumer Protection Act (“ TCPA ”) and any failure to comply with the TCPA could result in significant fines and
+Added: potential litigation from consumers.
+Added: Any inability to adequately address privacy and security concerns,
+Added: even if unfounded, or comply with applicable privacy and data protection laws, regulations and policies, could result in additional cost
+Added: and liability to us, damage our reputation, inhibit sales and adversely affect our business.
+Added: Furthermore, the costs of compliance with,
+Added: and other burdens imposed by, the laws, regulations and policies that are applicable to our business may limit the use and adoption of,
+Added: and reduce the overall demand for, our solutions.
+Added: If we are not able to adjust to changing laws, regulations and standards related to
+Added: privacy or security, our business may be harmed.
+Added: A change in our effective tax rate could have a significant adverse
+Added: impact on our business, and an adverse outcome resulting from examination of our income or other tax returns could adversely affect our
+Added: A number of factors may adversely affect our future effective tax rates,
+Added: such as the jurisdictions in which our profits are determined to be earned and taxed;
+Added: changes in the valuation of our deferred tax assets
+Added: and liabilities;
+Added: adjustments to estimated taxes upon finalization of various tax returns;
+Added: adjustments to our interpretation of transfer
+Added: pricing standards;
+Added: changes in available tax credits, grants and other incentives;
+Added: changes in stock-based compensation expense;
+Added: the availability
+Added: of loss or credit carryforwards to offset taxable income;
+Added: changes in tax laws or the interpretation of such tax laws (for example federal
+Added: and state taxes);
+Added: and changes in U.S.
+Added: generally accepted accounting principles (“ GAAP ”).
+Added: A change in our effective
+Added: tax rate due to any of these factors may adversely affect our future results from operations.
+Added: Significant judgment is required to determine the recognition and measurement
+Added: attributes prescribed in the accounting guidance for uncertainty in income taxes.
+Added: The accounting guidance for uncertainty in income taxes
+Added: applies to all income tax positions, including the potential recovery of previously paid taxes, which if settled unfavorably could adversely
+Added: affect our provision for income taxes.
+Added: In addition, we are subject to examination of our income tax returns by various tax authorities.
+Added: We regularly assess the likelihood of adverse outcomes resulting from any examination to determine the adequacy of our provision for income
+Added: An adverse determination of an examination could have an adverse effect on our results of operations and financial condition.
+Added: Additionally, U.S.
+Added: tax reform may lead to further changes in (or departure
+Added: from) these norms.
+Added: As these and other tax laws and related regulations change, our results of operations, cash flows, and financial condition
+Added: could be materially impacted.
+Added: Given the unpredictability of these possible changes and their potential interdependency, it is very difficult
+Added: to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash
+Added: Risks Related to Ownership of Zeo Securities
+Added: Our management team has limited experience managing a public
+Added: company, and regulatory compliance obligations may divert its attention from the day-to-day management of our businesses.
+Added: Most of the individuals who now constitute our management team have
+Added: limited to no experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly
+Added: complex laws pertaining to public companies.
+Added: Our management team may not successfully or efficiently manage our transition to being a
+Added: public company subject to significant regulatory oversight and reporting obligations under federal securities laws and the continuous
+Added: scrutiny of securities analysts and investors.
+Added: These new obligations and constituents will require significant attention from our senior
+Added: management and could divert their attention away from the day-to-day management of our businesses, which could adversely affect
+Added: our businesses.
+Added: It is probable that we will be required to expand our employee base and hire additional employees to support our operations
+Added: as a public company, which would increase our operating costs in future periods.
+Added: We will incur significant costs as a result of operating as a
+Added: public company.
+Added: We are subject to the reporting requirements of the Exchange Act,
+Added: the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Nasdaq listing requirements
+Added: and other applicable securities laws and regulations.
+Added: The expenses incurred by public companies generally for reporting and corporate
+Added: governance purposes are greater than those for private companies.
+Added: For example, the Exchange Act requires, among other things,
+Added: that we file annual, quarterly, and current reports with respect to our business, financial condition, and results of operations.
+Added: with these rules and regulations will increase our legal and financial compliance costs, and increase demand on our systems, particularly
+Added: after we are no longer an emerging growth company.
+Added: In addition, as a public company, we may be subject to stockholder activism, which
+Added: can lead to additional substantial costs, distract management, and impact the manner in which we operate our business in ways we cannot
+Added: currently anticipate.
+Added: As a result of disclosure of information in this Report and in filings required of a public company, our business
+Added: and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors.
+Added: these rules and regulations to increase our legal and financial compliance costs and to make some activities more difficult, time-consuming,
+Added: and costly, although we are currently unable to estimate these costs with any degree of certainty.
+Added: We also expect that being a public company and being subject to new
+Added: rules and regulations will make it more expensive for us to obtain directors and officers liability insurance, and we may be required
+Added: to accept reduced coverage or incur substantially higher costs to obtain coverage.
+Added: These laws and regulations could also make it more
+Added: difficult for us to attract and retain qualified persons to serve on the Board, committees of the Board or as our executive officers.
+Added: Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of Class A Common Stock,
+Added: fines, sanctions, and other regulatory action and potentially civil litigation.
+Added: These factors may therefore strain our resources, divert
+Added: management’s attention, and affect our ability to attract and retain qualified board members and executive officers.
+Added: A significant portion of the total outstanding shares of Class
+Added: A Common Stock is restricted from immediate resale following the Closing of the Business Combination, but may be sold into the market
+Added: shortly thereafter.
+Added: This could cause the market price of Class A Common Stock to drop significantly, even if Zeo’s business is doing
+Added: Although the Sponsor and each other shareholder party to the Amendment
+Added: to the Letter Agreement and each Lock-Up Seller party to the Lock-Up Agreement is prohibited from transferring any
+Added: securities of Zeo until the earlier of (i) six months after the Closing and (ii) subsequent to the Closing, (a) satisfaction of the Early
+Added: Lock-Up Termination or (b) the date on which Zeo completes a PubCo Sale (as defined in the Lock-Up Agreement), these shares
+Added: of Class A Common Stock may be sold after the expiration or early termination or release of the respective applicable lock-up under
+Added: the Amendment to the Letter Agreement or Lock-Up Agreement, as applicable.
+Added: Additionally, the Initial Shareholders have agreed
+Added: not to transfer an aggregate 500,000 shares of Class A Common Stock until two years after the Closing (with such shares being forfeited
+Added: upon the occurrence of a Convertible OpCo Preferred Unit Optional Conversion within two years after Closing).
+Added: We expect to file one or
+Added: more registration statements to provide for the resale of such shares from time to time.
+Added: As restrictions on resale end and the registration
+Added: statements are available for use, the market price of Class A Common Stock could decline if the holders of currently restricted shares
+Added: sell them or are perceived by the market as intending to sell them.
+Added: These sales, or the perception in the market that the holders of a
+Added: large number of shares intend to sell shares, could reduce the market price of Class A Common Stock.
+Added: As a public reporting company, we are subject to rules and regulations
+Added: established from time to time by the SEC and Public Company Accounting Oversight Board regarding our internal control over financial reporting.
+Added: If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures, we may
+Added: not be able to accurately report our financial results or report them in a timely manner, which could adversely affect our business.
+Added: We are a public reporting company subject to the rules and regulations
+Added: established from time to time by the SEC and the Public Company Accounting Oversight Board.
+Added: These rules and regulations require, among
+Added: other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting.
+Added: obligations as a public company are likely to place a considerable strain on our financial and management systems, processes, and controls,
+Added: as well as on our personnel.
+Added: As a public company, we are required to document and test our internal
+Added: control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness
+Added: of our internal control over financial reporting by the time our second annual report is filed with the SEC and thereafter, which requires
+Added: us to document and make significant changes to our internal control over financial reporting.
+Added: As a public company, we are subject to the
+Added: reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer
+Added: Protection Act of 2010, as well as rules adopted, and to be adopted, by the SEC and Nasdaq, and other applicable securities rules
+Added: and regulations, which impose various requirements on public companies, including the establishment and maintenance of effective disclosure
+Added: and financial controls and changes in corporate governance practices.
+Added: Our management and other personnel need to devote a substantial
+Added: amount of time to these public company requirements.
+Added: Moreover, we expect these rules and regulations to substantially increase our legal
+Added: and financial compliance costs and to make some activities more time-consuming and costly.
+Added: We may need to hire additional legal, accounting
+Added: and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit function.
+Added: Likewise, as a public company, we may lose our status as an “emerging
+Added: growth company,” as defined in the JOBS Act, and become subject to the SEC’s internal control over financial reporting
+Added: management and auditor attestation requirements in the year in which we are deemed to be a large accelerated filer, which would occur
+Added: once we are subject to Exchange Act reporting requirements for 12 months, have filed at least one SEC annual report and the
+Added: market value of our common equity held by non-affiliates equals or exceeds $700 million as of the end of the prior fiscal year’s
+Added: second fiscal quarter.
+Added: If we become subject to the SEC’s internal control reporting and attestation requirements, we might not be
+Added: able to complete our evaluation, testing and any required remediation in a timely fashion.
+Added: In addition, our current controls and any new
+Added: controls that we develop may become inadequate because of poor design and changes in our business, including increased complexity resulting
+Added: from any international expansion.
+Added: Any failure to implement and maintain effective internal controls over financial reporting could adversely
+Added: affect the results of assessments by our independent registered public accounting firm and their attestation reports.
+Added: We are continuing to develop and refine our disclosure controls and
+Added: other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the
+Added: SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required
+Added: to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
+Added: We are also continuing to improve our internal control over financial reporting, which includes hiring additional accounting and financial
+Added: personnel to implement such processes and controls.
+Added: We expect to incur costs related to implementing an internal audit and compliance
+Added: function in the upcoming years to further improve our internal control environment.
+Added: We have identified material weaknesses in our internal controls
+Added: over financial reporting.
+Added: If we are unable to remediate these material weaknesses, if management identifies additional material weaknesses
+Added: in the future or if we otherwise fail to maintain effective internal controls over financial reporting, we may not be able to accurately
+Added: or timely report our financial position or results of operations, which may adversely affect our business and stock price or cause our
+Added: access to the capital markets to be impaired.
+Added: We have identified material weaknesses in our internal controls over
+Added: financial reporting.
+Added: A material weakness is a deficiency, or combination of deficiencies, in internal controls over financial reporting
+Added: such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
+Added: or detected on a timely basis.
+Added: These material weaknesses are listed below:
+Added: ● Ineffective controls over period
+Added: end financial disclosure and reporting processes, including not timely performing certain reconciliations and the completeness and accuracy
+Added: of those reconciliations, and lack of effectiveness of controls over accurate accounting and financial reporting and reviewing the underlying
+Added: financial statement elements that led to, for example, inappropriate revenue recognition, preparing consolidating financial statements
+Added: that did not contain the required eliminating journal entries for intercompany transactions, and recording incorrect journal entries
+Added: that also did not have the sufficient review and approval.
+Added: ● Insufficient controls around
+Added: the review of certain technical accounting matters and related entries due to lack of sufficient staffing of adequate accounting resources.
+Added: ● Inadequate segregation of duties
+Added: in various key processes, including user access within the information technology control environment.
+Added: ● Lack of documentation of policies
+Added: and procedures including cybersecurity, user access reviews, and sufficient change management around the information technology control
+Added: ● Incomplete mapping of our risk
+Added: assessment to our accounting processes and control objectives and a lack of formality in our internal control activities, especially
+Added: related to management review-type controls.
+Added: These control deficiencies could result in a misstatement in our accounts
+Added: or disclosures that would result in a material misstatement to our financial statements that would not be prevented or detected.
+Added: we determined that these control deficiencies constitute material weaknesses.
+Added: We are in the early stages of designing and implementing a plan to
+Added: remediate the material weaknesses identified.
+Added: Our plan includes the below:
+Added: ● Designing and implementing
+Added: a risk assessment process supporting the identification of risks.
+Added: ● Implementing systems and controls
+Added: to enhance our review of significant accounting transactions and other new technical accounting and financial reporting issues and preparing
+Added: and reviewing accounting memoranda addressing these issues.
+Added: ● Improving our internal control
+Added: policies and procedures to specifically address controls around segregation of duties, cybersecurity, user access reviews, and changes
+Added: in management.
+Added: ● Implementing specific user
+Added: access, segregation of duties and change management controls within our financial reporting IT systems.
+Added: ● Hiring additional experienced
+Added: accounting, financial reporting and internal control personnel and changing roles and responsibilities of our personnel as we transition
+Added: to being a public company and are required to comply with Section 404 of the Sarbanes-Oxley Act (“ Section 404 ”).
+Added: We are in the process of hiring additional resources and we are engaging with a third-party consulting firm to assist us with our formal
+Added: internal control plan and to provide accounting services related to complex accounting transactions.
+Added: ● Implementing controls to enable
+Added: an effective and timely review of period-end close procedures.
+Added: ● Implementing controls to enable
+Added: an accurate and timely review of accounting records that support our accounting processes and maintain documents for internal accounting
+Added: We cannot assure you that these measures will significantly improve
+Added: or remediate the material weaknesses described above.
+Added: The implementation of these remediation measures is in the early stages and will
+Added: require validation and testing of the design and operating effectiveness of our internal controls over a sustained period of financial
+Added: reporting cycles and, as a result, the timing of when we will be able to fully remediate the material weaknesses is uncertain.
+Added: steps we take do not remediate the material weaknesses in a timely manner, there could be a reasonable possibility that these control
+Added: deficiencies or others may result in a material misstatement of our annual or interim financial statements that would not be prevented
+Added: or detected on a timely basis.
+Added: This, in turn, could jeopardize our ability to comply with our reporting obligations, limit our ability
+Added: to access the capital markets and adversely impact our stock price.
+Added: We and our independent registered public accounting firm were not required
+Added: to perform an evaluation of our internal control over financial reporting as of December 31, 2023 in accordance with the provisions of
+Added: the Sarbanes-Oxley Act.
+Added: Accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional,
+Added: material weaknesses.
+Added: Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting
+Added: as required by reporting requirements under Section 404.
+Added: Implementing any appropriate changes to our internal controls may distract
+Added: our officers and employees, entail substantial costs to modify our existing processes and take significant time to complete.
+Added: These changes
+Added: may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent
+Added: inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.
+Added: investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements
+Added: on a timely basis may harm our stock price and make it more difficult for us to effectively market and sell our products and services
+Added: to new and existing customers.
+Added: However, if we identify future deficiencies in our internal control
+Added: over financial reporting or if we are unable to comply with the demands that are placed upon us as a public company, including the requirements
+Added: of Section 404 of the Sarbanes-Oxley Act, in a timely or effective manner, we may be unable to accurately report our financial results,
+Added: or report them within the timeframes required by the SEC.
+Added: We also could become subject to sanctions or investigations by the SEC or other
+Added: regulatory authorities.
+Added: In addition, if we are unable to assert that our internal control over financial reporting is effective, or if
+Added: our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over
+Added: financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face
+Added: restricted access to the capital markets and our stock price may be adversely affected.
+Added: Our current controls and any new controls that we develop may also
+Added: become inadequate because of poor design or changes in our business, including increased complexity resulting from any international expansion,
+Added: and weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
+Added: Any failure to
+Added: develop or maintain effective controls or any difficulties encountered in their implementation or improvement could cause us to fail to
+Added: meet our reporting obligations, result in a restatement of our financial statements for prior periods, undermine investor confidence in
+Added: us and adversely affect the trading price of our common stock.
+Added: In addition, if we are unable to continue to meet these requirements, we
+Added: may not be able to remain listed on Nasdaq.
+Added: Changing laws and regulations could create uncertainty for Zeo
+Added: regarding compliance matters and result in higher costs.
+Added: Changing laws, regulations and standards relating to corporate governance
+Added: and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some
+Added: activities more time consuming.
+Added: These laws, regulations and standards are subject to varying interpretations and may evolve over time
+Added: as new guidance is provided by regulatory and governing bodies.
+Added: This could result in continuing uncertainty regarding compliance matters
+Added: and higher costs necessitated by ongoing revisions to disclosure and governance practices.
+Added: We intend to invest resources to comply with
+Added: evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion
+Added: of management’s time and attention from revenue-generating activities to compliance activities.
+Added: We cannot predict or estimate the
+Added: amount or timing of additional costs it may incur to respond to these requirements.
+Added: If our efforts to comply with new laws, regulations
+Added: and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and
+Added: practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.
+Added: The rules and regulations applicable to public companies make
+Added: it more expensive for Zeo to obtain and maintain director and officer liability insurance, which could adversely affect its ability to
+Added: attract and retain qualified officers and directors.
+Added: The rules and regulations applicable to public companies make it more
+Added: expensive for Zeo to obtain and maintain director and officer liability insurance, and Zeo may be required to accept reduced coverage
+Added: or incur substantially higher costs to obtain coverage.
+Added: We cannot predict or estimate the amount or timing of additional costs we may
+Added: incur to respond to these requirements.
+Added: The potential for increased personal liability could also make it more difficult for Zeo to attract
+Added: and retain qualified members of the Board, particularly to serve on its audit committee and compensation committee, and qualified executive
+Added: An active, liquid market for Zeo’s securities may not develop,
+Added: which would adversely affect the liquidity and price of Zeo’s securities.
+Added: The price of Zeo’s securities may vary significantly
+Added: due to factors specific to Zeo as well as to general market or economic conditions.
+Added: Furthermore, an active, liquid trading
+Added: market for Zeo’s securities may never develop, or, if developed, it may not be sustained.
+Added: You may be unable to sell
+Added: your securities without depressing the market price for the securities or at all unless an active, liquid market can be established and
+Added: An inactive trading market may also impair Zeo’s ability to attract and motivate employees through equity
+Added: incentive awards and to acquire other companies, products or technologies by using shares of capital stock as consideration.
+Added: The market price of the shares of Class A Common Stock may decline.
+Added: The market price of the shares of Class A Common Stock may decline
+Added: for a number of reasons, including if:
+Added: ● investors react negatively
+Added: to the prospects of Zeo’s business;
+Added: ● Zeo’s business
+Added: and prospects is not consistent with the expectations of financial or industry analysts;
+Added: ● Zeo does not achieve the perceived
+Added: benefits of the Business Combination as rapidly or to the extent anticipated by financial or industry analysts.
+Added: The price of Class A Common Stock may change significantly, even
+Added: if Zeo’s business is doing well, and you could lose all or part of your investment as a result.
+Added: The trading price of shares of Class A Common Stock is likely to be
+Added: The stock market recently has experienced extreme volatility.
+Added: This volatility often has been unrelated or disproportionate to
+Added: the operating performance of particular companies.
+Added: You may not be able to resell your shares of Class A Common Stock at an attractive
+Added: price due to a number of factors such as the following:
+Added: ● results of operations that
+Added: vary from the expectations of securities analysts and investors;
+Added: ● results of operations that
+Added: vary from those of Zeo’s competitors;
+Added: ● changes in expectations as
+Added: to Zeo’s future financial performance, including financial estimates and investment recommendations by securities analysts and
+Added: ● declines in the market prices
+Added: of stocks generally;
+Added: ● strategic actions by Zeo or
+Added: its competitors;
+Added: ● announcements by Zeo or its
+Added: competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;
+Added: ● any significant change in Zeo’s
+Added: ● changes in general economic
+Added: or market conditions (including changes in interest rates or inflation) or trends in Zeo’s industry or markets;
+Added: ● changes in business or regulatory
+Added: conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to Zeo’s business;
+Added: ● future sales of Class A Common
+Added: Stock or other securities;
+Added: ● dilution as a result of future
+Added: exercises of Zeo Warrants or conversion of the Convertible OpCo Preferred Units;
+Added: ● investor perceptions of the
+Added: investment opportunity associated with Class A Common Stock relative to other investment alternatives;
+Added: ● the public’s response
+Added: to press releases or other public announcements by Zeo or third parties, including Zeo’s filings with the SEC;
+Added: ● litigation involving Zeo, Zeo’s
+Added: industry, or both, or investigations by regulators into the Board, Zeo’s operations or those of Zeo’s competitors;
+Added: ● guidance, if any, that Zeo
+Added: provides to the public, any changes in this guidance or Zeo’s failure to meet this guidance;
+Added: ● the development and sustainability
+Added: of an active trading market for Class A Common Stock;
+Added: ● actions by institutional or
+Added: activist stockholders;
+Added: ● changes in accounting standards,
+Added: policies, guidelines, interpretations or principles;
+Added: ● other events or factors, including
+Added: those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events.
+Added: These broad market and industry fluctuations may adversely affect the
+Added: market price of Class A Common Stock, regardless of Zeo’s actual operating performance.
+Added: In addition, price volatility may be greater
+Added: if the public float and trading volume of Class A Common Stock is low.
+Added: In the past, following periods of market volatility, stockholders have
+Added: instituted securities class action litigation.
+Added: If Zeo were involved in securities litigation, it could have a substantial cost and divert
+Added: resources and the attention of executive management from Zeo’s business regardless of the outcome of such litigation.
+Added: Redeemable warrants issued
+Added: in ESGEN’s initial public offering, entitling the holder thereof to purchase Class A Common Stock (the “ Zeo
+Added: Warrants ”) will become exercisable for Zeo Common Stock, which would increase the number of shares eligible for future
+Added: resale in the public market and result in dilution to the stockholders of Zeo.
+Added: Outstanding Zeo Warrants to purchase an aggregate of 13,799,989 shares
+Added: of Zeo Common Stock are exercisable in accordance with the terms of the warrant agreement governing those securities.
+Added: These Zeo Warrants
+Added: will become exercisable 30 days after the completion of the Business Combination.
+Added: The exercise price of these Zeo Warrants is $11.50 per
+Added: To the extent such Zeo Warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution
+Added: to the then existing holders of Class A Common Stock and increase the number of shares eligible for resale in the public market.
+Added: Zeo stockholders may experience significant dilution as a result
+Added: of a Convertible OpCo Preferred Unit Conversion.
+Added: Subject to the conditions described in the OpCo A&R LLC Agreement,
+Added: holders of the Convertible OpCo Preferred Units may, or OpCo may require the holders of such Convertible OpCo Preferred Units to, convert
+Added: all of such holder’s Convertible OpCo Preferred Units into such number of Exchangeable OpCo Units as determined by the conversion
+Added: ratio applicable to the respective Convertible OpCo Preferred Unit Conversion.
+Added: Upon the occurrence of a conversion of Convertible OpCo
+Added: Preferred Units into Exchangeable OpCo Units, all Exchangeable OpCo Units received as a result of such conversion shall be immediately
+Added: exchanged (together with an equal number of shares of Zeo Class V Common Stock) into an equal number of shares of Class A Common Stock.
+Added: Accordingly, if the Convertible OpCo Preferred Units are converted into Exchangeable OpCo Units and immediately thereafter exchanged for
+Added: shares of Class A Common Stock, holders of Class A Common Stock could experience significant dilution.
+Added: Further, if the holders of the
+Added: shares of Class A Common Stock issued as a result of a Convertible OpCo Preferred Unit Conversion dispose of a substantial portion of
+Added: such shares of Class A Common Stock in the public market, whether in a single transaction or series of transactions, it could adversely
+Added: affect the market price for Zeo’s Class A Common Stock.
+Added: These sales, or the possibility that these sales may occur, could make it
+Added: more difficult for Zeo or its stockholders to sell shares of Class A Common Stock in the future.
+Added: Zeo may be subject to securities class action litigation, which may harm its business and operating results.
+Added: Certain companies that have experienced volatility in the market price
+Added: of their stock have been subject to securities class action litigation.
+Added: Zeo may be the target of this type of litigation in the future.
+Added: Securities litigation against Zeo could result in substantial costs and damages and divert Zeo’s management’s attention from
+Added: other business concerns, which could seriously harm Zeo’s business, results of operations, financial condition or cash flows.
+Added: Zeo may also be called on to defend itself against lawsuits relating
+Added: to its business operations.
+Added: Some of these claims may seek significant damages amounts.
+Added: Due to the inherent uncertainties of litigation,
+Added: the ultimate outcome of any such proceedings cannot be accurately predicted.
+Added: A future unfavorable outcome in a legal proceeding could
+Added: have an adverse impact on Zeo’s business, financial condition and results of operations.
+Added: In addition, current and future litigation,
+Added: regardless of its merits, could result in substantial legal fees, settlements or judgment costs and a diversion of Zeo’s management’s
+Added: attention and resources that are needed to successfully run Zeo’s business.
+Added: Because there are no current plans to pay cash dividends on shares
+Added: of Class A Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your shares of Class
+Added: A Common Stock at a price greater than what you paid for them.
+Added: Zeo intends to retain future earnings, if any, for future operations,
+Added: expansion (which may include potential acquisitions) and debt repayment, and there are no current plans to pay any cash dividends for
+Added: the foreseeable future.
+Added: The declaration, amount and payment of any future dividends on shares of Class A Common Stock will be at the sole
+Added: discretion of the Board.
+Added: The Board may take into account general and economic conditions, Zeo’s financial condition and results
+Added: of operations, Zeo’s available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory
+Added: restrictions, implications of the payment of dividends by Zeo’s to its stockholders or by its subsidiaries to it and such other
+Added: factors as the Board may deem relevant.
+Added: As a result, you may not receive any return on an investment in the shares of Class A Common Stock
+Added: unless you sell such shares for a price greater than that which you paid for it.
+Added: Zeo may issue additional shares of Class A Common Stock or other
+Added: equity securities without seeking approval of its stockholders, which would dilute your ownership interests and may depress the market
+Added: price of Class A Common Stock.
+Added: Zeo has Zeo Warrants outstanding to purchase up to an aggregate of
+Added: 13,799,989 shares of Class A Common Stock.
+Added: Additionally, Zeo will issue shares of Class A Common Stock to the holders of Convertible OpCo
+Added: Preferred Units upon the occurrence of a Convertible OpCo Preferred Unit Conversion.
+Added: Further, Zeo may choose to seek third-party financing
+Added: to provide additional working capital for Zeo’s business, in which event Zeo may issue additional shares of Class A Common Stock
+Added: or other equity securities.
+Added: Zeo may also issue additional shares of Class A Common Stock or other equity securities of equal or senior
+Added: rank in the future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding Zeo Warrants
+Added: or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.
+Added: The issuance of additional shares of Class A Common Stock or other
+Added: equity securities of equal or senior rank would have the following effects:
+Added: ● Zeo’s existing shareholders’
+Added: proportionate ownership interest in Zeo will decrease;
+Added: ● the amount of cash available
+Added: per share, including for payment of dividends in the future, may decrease;
+Added: ● the relative voting strength
+Added: of each previously outstanding share of Class A Common Stock may be diminished;
+Added: ● the market price of the shares
+Added: of Class A Common Stock may decline.
+Added: Zeo intends to file a registration statement with the SEC on Form
+Added: S-8 that will automatically become effective upon filing.
+Added: Our issuance of additional shares of Class A Common Stock or convertible
+Added: securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect the price
+Added: of Class A Common Stock.
+Added: Zeo intends to file a registration statement with the SEC on Form S-8 providing
+Added: for the registration of shares of Class A Common Stock issued or reserved for issuance under the 2024 Plan.
+Added: Subject to the expiration
+Added: of any applicable lock-ups, shares registered under the registration statement on Form S-8 will automatically become
+Added: effective upon filing and be available for resale immediately in the public market without restriction.
+Added: The initial registration statement
+Added: on Form S-8 is expected to cover approximately 3,220,400 shares of Class A Common Stock.
+Added: In addition, the shares of Class A Common Stock reserved for future
+Added: issuance under the 2024 Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating
+Added: to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale by affiliates
+Added: under Rule 144, as applicable.
+Added: If securities or industry analysts do not publish research or
+Added: reports about Zeo’s business, if they change their recommendations regarding the shares of Class A Common Stock or if Zeo’s
+Added: operating results do not meet their expectations, the price and trading volume of shares of Class A Common Stock could decline.
+Added: The trading market for shares of Class A Common Stock will depend in
+Added: part on the research and reports that securities or industry analysts publish about Zeo or its businesses.
+Added: If no securities or industry
+Added: analysts commence coverage of Zeo, the trading price for shares of Class A Common Stock could be negatively impacted.
+Added: In the event securities
+Added: or industry analysts initiate coverage, if one or more of the analysts who cover Zeo downgrade its securities or publish unfavorable research
+Added: about its businesses, or if Zeo’s operating results do not meet analyst expectations, the trading price of shares of Class A Common
+Added: Stock would likely decline.
+Added: If one or more of these analysts cease coverage of Zeo or fail to publish reports on Zeo regularly, demand
+Added: for shares of Class A Common Stock could decrease, which might cause the share price and trading volume to decline.
+Added: Accordingly, holders
+Added: of Class A Common Stock may experience a loss as a result of a decline in the market price of Class A Common Stock.
+Added: In addition, a decline
+Added: in the market price of Class A Common Stock could adversely affect Zeo’s ability to issue additional securities and to obtain additional
+Added: financing in the future.
+Added: The ability of Zeo’s management to require holders of Zeo
+Added: Warrants to exercise such Zeo Warrants on a cashless basis will cause holders to receive fewer shares of Class A Common Stock upon their
+Added: exercise of such Zeo Warrants than they would have received had they been able to exercise such Zeo Warrants for cash.
+Added: If Zeo calls the Zeo Warrants for redemption after the redemption criteria
+Added: described elsewhere in this Report have been satisfied, Zeo’s management will have the option to require any holder that wishes
+Added: to exercise Zeo Warrants (including any Zeo Warrants held by the Initial Shareholders or their permitted transferees) to do so on a “cashless
+Added: basis.” If Zeo’s management chooses to require holders to exercise their Zeo Warrants on a cashless basis, the number of shares
+Added: of Class A Common Stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his, her or
+Added: its Zeo Warrants for cash.
+Added: This will have the effect of reducing the potential “upside” of the holder’s investment in
+Added: Zeo may redeem unexpired Zeo Warrants prior to their exercise
+Added: at a time that is disadvantageous for holders of Zeo Warrants.
+Added: Zeo will have the ability to redeem outstanding Zeo Warrants at any
+Added: time after they become exercisable and prior to their expiration, at a price of $0.01 per Zeo Warrant;
+Added: provided, that the last reported
+Added: sales price of shares of Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period
+Added: ending on the third business day prior to the date Zeo sends the notice of redemption to the holders of Zeo Warrants.
+Added: If and when the
+Added: Zeo Warrants become redeemable by Zeo, Zeo may exercise its redemption right if there is a current registration statement in effect with
+Added: respect to the shares of Class A Common Stock underlying such Zeo Warrants.
+Added: Redemption of the outstanding Zeo Warrants could force you
+Added: (i) exercise your Zeo Warrants and pay the related exercise price at a time when it may be disadvantageous for you to do so;
+Added: sell your Zeo Warrants at the then-current market price when you might otherwise wish to hold your Zeo Warrants;
+Added: or (iii) accept the nominal
+Added: redemption price which, at the time the outstanding Zeo Warrants are called for redemption, is likely to be substantially less than the
+Added: market value of your Zeo Warrants.
+Added: In the event Zeo determines to redeem any Zeo Warrants, holders of
+Added: such Zeo Warrants would be notified of such redemption as described in the warrant agreement governing the Zeo Warrants.
+Added: Specifically,
+Added: in the event that Zeo elects to redeem all of the redeemable Zeo Warrants as described above, Zeo will fix a Zeo Warrant redemption date.
+Added: Notice of redemption will be mailed by first class mail, postage prepaid, by Zeo not less than 30 days prior to such date to the registered
+Added: holders of the redeemable Zeo Warrants to be redeemed at their last addresses as they appear on the registration books.
+Added: Any notice mailed
+Added: in the manner provided in the warrant agreement governing the Zeo Warrants will be conclusively presumed to have been duly given whether
+Added: or not the registered holder received such notice.
+Added: In addition, beneficial owners of the redeemable Zeo Warrants will be notified of such
+Added: redemption via Zeo’s posting of the redemption notice to DTC.
+Added: If Zeo’s performance does not meet market expectations,
+Added: the price of its securities may decline.
+Added: If Zeo’s performance does not meet market expectations, the price
+Added: of Zeo Common Stock may decline.
+Added: Fluctuations in the price of Zeo Common Stock could contribute to the loss of all or part of your investment.
+Added: If an active market for Zeo Common Stock develops and continues, the trading price of Zeo Common Stock could be volatile and subject to
+Added: wide fluctuations in response to various factors, some of which are beyond its control.
+Added: Any of the factors listed below could have a material
+Added: adverse effect on your investment in Zeo Common Stock and it may trade at prices significantly below the price you paid for them.
+Added: Factors affecting the trading price of Zeo Common Stock may include:
+Added: ● actual or anticipated fluctuations
+Added: in Zeo’s quarterly financial results or the quarterly financial results of companies perceived to be similar to it;
+Added: ● changes in the market’s
+Added: expectations about its operating results;
+Added: ● success of competitors;
+Added: ● its operating results failing
+Added: to meet market expectations in a particular period;
+Added: ● changes in financial estimates
+Added: and recommendations by securities analysts concerning Zeo or the solar energy industry and market in general;
+Added: ● operating and stock price performance
+Added: of other companies that investors deem comparable to Zeo;
+Added: ● its ability to market new and
+Added: enhanced products on a timely basis;
+Added: ● changes in laws and regulations
+Added: affecting its business;
+Added: ● commencement of, or involvement
+Added: in, litigation involving Zeo;
+Added: ● changes in its capital structure,
+Added: such as future issuances of securities or the incurrence of additional debt;
+Added: ● the volume of shares of its
+Added: common stock available for public sale;
+Added: ● any significant change in its
+Added: board or management;
+Added: ● sales of substantial amounts
+Added: of common stock by its directors, executive officers or significant stockholders or the perception that such sales could occur;
+Added: ● general economic and political
+Added: conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
+Added: Broad market and industry factors may depress the market price of Zeo
+Added: Common Stock irrespective of its operating performance.
+Added: The stock market in general and the Nasdaq have experienced price and volume fluctuations
+Added: that have often been unrelated or disproportionate to the operating performance of the particular companies affected.
+Added: The trading prices and valuations of these stocks, and of Zeo’s
+Added: securities, may not be predictable.
+Added: A loss of investor confidence in the market for solar energy or the stocks of other companies which
+Added: investors perceive to be similar to Zeo could depress its stock price regardless of its business, prospects, financial conditions or results
+Added: of operations.
+Added: A decline in the market price of Zeo Common Stock also could adversely affect its ability to issue additional securities
+Added: and its ability to obtain additional financing in the future.
+Added: Delaware law and our governing documents contain certain provisions,
+Added: including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover
+Added: attempts that stockholders may consider favorable.
+Added: Our governing documents and the DGCL contain provisions that could
+Added: have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the Board and therefore depress
+Added: the trading price of Class A Common Stock.
+Added: These provisions could also make it difficult for stockholders to take certain actions, including
+Added: electing directors who are not nominated by the current members of the Board or taking other corporate actions, including effecting changes
+Added: in the management of Zeo.
+Added: Among other things, our governing documents include provisions regarding:
+Added: ● the ability of the Board to
+Added: issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those
+Added: shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership
+Added: of a hostile acquirer;
+Added: ● the limitation of the liability
+Added: of, and the indemnification of, Zeo’s directors and officers;
+Added: ● the exclusive right of the
+Added: Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director,
+Added: which prevents stockholders from being able to fill vacancies on the Board;
+Added: ● the requirement that, subject
+Added: to the special rights of the holders of one or more series of preferred stock, special meetings of the stockholders may be called only
+Added: (i) by or at the direction of the Board, the Chairperson of the Board or the Chief Executive Officer, in each case, in accordance with
+Added: our bylaws or (ii) for so long as the holders of shares of Zeo Class V Common Stock beneficially own, directly or indirectly, a majority
+Added: of the total voting power of stock entitled to vote generally in election of directors, by or at the request of stockholders collectively
+Added: holding shares of capital stock of Zeo representing a majority of the total voting power of stock entitled to vote generally in election
+Added: of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal
+Added: of directors;
+Added: ● controlling the procedures
+Added: for the conduct and scheduling of the Board and stockholder meetings;
+Added: ● the requirement for the affirmative
+Added: vote of holders of at least 2/3 of the voting power of all of the then outstanding shares of the voting stock, voting together as a single
+Added: class, to amend, alter, change or repeal certain provisions of the Proposed Charter, which could preclude stockholders from bringing
+Added: matters before annual or special meetings of stockholders, delay changes in Zeo and inhibit the ability of an acquirer to effect such
+Added: amendments to facilitate an unsolicited takeover attempt;
+Added: ● the ability of the Board to
+Added: amend our bylaws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of
+Added: an acquirer to amend our bylaws to facilitate an unsolicited takeover attempt;
+Added: ● advance notice procedures with
+Added: which stockholders must comply to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting,
+Added: which could preclude stockholders from bringing matters before annual or special meetings of stockholders, delay changes in the Board
+Added: and discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors
+Added: or otherwise attempting to obtain control of Zeo.
+Added: These provisions, alone or together, could delay or prevent hostile
+Added: takeovers and changes in control or changes in the Board or management.
+Added: Any provision of our governing documents or Delaware law that has the
+Added: effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares
+Added: of Class A Common Stock and could also affect the price that some investors are willing to pay for shares of Class A Common Stock.
+Added: We are a holding company.
+Added: Our only material asset is our equity
+Added: interest in OpCo, and we are accordingly be dependent upon distributions from OpCo to pay taxes, make payments under the Tax Receivable
+Added: Agreement and cover our corporate and other overhead expenses.
+Added: We are a holding company and have no material assets other than our
+Added: equity interest in OpCo.
+Added: We have no independent means of generating revenue.
+Added: To the extent OpCo has available cash, we intend to cause
+Added: OpCo to make generally pro rata distributions to the holders of OpCo Units, including us, in an amount sufficient to cause each OpCo unitholder
+Added: to receive a distribution at least equal to (i) such OpCo unitholder’s allocable share of net taxable income as calculated with
+Added: certain assumptions, multiplied by an assumed tax rate, and (ii) with respect to us, any payments required to be made by us under the
+Added: Tax Receivable Agreement.
+Added: The assumed tax rate for this purpose will be the combined maximum U.S.
+Added: federal, state, and local rate of tax
+Added: applicable to an individual resident in New York City, New York for the applicable taxable year.
+Added: We intend to cause OpCo to make non-pro rata
+Added: payments to us to reimburse us for our corporate and other overhead expenses.
+Added: To the extent that we need funds and OpCo or its subsidiaries
+Added: are restricted from making such distributions or payments under applicable law or regulation or under the terms of any current or future
+Added: financing arrangements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely
+Added: Moreover, because we have no independent means of generating revenue,
+Added: our ability to make tax payments and payments under the Tax Receivable Agreement will be dependent on the ability of OpCo to make distributions
+Added: to us in an amount sufficient to cover our tax obligations and obligations under the Tax Receivable Agreement.
+Added: This ability, in turn,
+Added: may depend on the ability of OpCo’s subsidiaries to make distributions to OpCo.
+Added: We intend that such distributions from OpCo and
+Added: its subsidiaries be funded with cash from operations or from future borrowings.
+Added: The ability of OpCo, its subsidiaries and other entities
+Added: in which it directly or indirectly hold an equity interest to make such distributions will be subject to, among other things, (i) the
+Added: applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution
+Added: and (ii) restrictions in relevant debt instruments issued by OpCo or its subsidiaries and other entities in which it directly or indirectly
+Added: holds an equity interest.
+Added: To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, such payments
+Added: will be deferred and will accrue interest until paid, and such failure to make payments may result in a breach under the Tax Receivable
+Added: Agreement in certain cases.
+Added: Because distributions of OpCo will be used to fund Tax Receivable Agreement payments by us, OpCo’s liquidity
+Added: will be affected negatively by the Tax Receivable Agreement in a material respect.
+Added: We will be required to make payments under the Tax Receivable
+Added: Agreement for certain tax benefits that we may claim, and the amounts of such payments could be significant.
+Added: In connection with the Business Combination, we entered into the Tax
+Added: Receivable Agreement with the TRA Holders.
+Added: This agreement generally provides for the payment by us to the TRA Holders of 85% of the net
+Added: cash savings, if any, in U.S.
+Added: federal, state and local income tax and franchise tax (computed using simplifying assumptions to address
+Added: the impact of state and local taxes) that we actually realize (or are deemed to realize in certain circumstances) in periods after the
+Added: Business Combination as a result of certain increases in tax basis available to us pursuant to the exercise of the OpCo Exchange Rights
+Added: or a Mandatory Exchange and certain benefits attributable to imputed interest.
+Added: We will retain the benefit of the remaining 15% of any
+Added: actual net cash tax savings that we realize.
+Added: The term of the Tax Receivable Agreement will continue until all tax
+Added: benefits that are subject to the Tax Receivable Agreement have been utilized or expired, unless we experience a change of control (as
+Added: defined in the Tax Receivable Agreement, which includes certain mergers, asset sales, or other forms of business combinations) or the
+Added: Tax Receivable Agreement otherwise terminates early (at our election or as a result of our breach or the commencement of bankruptcy or
+Added: similar proceedings by or against us), and we make the termination payments specified in the Tax Receivable Agreement in connection with
+Added: such change of control or other early termination.
+Added: The payment obligations under the Tax Receivable Agreement are our
+Added: obligations and not obligations of OpCo, and we expect that the payments required to be made under the Tax Receivable Agreement will be
+Added: Payments under the Tax Receivable Agreement will reduce the amount of cash provided by the tax savings that would otherwise
+Added: have been available to us for other uses.
+Added: Estimating the amount and timing of payments that may become due under the Tax Receivable Agreement
+Added: is by its nature imprecise.
+Added: For purposes of the Tax Receivable Agreement, net cash tax savings generally are calculated by comparing our
+Added: actual tax liability (determined by using the actual applicable U.S.
+Added: federal income tax rate and an assumed combined state and local income
+Added: and franchise tax rate) to the amount we would have been required to pay had we not been able to utilize any of the tax benefits subject
+Added: to the Tax Receivable Agreement.
+Added: The actual increases in tax basis covered by the Tax Receivable Agreement, as well as the amount and
+Added: timing of any payments under the Tax Receivable Agreement, will vary depending on a number of factors, including the timing of any redemption
+Added: of Exchangeable OpCo Units, the price of Class A Common Stock at the time of each redemption, the extent to which such redemptions are
+Added: taxable transactions, the amount of the redeeming OpCo unitholder’s tax basis in its Exchangeable OpCo Units at the time of the
+Added: relevant redemption, the depreciation and amortization periods that apply to the increase in tax basis, the amount and timing of taxable
+Added: income we generate in the future, the U.S.
+Added: federal income tax rates then applicable, and the portion of our payments under the Tax Receivable
+Added: Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis.
+Added: Any distributions made by OpCo to us
+Added: in order to enable us to make payments under the Tax Receivable Agreement, as well as any corresponding pro rata distributions made to
+Added: the OpCo unitholders, could have a substantial negative impact on our liquidity.
+Added: The payments under the Tax Receivable Agreement following the exercise
+Added: of the OpCo Exchange Rights or a Mandatory Exchange will not be conditioned upon a TRA Holder having a continued ownership interest in
+Added: In certain cases, payments under the Tax Receivable Agreement
+Added: may be accelerated and/or significantly exceed the actual benefits, if any, Zeo realizes in respect of the tax attributes subject to the
+Added: Tax Receivable Agreement.
+Added: If we experience a change of control (as defined under the Tax Receivable
+Added: Agreement, which includes certain mergers, asset sales and other forms of business combinations) or the Tax Receivable Agreement otherwise
+Added: terminates early (at our election or as a result of our breach or the commencement of bankruptcy or similar proceedings by or against
+Added: us), our obligations under the Tax Receivable Agreement would accelerate and we would be required to make an immediate payment equal to
+Added: the present value of the anticipated future payments to be made by us under the Tax Receivable Agreement, and it is expected that such
+Added: payment would be substantial.
+Added: The calculation of anticipated future payments would be based upon certain assumptions and deemed events
+Added: set forth in the Tax Receivable Agreement, including (i) that we have sufficient taxable income to fully utilize the tax benefits covered
+Added: by the Tax Receivable Agreement, and (ii) that any OpCo Units (other than those held by us) outstanding on the termination date are deemed
+Added: to be redeemed on the termination date.
+Added: If we were to experience a change of control or the Tax Receivable Agreement was otherwise terminated
+Added: as of the Closing Date, we estimate that the early termination payment, calculated on the basis of the above assumptions and assuming
+Added: a share price of $10.00 per share, would be approximately $66.4 million (calculated using a discount rate equal to (i) the greater of
+Added: (a) 0.25% and (b) the Secured Overnight Financing Rate (“ SOFR ”), plus (ii) 150 basis points).
+Added: The foregoing
+Added: amount is merely an estimate and the actual payment could differ materially.
+Added: The aggregate amount of payments that are actually made under
+Added: the Tax Receivable Agreement could substantially exceed the estimated termination payment described above.
+Added: Any early termination payment may be made significantly in advance
+Added: of, and may materially exceed, the actual realization, if any, of the future tax benefits to which the termination payment relates.
+Added: the obligation to make an early termination payment upon a change of control could have a substantial negative impact on our liquidity
+Added: and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or
+Added: changes of control.
+Added: There can be no assurance that we will be able to satisfy our obligations
+Added: under the Tax Receivable Agreement.
+Added: In the event that payment obligations under the Tax Receivable
+Added: Agreement are accelerated in connection with a change of control, the consideration payable to holders of Class A Common Stock in connection
+Added: with such change of control could be substantially reduced.
+Added: If we experience a change of control (as defined under the Tax Receivable
+Added: Agreement, which includes certain mergers, asset sales and other forms of business combinations), we would be obligated to make a substantial
+Added: immediate payment, and such payment may be significantly in advance of, and may materially exceed, the actual realization, if any, of
+Added: the future tax benefits to which the payment relates.
+Added: As a result of this payment obligation, holders of Class A Common Stock could receive
+Added: substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation.
+Added: Further, any payment obligations under the Tax Receivable Agreement will not be conditioned upon the TRA Holders having a continued interest
+Added: in us or OpCo.
+Added: Accordingly, the TRA Holders’ interests may conflict with those of the holders of Class A Common Stock.
+Added: We will not be reimbursed for any payments made under the Tax
+Added: Receivable Agreement in the event that any tax benefits are subsequently disallowed.
+Added: Payments under the Tax Receivable Agreement will be based on the tax
+Added: reporting positions that we will determine.
+Added: The IRS or another taxing authority may challenge all or part of the tax basis increases covered
+Added: by the Tax Receivable Agreement, as well as other related tax positions we take, and a court could sustain such challenge.
+Added: The TRA Holders
+Added: will not be required to reimburse us for any payments previously made under the Tax Receivable Agreement if any tax benefits that have
+Added: given rise to payments under the Tax Receivable Agreement are subsequently disallowed, except that excess payments made to any TRA Holder
+Added: will be netted against future payments that would otherwise be made to such TRA Holder, if any, after our determination of such excess
+Added: (which determination may be made a number of years following the initial payment and after future payments have been made).
+Added: in such circumstances, we could make payments that are greater than our actual net cash tax savings, if any, and we may not be able to
+Added: recoup those payments, which could have a substantial negative impact on our liquidity.
+Added: If OpCo were to become a publicly traded partnership taxable
+Added: as a corporation for U.S.
+Added: federal income tax purposes, we and OpCo might be subject to potentially significant tax inefficiencies, and
+Added: we would not be able to recover payments previously made by us under the Tax Receivable Agreement even if the corresponding tax benefits
+Added: were subsequently determined to have been unavailable due to such status.
+Added: We intend to operate such that OpCo does not become a publicly traded
+Added: partnership taxable as a corporation for U.S.
federal income tax purposes.
−Removed: Prospective investors are urged to consult their tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities.
−Removed: Recent increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate an initial business combination.
−Removed: Recent increases in inflation and interest rates in the United States and elsewhere may lead to increased price volatility for publicly traded securities, including ours, and may lead to other national, regional and international economic disruptions, any of which could make it more difficult for us to consummate an initial business combination.
−Removed: We identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future, or fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
−Removed: Our internal control over financial reporting was not effective as of December 31, 2022.
−Removed: We identified material weaknesses in our internal control over financial reporting, specifically, we did not design and maintain an effective control environment to prevent or detect material misstatements to the financial statements.
−Removed: Specifically, we lacked a sufficient complement of personnel with an appropriate level of internal controls and accounting knowledge, training and experience commensurate with our financial reporting requirements.
−Removed: Specifically, management did not design and maintain effective controls over the calculation of earnings per share and classification of the reinvestment of interest and dividend income in the Trust Account in the statement of cash flows.
−Removed: Risks Associated with Acquiring and Operating a Business in Foreign Countries
−Removed: If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
−Removed: If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
−Removed: If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
−Removed: costs and difficulties inherent in managing cross-border business operations;
−Removed: rules and regulations regarding currency redemption;
−Removed: complex withholding taxes on individuals;
−Removed: laws governing the manner in which future business combinations may be effected;
−Removed: exchange listing and/or delisting requirements;
−Removed: tariffs and trade barriers;
−Removed: regulations related to customs and import/export matters;
−Removed: local or regional economic policies and market conditions;
−Removed: unexpected changes in regulatory requirements;
−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: rates of inflation;
−Removed: challenges in collecting accounts receivable;
−Removed: cultural and language differences;
−Removed: employment regulations;
−Removed: underdeveloped or unpredictable legal or regulatory systems;
−Removed: protection of intellectual property;
−Removed: social unrest, crime, strikes, riots and civil disturbances;
−Removed: regime changes and political upheaval;
−Removed: terrorist attacks, natural disasters and wars;
−Removed: deterioration of political relations with the United States.
−Removed: We may not be able to adequately address these additional risks.
−Removed: If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
−Removed: If our management following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.
−Removed: Following our initial business combination, our management may resign from their positions as officers or directors of the company and the management of the target business at the time of the business combination will remain in place.
−Removed: Management of the target business may not be familiar with United States securities laws.
−Removed: If new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws.
−Removed: This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
−Removed: After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in any such country.
−Removed: Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which we operate.
−Removed: The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business.
−Removed: Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future.
−Removed: If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries.
−Removed: A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our initial business combination, the ability of that target business to become profitable.
−Removed: Exchange rate fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
−Removed: In the event we acquire a non-U.S.
−Removed: target, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency.
−Removed: The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions.
−Removed: Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial business combination, our financial condition and results of operations.
−Removed: Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
−Removed: We may reincorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights.
−Removed: In connection with our initial business combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another jurisdiction.
−Removed: If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements.
−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: We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
−Removed: We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law.
−Removed: Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from seeking a business combination target.
−Removed: Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
−Removed: This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.
−Removed: If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
−Removed: UNRESOLVED STAFF COMMENTS.
+Added: A “publicly traded partnership” is a partnership
+Added: the interests of which are traded on an established securities market or are readily tradable on a secondary market or the substantial
+Added: equivalent thereof.
+Added: Under certain circumstances, transfers of OpCo Units could cause OpCo to be treated as a publicly traded partnership.
+Added: Applicable U.S.
+Added: Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership, and we intend to
+Added: operate such that redemptions or other transfers of OpCo Units qualify for one or more of such safe harbors.
+Added: For example, we intend to
+Added: limit the number of holders of OpCo Units, and the OpCo A&R LLC Agreement provides for certain limitations on the ability of holders
+Added: of OpCo Units to transfer their OpCo Units and provides us, as the manager of OpCo, with the right to prohibit the exercise of an OpCo
+Added: Exchange Right if we determine (based on the advice of counsel) there is a material risk that OpCo would be a publicly traded partnership
+Added: as a result of such exercise.
+Added: If OpCo were to become a publicly traded partnership taxable as a corporation
+Added: federal income tax purposes, significant tax inefficiencies might result for us and for OpCo, including as a result of our inability
+Added: to file a consolidated U.S.
+Added: federal income tax return with OpCo.
+Added: In addition, we might not be able to realize tax benefits covered under
+Added: the Tax Receivable Agreement, and we would not be able to recover any payments previously made by us under the Tax Receivable Agreement,
+Added: even if the corresponding tax benefits (including any claimed increase in the tax basis of OpCo’s assets) were subsequently determined
+Added: to have been unavailable.
+Added: In certain circumstances, OpCo will be required to make tax distributions
+Added: to the OpCo unitholders, including us, and the tax distributions that OpCo will be required to make may be substantial.
+Added: The OpCo tax distribution
+Added: requirement may complicate our ability to maintain our intended capital structure.
+Added: To the extent OpCo has available cash, we intend to cause OpCo to make
+Added: generally pro rata distributions to the holders of OpCo Units, including us, in an amount sufficient to cause each OpCo unitholder to
+Added: receive a distribution at least equal to (i) such OpCo unitholder’s allocable share of net taxable income as calculated with certain
+Added: assumptions, multiplied by an assumed tax rate, and (ii) with respect to us, any payments required to be made by us under the Tax Receivable
+Added: The assumed tax rate for this purpose will be the combined maximum U.S.
+Added: federal, state, and local rate of tax applicable to
+Added: an individual resident in New York City, New York for the applicable taxable year.
+Added: The amount of tax distributions to such unitholder
+Added: for any year may be reduced by prior operating distributions made to that unitholder for such year.
+Added: As a result of certain assumptions
+Added: in calculating the tax distribution payments, including the assumed tax rate, we may receive tax distributions from OpCo that exceed our
+Added: actual tax liability and our obligations under the Tax Receivable Agreement by a material amount.
+Added: The receipt of such excess distributions would complicate our ability
+Added: to maintain certain aspects of our capital structure.
+Added: Such cash, if retained, could cause the value of an OpCo Manager Unit to deviate
+Added: from the value of a share of Class A Common Stock.
+Added: If we retain such cash balances, the holders of Exchangeable OpCo Units would benefit
+Added: from any value attributable to such accumulated cash balances as a result of their exercise of the OpCo Exchange Rights.
+Added: take steps to eliminate any material cash balances.
+Added: Such steps could include distributing such cash balances as dividends on the Class
+Added: A Common Stock or reinvesting such cash balances in OpCo for additional OpCo Manager Units (with an accompanying stock dividend with respect
+Added: to Class A Common Stock).
+Added: The tax distributions to the OpCo unitholders may be substantial and
+Added: may, in the aggregate, exceed the amount of taxes that OpCo would have paid if it were a similarly situated corporate taxpayer.
+Added: used by OpCo to satisfy its tax distribution obligations will generally not be available for reinvestment in its business.
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.