Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No
☒
Indicate by check mark whether the registrant
(1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report
on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No
☐
At June 30, 2022, the last business day of
the registrant’s most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant
held by non-affiliates of the registrant was $123,006,000.
As of March 16, 2023, there were 12,473,500
shares of Class A common stock and 3,087,500 shares of Class B common of the Company issued and outstanding.
None.
This Annual Report on Form 10-K contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, or the Exchange Act. The statements contained in this report that are not purely historical are
forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s
expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts
or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The
words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements, but
the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include,
for example, statements about our:
The forward-looking statements contained in this
report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be
no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under applicable laws.
PART I
ITEM 1. BUSINESS
In this Annual Report on Form 10-K (the
“Form 10-K”), references to the “Company” and to “we,” “us,” and “our”
refer to Nubia Brand International Corp.
Overview
Nubia Brand International Corp. is a newly organized
blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses, which we refer to as our initial business combination throughout this prospectus.
While we may pursue an initial business combination target in any business or industry or geographic location, we intend to focus our
search on wireless telecommunications companies.
On March 15, 2022, Nubia consummated its initial
public offering of 12,350,000 units (the “Units”), including 1,350,000 units under the underwriters’ over-allotment
option, with each unit consisting of one share of Nubia’s Class A common stock and one-half of one warrant, each whole warrant
to purchase one share of Nubia’s Class A common stock. The units were sold at an offering price of $10.00 per unit, generating
gross proceeds of $123,500,000. Simultaneously with the consummation of the initial public offering, Nubia consummated the private placement
of 5,405,000 warrants at a price of $1.00 per warrant (the “Private Warrants”), generating total proceeds of $5,405,000. The
private warrants are identical to the public warrants underlying the Units being sold in the initial public offering.
Following the consummation of the initial public
offering, a total of $125,970,000 of the net proceeds from the sale of the Units in the initial public offering and the Private Warrants
was deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. None of the funds
held in trust will be released from the trust account, other than interest income to pay any tax obligations, until the earlier of the
completion of an initial business combination within the required time period or our entry into liquidation if we have not completed a
business combination in the required time period. On May 2, 2022, our Class A common stock and warrants underlying the Units sold in our
IPO began to trade separately on a voluntary basis.
If the Company is unsuccessful in consummating
an initial business combination within 12 months, or March 15, 2023, (or up to 18 months, September 15, 2023, if the Company extends the
period of time to consummate a business combination) from the closing of the IPO the Company is required to cease all operations, redeem
the public shares and thereafter liquidate and dissolve.
Business Combination Agreement
On February 16, 2023, Nubia entered into a
Merger Agreement (the “Merger Agreement”) by and among Honeycomb Battery Company, an Ohio corporation (the
“Company” or “Honeycomb”), Nubia, and Nubia Merger Sub, Inc., an Ohio corporation (“Merger Sub”)
and wholly-owned subsidiary of Nubia, pursuant to which Merger Sub will merge with and into the Company (the “Merger”)
with the Company as the surviving corporation of the Merger and becoming a wholly-owned subsidiary of Nubia. In connection with the
Merger, Nubia will change its name to “Honeycomb Battery Company” or such
other name designated by the Company by notice to Nubia, which is referred to herein as the “Combined Company.” The
board of directors of Nubia has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other
transactions contemplated thereby (collectively, the “Transactions”) and (ii) resolved to recommend approval of the
Merger Agreement and related matters by the stockholders of Nubia.
The Merger Agreement provides for Nubia to issue
to the Honeycomb shareholders aggregate consideration of 70,000,000 shares of the Combined Company’s common stock (the “Closing
Merger Consideration Shares”) at the effective time of the Merger Agreement (the “Effective Time”), plus up to an additional
22,500,000 shares of the Combined Company’s common stock (the “Earnout Shares”) upon the occurrence of the following
events (or earlier upon a change of control of Nubia but subject to (and only to the extent that) the valuation of Nubia common stock
implied by such change of control transaction meeting the respective VWAP (as defined below) thresholds set forth below):
| (i) | 5,000,000 Earnout Shares if, over any ten (10) trading days
within any thirty (30) trading day period from and after the date that is thirty (30) days following the closing date of the Transactions
(the “Closing Date”) until the second anniversary of the Closing Date, the VWAP of the shares of Nubia’s Class A common
stock is greater than or equal to $12.50 per share (subject to any adjustment pursuant to the Merger Agreement); |
| (ii) | 7,500,000 Earnout Shares if, over any ten (10) trading days
within any thirty (30) trading day period from and after the date that is one hundred eighty (180) days following the Closing Date until
the date that is forty-two (42) months following the Closing Date, the VWAP of the shares of Nubia’s Class A common stock is greater
than or equal to $15.00 per share (subject to any adjustment pursuant to the Merger Agreement); and |
| (iii) | 10,000,000 Earnout Shares if over any ten (10) trading days
within any thirty (30) trading day period from and after the date that is one hundred eighty (180) days following the Closing Date until
the fourth anniversary of the Closing Date, the VWAP of the shares of Nubia’s Class A common stock is greater than or equal to
$25.00 per share (subject to any adjustment pursuant to the Merger Agreement). |
For purposes of the foregoing, “VWAP”
means, for any security as of any date(s), the dollar volume-weighted average price for such security on the principal securities exchange
or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing
bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc. If the
VWAP cannot be calculated for such security on such date(s) on any of the foregoing bases, the VWAP of such security on such date(s) shall
be the fair market value per share on such date(s) as reasonably determined by Nubia.
In accordance with the terms and subject to the
conditions of the Merger Agreement, each share of Honeycomb’s common stock outstanding immediately prior to the Effective Time will
be converted into the right to receive its allocable portion of the Closing Merger Consideration Shares and the Earnout Shares, if any.
The Business Combination will require the
approval of the shareholders of Nubia and Honeycomb and is subject to other customary closing conditions, including a proxy statement
being filed with and cleared by the U.S. Securities and Exchange Commission. The Transactions is expected to close in the second quarter
of 2023.
Initial Business Combination
General
We are not presently engaged in, and we will not
engage in, any substantive commercial business until we complete a business combination. We intend to utilize cash derived from the proceeds
of the IPO and the private placement of Private Warrants, our capital stock, debt or a combination of these in effecting our initial business
combination.
Selection of a Target Business and Structuring
of Our Initial Business Combination
Nasdaq rules require that we must complete one
or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account
(excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing
a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the
fair market value of our initial business combination. Even though our board of directors will rely on generally accepted standards, our
board of directors will have discretion to select the standards employed. In addition, the application of the standards generally involves
a substantial degree of judgment. Accordingly, investors will be relying on the business judgment of the board of directors in evaluating
the fair market value of the target or targets. Any proxy solicitation materials or tender offer documents used by us in connection with
any proposed transaction will provide public stockholders with our analysis of our satisfaction of the 80% of fair market value test,
as well as the basis for our determinations. If our board of directors is not able to independently determine the fair market value of
our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity
that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board
of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may
be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount
of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination
must be approved by a majority of our independent directors.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity
interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company
owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the prior owners
of the target business, the target management team or stockholders or for other reasons, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act of 1940, as amended (the “Investment Company Act”). Even if the post-transaction company owns or acquires 50% or
more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest
in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital
stock, shares or other equity interests of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100%
of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion
of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test. If the
business combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all
of the target businesses and we will treat the target businesses together as our initial business combination for purposes of a tender
offer or for seeking stockholder approval, as applicable.
In evaluating a prospective target business, we
expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees,
document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made
available to us.
The time required to select and evaluate a target
business and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after consummation
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By consummating our initial business combination with only a single entity, our lack of diversification may:
| |
● |
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and |
| |
● |
result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services. |
Limited Ability to Evaluate the Target Business’
Management Team
Although we scrutinized the management team of
our target business, our assessment of the target business’ management team may not prove to be correct. In addition, the future
management team may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of our officers and directors, if any, in the target business following our initial business combination remains to be determined. While
it is possible that some of our key personnel will remain associated in senior management or advisory positions with us following our
initial business combination, it is unlikely that they will devote their full time efforts to our affairs subsequent to our initial business
combination. Moreover, they would only be able to remain with the company after the consummation of our initial business combination if
they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for them to receive compensation in the form of
cash payments and/or our securities for services they would render to the company after the consummation of the business combination.
While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target business,
their ability to remain with the company after the consummation of our initial business combination will not be the determining factor
in our decision as to whether or not we will proceed with any potential business combination. Additionally, our officers and directors
may not have significant experience or knowledge relating to the operations of the particular target business.
Following our initial business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We may not have the ability to
recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we have encountered and will continue to encounter intense competition from other entities
having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds,
and operating businesses seeking strategic acquisitions. Many of these entities are well established and have significant experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, the requirement that
we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the trust account (excluding
any taxes payable) at the time of the agreement to enter into the business combination, and our obligation to pay cash in connection with
our public stockholders who exercise their redemption rights, may not be viewed favorably by certain target businesses. Any of these factors
may place us at a competitive disadvantage in successfully negotiating our initial business combination.
Facilities
Our executive offices are located at 13355 Noel
Rd., Suite 1100, Dallas, Texas, and our telephone number is (972) 918-5120.
Employees
We have two officers. These individuals are not
obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary,
in the exercise of their respective business judgement, to our affairs until we have completed our initial business combination. The amount
of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the stage of the initial business combination process we are in. We do not intend to have any full-time employees prior to the completion
of our initial business combination. We do not have an employment agreement with any member of our management team.
Periodic Reporting and Audited Financial Statements
We have registered our units, Class A common stock
and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current
reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited
and reported on by our independent registered public accountants.
We will provide stockholders with audited financial
statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders
to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance
with, or 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. These financial statement requirements may limit the pool of potential targets we may conduct
an initial business combination with 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. We cannot assure
you that any particular target business identified by us as a potential business combination candidate will have financial statements
prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance
with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed
target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will
be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending December 31, 2023 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a
large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our
internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such business combination. Prior to the date of this prospectus, we will
file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As
a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a
Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business
combination.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to
take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which
we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means
the market value of our shares of common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2)
the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein
to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals or exceeds
$250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded $100 million during
such completed fiscal year or the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that year’s
second fiscal quarter.
Potential Conflicts
Members of our management team who directly or
indirectly own our securities may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included
by a target business as a condition to any agreement with respect to our initial business combination.
Our officers and directors have agreed to present
to us all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account, subject
to any fiduciary or contractual obligations they may have. As more fully discussed in “Directors, Executive Officers and Corporate
Governance — Conflicts of Interest,” if any of our officers or directors becomes aware of an initial business combination
opportunity that might be attractive to any entity to which he has fiduciary or contractual obligations, he may be required to present
such initial business combination opportunity to such entity prior to presenting such initial business combination opportunity to us.
For more information on the relevant pre-existing fiduciary duties or contractual obligations of our management team, see the section
titled “Directors, Executive Officers and Corporate Governance — Conflicts of Interest.”
Legal Proceedings
There is no material litigation, arbitration or
governmental proceeding currently pending against us or any members of our management team in their capacity as such.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required
to make disclosures under this Item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We do not own any real estate or other physical
properties materially important to our operations. We maintain our principal executive offices at 13355 Noel Rd., Suite 1100, Dallas,
Texas. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate
for our current operations.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any material litigation
or other legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure
that has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The following table sets forth information about
our directors and executive officers as of the date of this annual report.
| Name | |
Age | |
Position |
| Jaymes Winters | |
60 | |
Chief Executive Officer and Director |
| Alexander Monje | |
33 | |
Chairman of the Board |
| Vlad Prantsevich | |
32 | |
Chief Financial Officer and Director |
| David Campbell | |
61 | |
Director |
| Michael Patterson | |
58 | |
Director |
| Karin-Joyce (KJ) Tjon | |
60 | |
Director |
| Yvonne Brown | |
63 | |
Director |
Jaymes Winters is our Chief Executive Officer.
With over 15 years experience as a Chief Executive Officer in the oil and gas, telecommunications and retail spaces with extensive
mergers and acquisitions (M&A) experience, Mr. Winters been Chief Executive Officer at Mach FM Corp. since its inception in 2015 and
oversaw 600 MHz spectrum acquisition via an auction conducted by the Federal Communications Commission, or FCC. He designed a Simultaneous
Multiple Round (SMR) analysis using historical data from previous FCC auctions to predict the total amount bid by other participants within
5%. Prior to that, he was founder and Chief Executive Officer of United Energy Inc., which for seven consecutive years was one of the
largest African American owned businesses on the west coast with annual revenues of nearly $100 million and 1,000 employees. Mr. Winters
has directed and negotiated four M&A transactions utilizing private equity firms. For over nine years, he was an adjunct professor
in the School of Business at Portland State University teaching business strategy, mergers and acquisitions, venture capital and is the
author of an upcoming college textbook titled “Chronicles of an Urban CEO” (Kendall Hunt Publishing Company, August 2021).
Mr. Winters holds a B.S. Business Administration with a minor in Economics from Oregon State University.
Alexander Monje has been the chairman of our board of directors since
March 10, 2022. Since February 2022, Mr. Monje is the Founder and CEO of Biscayne Ventures Advisors. From 2021 to 2022, Mr. Monje served
as Chief Legal Officer of Benessere Investment Group, a consulting and advisory firm with a focus on special purpose acquisition companies.
Mr. Monje has spent the last 8 years in law and finance. From 2018 to 2020, Mr. Monje worked as a commercial litigator representing domestic
and international investors and entrepreneurs, small to midsize private companies, and public companies in several dispute forums. While
in law school, in 2017, Mr. Monje worked in the chambers of Justice R. Fred Lewis at the Florida Supreme Court and, from 2015 to 2017,
worked as a law clerk for a law firm focusing on commercial litigation and corporate transactions. From 2014 to 2015, Mr. Monje worked
in institutional equity sales at Gabelli & Company. From 2013 to 2014, Mr. Monje worked in investment management at Morgan Stanley.
He graduated with Honors from the University of Miami School of Law and earned his B.S. from the University of Miami.
Vlad Prantsevich is our Chief Financial Officer
and a member of our board of directors. Mr. Prantsevich joined Mach FM Corp. in 2015 and serves as the EVP of Operations. Mr. Prantsevich
leads key corporate strategy, finance and operations planning responsibilities, as well as M&A initiatives that include identifying
acquisition candidates, financial modeling, transaction structuring, and proprietary valuation models. Additionally, Mr. Prantsevich has
more than 6 years of executive management level experience in charge of Corporate Finance at 64 Audio, a global pro audio and consumer
electronics brand, where he helped lead the business through a period of rapid growth, implementing key processes, driving software-based
improvements of operations, and development of manufacturing and sales channel partners. Mr. Prantsevich holds a B.S. in Business Administration
from Portland State University.
David Campbell has been a director since March
10, 2022. Since March 2021, Mr. Campbell has been the Chief Operations Officer for Aero Design Labs, Inc. From January 2018 to March 2021,
he was self employed as an aviation consultant. September 2014 to January 2018, he was President and Chief Executive Officer for Horizon
Air of the Alaska Air Group (NYSE: “ALK”). He has more than 20 years of experience as an executive in the aviation sector,
leading finance, flight operations, maintenance & engineering functions with extensive experience in crisis management, restructuring
and turnaround of underperforming operations, billion-dollar budgetary and P&L responsibilities. He has served on boards at American
Airlines Federal Credit Union, North Texas Leaders and Executives Advocating Diversity, Greater Portland Inc., and Make-A-Wish. David
has a B.S. Business Administration and Management from Louisiana Tech University and an M.B.A. from University of Texas-Arlington.
Michael Patterson has been a director since March
10, 2022. Since 1985, Mr. Patterson has served as the Chief Administrative Officer and Chief Legal Officer for Blue Cross and Blue Shield
of Alabama, where he has held several roles, working his way up from a staff accountant to Senior Legal Counsel and then to Chief Legal
Officer, overseeing acquisitions totaling over $500 million in transactional value while adding 700,000 healthcare customers/members for
the company. He has served on the board of Lakeshore Foundation, an organization that encourages and provides opportunities for people
with disabilities to live a healthy lifestyle through activity, research, advocacy and health promotion. A graduate of the University
of Alabama at Birmingham with a Bachelor of Science in Accounting, Patterson received his Juris Doctorate from the Birmingham School of
Law in 1993 and was admitted to the Alabama bar that same year. He was appointed and served as the State of Alabama Revenue Commissioner
from March 2000 until 2001.
Karin-Joyce (KJ) Tjon has been a director since
March 10, 2022. Ms. Tjon is also a Director at Volcon, Inc. (NASDAQ, “VLCN”)
and Kaleyra, Inc. (NYSE, “KLR”). Ms. Tjon served as Chief Financial Officer of Alorica Inc. from July 2018 to May 2020.
From February 2017 to August 2017, she served as President and Chief Operating Officer of Scientific Games, Inc. Ms. Tjon has more than
6 years of executive management level experience as a Chief Executive Officer for publicly listed companies and large privately held companies.
Ms. Tjon has served as Chief Financial Officer and Executive Vice President for Epiq Systems (NASDAQ: “EPIQ”) where she was
responsible for legal, governance and risk compliance as well as all areas of international corporate finance, including financial planning
and analysis, accounting, SEC filings, tax planning, investor relations, and SAP support. As a part of the executive team, she worked
through a strategic review process which culminated in the sale of the company to a strategic buyer, backed by private equity. At Alvarez
& Marsal LLC, a leading global professional services firm, Ms. Tjon served in several interim C-level posts guiding global clients
through operational restructurings, business planning and execution, complex negotiations, financial audit and regulatory compliance issues,
and technology issues. Ms. Tjon graduated summa cum laude from Ohio University with a B.S.S in Organizational Behavior & Management
and received her M.B.A. from Columbia University.
Yvonne Brown has been a director since March 10,
2022. Currently retired, Ms. Brown was self-employed as an IT management consultant from January 2019 to March 2021. Between November
2014 and July 2018, Ms. Brown served as roles as Director of Digital Business and Director of Transitions at Cognizant Technology Solutions.
From March 2013 to June 2014, Ms. Brown served as Vice President of Transition/Transformation Management Services with Xerox Business
Services, LLC where she led a global organization providing IT services to clients in diverse industries supporting the Information Technology
Outsourcing division’s revenue of over $1 billion. Prior to 2013, Ms. Brown had an extensive career with Electronic Data Systems
Inc. and HP Enterprise Services leading the planning and execution of complex transition and transformation mission-critical programs
with globally dispersed resources, for IT outsourcing megadeal contracts valued over $100 million. Ms. Brown has more than 20 years of
senior management experience in the IT sector and is accomplished in the delivery of technology enablement services, strategic outsourcing,
governance, and stakeholder management. Ms. Brown’s experience spans the total range from sales through planning, analysis, solution
design, development, testing, integration, and implementation. Ms. Brown has a B.A. in Computer Science from East Carolina University
and an M.S. in Engineering Management from Southern Methodist University.
Number and Terms of Office of Officers and
Directors
Our board of directors has seven members and 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 meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements,
we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term
of office of the first class of directors, consisting of Yvonne Brown and Michael Patterson will expire at our first annual meeting of
stockholders. The term of office of the second class of directors, consisting of David Campbell and Karin-Joyce Tjon, will expire
at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Jaymes Winters, Vlad Prantsevich
and Alexander Monje will expire at the third annual meeting of stockholders.
Our officers are appointed by the board of directors
and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized
to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of
a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer, Assistant
Secretaries and such other offices as may be determined by the board of directors.
Director Independence
Nasdaq listing standards require that a majority
of our board of directors be independent. An “independent director” is defined generally as a person other than an officer
or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s
board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of
a director. Our board of directors determined that David Campbell, Michael Patterson, Karin-Joyce (KJ) Tjon, Yvonne Brown, and Alexander
Monje are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors
will have regularly scheduled meetings at which only independent directors are present.
Audit Committee
We established an audit committee of the board
of directors. Michael Patterson, Yvonne Brown and Karin-Joyce (KJ) Tjon serve as members of our audit committee, and Karin-Joyce (KJ)
Tjon chairs the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members
of the audit committee, all of whom must be independent. Each of Michael Patterson, Yvonne Brown and Karin-Joyce (KJ) Tjon meet the
independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee
is financially literate, and our board of directors has determined that Karin-Joyce (KJ) Tjon qualifies as an “audit committee
financial expert” as defined in applicable SEC rules.
We adopted an audit committee
charter, which details the principal functions of the audit committee, including:
| ● | the appointment, compensation, retention, replacement, and oversight
of the work of the independent registered public accounting firm engaged by us; |
| ● | pre-approving all audit and permitted non-audit services
to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
| ● | setting clear hiring policies for employees or former employees
of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
| ● | setting clear policies for audit partner rotation in compliance
with applicable laws and regulations; |
| ● | obtaining and reviewing a report, at least annually, from the
independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures,
(ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any
inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent
audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered
public accounting firm and us to assess the independent registered public accounting firm’s independence; |
| ● | reviewing and approving any related party transaction required
to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
| ● | reviewing with management, the independent registered public
accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with
regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial
statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting
Standards Board, the SEC or other regulatory authorities. |
Compensation Committee
We have established a compensation committee of
the board of directors. David Campbell, Karin-Joyce (KJ) Tjon and Alexander Monje serve as members of our compensation committee.
Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee,
all of whom must be independent. David Campbell, Karin-Joyce (KJ) Tjon and Alexander Monje are independent and Alexander Monje chairs
the compensation committee.
We adopted a compensation committee charter, which
details the principal functions of the compensation committee, including:
| ● | reviewing and approving on an annual basis the corporate goals
and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s
performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer
based on such evaluation; |
| ● | reviewing and approving on an annual basis the compensation,
if any is paid by us, of all of our other officers; |
| ● | reviewing on an annual basis our executive compensation policies
and plans; |
| ● | implementing and administering our incentive compensation equity-based remuneration
plans; |
| ● | assisting management in complying with our proxy statement and
annual report disclosure requirements; |
| ● | approving all special perquisites, special cash payments and
other special compensation and benefit arrangements for our officers and employees; |
| ● | if required, producing a report on executive compensation to
be included in our annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate,
to the remuneration for directors. |
Notwithstanding the foregoing, as indicated above,
other than the payment to Mach FM, an affiliate of our sponsor, of $10,000 per month, for up to 18 months, for office space, utilities
and secretarial and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be
paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they
render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation
of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation
arrangements to be entered into in connection with such initial business combination.
The charter provides that the compensation committee
may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly
responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice
from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence
of each such adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
We do not have a standing nominating committee
though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules. In accordance
with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board
of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly
selecting or approving director nominees without the formation of a standing nominating committee. The directors who will participate
in the consideration and recommendation of director nominees are David Campbell, Michael Patterson, Karin-Joyce (KJ) Tjon, Yvonne
Brown, and Alexander Monje. In accordance with Rule 5605 of the Nasdaq rules, all such directors are independent. As there is no standing
nominating committee, we do not have a nominating committee charter in place.
The board of directors will also consider director
candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election
at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate
a director for election to our board of directors should follow the procedures set forth in our bylaws.
We have not formally established any specific,
minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating
nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Code of Ethics
We have adopted a code of ethics that applies
to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern
all aspects of our business.
Legal Proceedings Involving Our Officers and
Directors
On August 3, 2017, Jaymes W. Winters II,
our Chief Executive Officer, filed a petition for bankruptcy under Chapter 7 of the Bankruptcy Code (the “Chapter 7 Case”)
in the United States Bankruptcy Court Western District of Washington (Tacoma) (the “Court”) (Case No. 17-42965) to avoid a
$2,480,000 judicial lien against his personal residence obtained by Sterling Savings Bank (the “Sterling Savings Lien”), which
was held by Umpqua Bank, the successor to Sterling Savings Bank. On November 9, 2018, the Court partially granted Mr. Winters’s
motion to avoid the judgment lien of Umpqua Bank and all but $160,725.00 of Umpqua Bank’s judicial lien was avoided. On May 14,
2018, while the Chapter 7 Case was still open, Mr. Winters filed another petition for bankruptcy under Chapter 13 of the Bankruptcy
Code in the United States Bankruptcy Court Western District of Washington (Tacoma) (Case Number: 3:17-BK-42965) to further protect his
rights in relation to the Sterling Savings Lien. The Court granted a voluntary dismissal of the Chapter 13 Case on November 27, 2018.
As of the date of this prospectus, both the Chapter 7 Case and the Chapter 13 Case are closed.
Conflicts of Interest
Subject to pre-existing fiduciary or contractual
duties as described below, our officers and directors have agreed to present any business opportunities presented to them in their capacity
as a director or officer of our company to us. Certain of our officers and directors presently have fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly,
if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or
she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to
present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers or
directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate of
incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one
we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers and directors may become officers
or directors of another special purpose acquisition company with a class of securities intended to be registered under the Exchange Act,
even prior to us entering into a definitive agreement for our initial business combination.
Potential investors should also be aware of the
following other potential conflicts of interest:
| ● | None of our officers or directors is required to commit his
or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business
activities. |
| ● | In the course of their other business activities, our officers
and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the
other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. |
| ● | Our initial stockholders have agreed to waive their redemption
rights with respect to any founder shares and any public shares held by them in connection with the consummation of our initial business
combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any founder shares held
by them if we fail to consummate our initial business combination within 12 months (or up to 18 months if our time to complete
a business combination is extended as described herein) after the closing of this offering. If we do not complete our initial business
combination within such applicable time period, the proceeds of the sale of the placement warrants held in the trust account will be
used to fund the redemption of our public shares, and the placement warrants will expire worthless. With certain limited exceptions,
the founder shares will not be transferable, assignable by our sponsor until the earlier to occur of: (A) six months after the completion
of our initial business combination and (B) subsequent to our initial business combination, if the reported last sale price of our Class
A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination. With certain
limited exceptions, the placement warrants and the Class A common stock underlying such warrants, will not be transferable, assignable
or saleable by our sponsor or its permitted transferees until 30 days after the completion of our initial business combination. Since
our sponsor and officers and directors may directly or indirectly own common stock and warrants following this offering, our officers
and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which
to effectuate our initial business combination. |
| ● | Our officers and directors may have a conflict of interest with
respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included
by a target business as a condition to any agreement with respect to our initial business combination. |
| ● | Our sponsor, officers or directors may have a conflict of interest
with respect to evaluating a business combination and financing arrangements as we may obtain loans from our sponsor or an affiliate
of our sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination.
Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender, upon consummation
of our initial business combination. The warrants would be identical to the placement warrants. |
The conflicts described above may not be resolved
in our favor.
In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
| ● | the corporation could financially undertake the opportunity; |
| ● | the opportunity is within the corporation’s line of business;
and |
| ● | it would not be fair to our company and its stockholders for
the opportunity not to be brought to the attention of the corporation. |
Accordingly, as a result of multiple business
affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation provides that we renounce
our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person
solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that
opportunity to us without violating another legal obligation.
Below is a table summarizing the entities to which
our executive officers and directors currently have fiduciary duties or contractual obligations:
| Individual(1) |
|
Entity(2) |
|
Entity’s Business |
|
Affiliation |
| Jaymes Winters |
|
Mach FM Corp. |
|
Telecommunications |
|
CEO |
| |
|
|
|
|
|
|
| Vlad Prantsevich |
|
Mach FM Corp. |
|
Telecommunications |
|
Executive Vice President |
| |
|
1964 Ears, LLC |
|
Audio / Electronics |
|
Financial Manager |
| |
|
|
|
|
|
|
| David Campbell |
|
Aero Design Labs, Inc |
|
Aviation |
|
Chief Operations Officer |
| |
|
|
|
|
|
|
| Michael Patterson |
|
Blue Cross Blue Shield of Alabama |
|
Health Care |
|
Chief Administrative Officer |
| |
|
|
|
|
|
|
| Karin-Joyce (KJ) Tjon |
|
Volcon, Inc |
|
Electric Vehicles |
|
Director |
| |
|
Kaleyra, Inc. |
|
Software |
|
Director |
| |
|
|
|
|
|
|
| Yvonne Brown |
|
N/A |
|
N/A |
|
N/A |
| |
|
|
|
|
|
|
| Alexander Monje |
|
Biscayne Ventures Advisors |
|
Venture Capital |
|
Founder & CEO |
| (1) | Each person has a fiduciary duty with respect to the listed
entities next to their respective names. |
| (2) | Each of the entities listed in this table has priority and preference
relative to our company with respect to the performance by each individual listed in this table of his obligations and the presentation
by each such individual of business opportunities. |
Accordingly, if any of the above executive officers,
or directors becomes aware of a business combination opportunity which is suitable for any of the above entities to which he or she has
current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business
combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions, that such an initial business combination is fair
to our company from a financial point of view.
In the event that we submit our initial business
combination to our public stockholders for a vote, pursuant to the letter agreement, our sponsor, officers and directors have agreed to
vote any founder shares held by them and any public shares purchased during or after the offering (including in open market and privately
negotiated transactions) in favor of our initial business combination.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10%
of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our shares of Common Stock and other equity securities. These executive officers, directors, and greater than
10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting
persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that, during 2022, our directors, executive officers, and
ten percent stockholders complied with all Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
Employment Agreements
We have not entered into any employment agreements
with our executive officers and have not made any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
None of our officers has received any cash compensation
for services rendered to us. Commencing on the date of March 10, 2022, we have agreed to pay Mach FM, an affiliate of our sponsor, a total
of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our initial business combination
or our liquidation, we will cease paying these monthly fees. No compensation of any kind, including any finder’s fee, reimbursement,
consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsor, officers or directors or any affiliate
of our sponsor, officers or directors, prior to, or in connection with any services rendered in order to effectuate, the consummation
of our initial business combination (regardless of the type of transaction that it is). However, these individuals will be reimbursed
for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses
and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that
were made to our sponsor, officers or directors or our or their affiliates. Any such payments prior to an initial business combination
will be made using funds held outside the trust account. Other than quarterly audit committee review of such payments, we do not expect
to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses
incurred in connection with identifying and consummating an initial business combination.
After the completion of our initial business combination,
directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All
of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials
furnished to our stockholders in connection with a proposed initial business combination. We have not established any limit on the amount
of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation
will be known at the time of the proposed initial business combination because the directors of the post-combination business will
be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended
to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority
of the independent directors on our board of directors.
We do not intend to take any action to ensure
that members of our management team maintain their positions with us after the consummation of our initial business combination, although
it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after
our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with
us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability
of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision
to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for
benefits upon termination of employment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information
with respect to the beneficial ownership of our voting securities by (i) each person who is known by us to be the beneficial owner of
more than 5% of our issued and outstanding ordinary shares, (ii) each of our officers and directors, and (iii) all of our officers and
directors as a group as of March 16, 2023.
Unless otherwise indicated, we believe that all
persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following
table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of the warrants or conversion of rights,
as the warrants are not exercisable within 60 days of March 16, 2023 and the rights are not convertible within 60 days of March 16, 2023.
| |
|
Amount and
Nature of |
|
|
Approximate
Percentage of
Outstanding |
|
| Name and Address of Beneficial Owner(1) |
|
Beneficial
Ownership |
|
|
Common
Stock |
|
| Jaymes Winters |
|
|
— |
|
|
|
— |
|
| Vlad Prantsevich |
|
|
— |
|
|
|
— |
|
| David Campbell |
|
|
— |
|
|
|
— |
|
| Michael Patterson |
|
|
— |
|
|
|
— |
|
| Karin-Joyce (KJ) Tjon |
|
|
— |
|
|
|
— |
|
| Yvonne Brown |
|
|
— |
|
|
|
— |
|
| Alexander Monje |
|
|
— |
|
|
|
— |
|
| All current directors and executive officers as a group (seven individuals) |
|
|
— |
|
|
|
— |
|
| Five Percent Holders of Nubia |
|
|
|
|
|
|
|
|
| Mach FM Acquisitions LLC(2) |
|
|
3,087,500 |
|
|
|
19.84 |
% |
| Patrick Orlando(2) |
|
|
3,087,500 |
|
|
|
19.84 |
% |
| Boothbay Fund Management, LLC (3) |
|
|
967,000 |
|
|
|
6.18 |
% |
| Saba Capital Management, L.P.(4) |
|
|
989,000 |
|
|
|
6.33 |
% |
| (1) |
Unless otherwise noted, the business address of each of the following entities or individuals is c/o Nubia Brand International Corp., 13355 Noel Rd, Suite 1100, Dallas, TX 75240. |
| (2) |
Mach FM Acquisitions LLC, our sponsor, is the record holder of the securities reported herein. Patrick Orlando is the manager of our sponsor. By virtue of this relationship, Mr. Orlando may be deemed to have beneficial ownership of the securities held of record by our sponsor. Mr. Orlando disclaims any such beneficial ownership except to the extent of his pecuniary interests. |
| (3) |
Pursuant to a Schedule 13G filed by reporting persons. The shares are held by one or more private funds (the “Funds”), which are managed by Boothbay Fund Management, LLC, a Delaware limited liability company (the “Adviser”). Ari Glass is the Managing Member of the Adviser. Certain subadvisors (“Subadvisors”) have been delegated the authority to act on behalf of the Funds, including exclusive authority to vote and/or direct the disposition of certain Shares held by the Fund, and such Shares may be reported in regulatory filings made by such Subadvisors. However, this report is being made to the extent that, for the purposes of Reg. Section 240.13d-3. The address of the reporting persons is 140 East 45th Street, 14th Floor, New York, NY 10017. |
| (4) |
Pursuant to a Schedule 13G filed by reporting persons. Saba Capital Management, L.P., a Delaware limited partnership (“Saba Capital”), Saba Capital Management GP, LLC, a Delaware limited liability company (“Saba GP”), and Mr. Boaz R. Weinstein (together, the “Reporting Persons”). The Reporting Persons have entered into a Joint Filing Agreement, dated March 21, 2022, pursuant to which the Reporting Persons have agreed to file this statement and any subsequent amendments hereto jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Act. The address of the reporting persons is 405 Lexington Avenue, 58th Floor, New York, New York 10174. |
All of the founder shares issued and outstanding
prior to the IPO are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us entered into by
our sponsor, officers and directors. Those lock-up provisions provide that such securities are not transferable or saleable (i) in the
case of the founder shares (or shares of common stock issuable upon conversion thereof), until the earlier to occur of: (A) six months
after the completion of our initial business combination and (B) subsequent to our initial business combination, if the reported last
sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination.
In the case of the placement warrants, until 30 days after the completion of our initial business combination, except in each case (a)
to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any
affiliates of our sponsor, (b) in the case of an individual, by gift to a member of one of the members of the individual’s immediate
family or to a trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person
or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of any of
our officers, our directors, the initial stockholders or members of our sponsor; (d) in the case of an individual, pursuant to a qualified
domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination
at prices no greater than the price at which the securities were originally purchased; (f) in the event of our liquidation prior to the
completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s limited liability company
agreement upon dissolution of our sponsor; or (h) in the event of our liquidation, merger, capital stock exchange, reorganization or other
similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities
or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a)
through (e) or (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions
and the other restrictions contained in the letter agreements and by the same agreements entered into by our sponsor with respect to such
securities.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Insider Shares
On
August 17, 2021, we issued an aggregate of 2,875,000 shares of our Class B common stock to Mach FM Acquisitions LLC to
for an aggregate purchase price of $25,000 in cash, or approximately $0.009 per share. On March 10, 2022, we effectuated a 1.1-for-1 share
split, resulting in an aggregate of 3,162,500 founder shares outstanding. The Company subsequently forfeit 75,000 founder shares in connection
with the partial exercise of the underwriters’ over-allotment option, resulting in the Sponsor holding 3,087,500 founder shares.
The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding
shares upon completion of this offering (excluding the representative shares). The founder shares may not, subject to certain limited
exceptions, be transferred, assigned or sold by the holder.
Simultaneously with the closing of the IPO, we
consummated the private placement with the Sponsor of 5,405,000 Private Warrants at a price of $1.00 per Private Warrant, generating total
proceeds of $5,405,000.
On May 20, 2022, we entered
into an amended and restated promissory note (the “Amended Note”) pursuant to which the Company amended and restated its outstanding
promissory note issued to the Company’s sponsor, Mach FM Acquisitions LLC, on July 27, 2021, in the aggregate principal amount of
$300,000 (the “Original Note”).
Pursuant to the Amended
Note, we amended the Original Note by (i) extending the original maturity date from the date on which we consummated its initial public
offering to a new maturity date which shall be upon the closing of a Repayment/Conversion Trigger Event, as such term is defined below,
and (ii) by permitting the holder of the Amended Note, in its sole discretion, to convert any or all of the unpaid principal under the
Amended Note into warrants, at a price of $1.00 per warrant, upon consummation of the Company’s initial business combination. “Repayment/Conversion
Trigger Event” means:
| (i) | the closing of a merger, consolidation
or other business combination pursuant to which the Company acquires an entity for its initial business combination; or |
| (ii) | the liquidation of the Company
on or before the date of the 12 month anniversary of the IPO (or up to the 18 month anniversary of the IPO if the Company extends the
period of time to consummate a business combination), or such later liquidation date as may be approved by the Company’s stockholders,
that occurs while the Amended Note is outstanding or any time thereafter prior to the repayment of the Amended Note. |
Administrative Services Agreement
The Company entered into an agreement, commencing
on March 15, 2022 through the earlier of the Company’s consummation of a business combination and its liquidation, to pay the Sponsor
a total of $10,000 per month for office space, utilities, secretarial and administrative support. However, pursuant to the terms of such
agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue without interest and be due
and payable no later than the date of the consummation of initial business combination.
Related Party Policy
We have not yet adopted a formal policy for the
review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved
or ratified in accordance with any such policy.
Effective as of March 10, 2022, we adopted a Code
of Ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our
board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our Code of Ethics,
conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee
of indebtedness) involving the company. A form of the Code of Ethics that we adopted is filed as an exhibit to the registration statement
filed with the SEC in connection with this offering.
In addition, our audit committee, pursuant to
a written charter that we adopted effective as of the date of this prospectus, will be responsible for reviewing and approving related
party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee
present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the
members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members
of the audit committee will be required to approve a related party transaction. A form of the audit committee charter we adopted is filed
as an exhibit to the registration statement filed with the SEC in connection with this offering. We also require each of our directors
and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.
To further minimize conflicts of interest, we
have agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors
unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of
view. Furthermore, no finder’s fees, reimbursements, consulting fee, monies in respect of any payment of a loan or other compensation
will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors prior to, for services
rendered to us prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business
combination (regardless of the type of transaction that it is). However, the following payments will be made to our sponsor, officers
or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held in the trust account prior
to the completion of our initial business combination:
| ● | Repayment of up to an aggregate of $300,000 in loans made to
us by our sponsor to cover offering-related and organizational expenses; |
| ● | Payment to Mach FM, an affiliate of our sponsor, of $10,000
per month, for up to 18 months, for office space, utilities and secretarial and administrative support; |
| ● | Reimbursement for any out-of-pocket expenses related to
identifying, investigating and completing an initial business combination; and |
| ● | Repayment of non-interest bearing loans which may be made
by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with
an intended initial business combination, the terms of which (other than as described above) have not been determined nor have any written
agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per
warrant at the option of the lender, upon consummation of our initial business combination. The warrants would be identical to the placement
warrants. |
Our audit committee will review on a quarterly
basis all payments that were made to our sponsor, officers, directors or our or their affiliates.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
Public Accounting Fees
The firm of Marcum LLP, or
Marcum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum for services rendered.
Audit Fees. For the year ended December
31, 2022 and for the period from June 14, 2021 (inception) through December 31, 2021, fees for our independent registered public accounting
firm were approximately $77,250 and $73,130, respectively, for the services Marcum performed in connection with the audit of our December
31, 2022 and 2021 financial statements included in this Annual Report on Form 10-K, and our IPO.
Audit-Related Fees.
For the year ended December 31, 2022 and for the period from June 14, 2021 (inception) through December 31, 2021, our independent registered
public accounting firm did not render assurance and related services related to the performance of the audit or review of financial statements.
Tax Fees. For the year ended
December 31, 2022 and for the period from June 14, 2021 (inception) through December 31, 2021, fees for our independent registered public
accounting firm were approximately $0, for the services Marcum performed in connection with tax compliance, tax advice and tax planning.
All Other Fees. For the year ended December
31, 2022 and for the period from June 14, 2021 (inception) through December 31, 2021, there were no fees billed for products and services
provided by our independent registered public accounting firm other than those set forth above.
Pre-Approval Policy
Our audit committee was formed upon the consummation
of our IPO. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to
the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward
basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our
auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange
Act which are approved by the audit committee prior to the completion of the audit).
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
The accompanying notes are an integral part of
these financial statements.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS
AND GOING CONCERN
Nubia Brand International Corp. (the “Company”)
was incorporated in Delaware on June 14, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth
companies.
As of December 31, 2022, the Company had not commenced
any operations. All activity for the period from June 14, 2021 (inception) through December 31, 2022 relates to the Company’s formation
and the initial public offering (“Initial Public Offering” or “IPO”), which is described below. The Company will
not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will
generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has
selected December 31 as its fiscal year end.
The registration statement for the Company’s
Initial Public Offering was declared effective on March 10, 2022. On March 15, 2022, the Company consummated the Initial Public Offering
of 11,000,000 units (“Units” and, with respect to the shares of common stock included in the Units being offered, the “Public
Shares”), generating gross proceeds of $110,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private sale (the “Private Placement”) of an aggregate of 5,000,000 warrants
(the “Private Placement Warrants”) to Mach FM Acquisitions LLC (the “Sponsor”) at a purchase price of $1.00 per
Private Placement Warrant, generating gross proceeds to the Company in the amount of $5,000,000.
On March 15, 2022, the underwriters purchased
an additional 1,350,000 Units pursuant to the partial exercise of the over-allotment option. The Units were sold at an offering price
of $10.00 per Unit, generating additional gross proceeds to the Company of $13,500,000. Also, in connection with the partial exercise
of the over-allotment option, the Sponsor and the underwriter purchased an additional 405,000 Private Placement Warrants at a purchase
price of $1.00 per warrant generating additional gross proceeds to the Company of $405,000.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial
Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets
held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned
on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for
it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). Upon the closing of the Initial Public Offering, management agreed that an amount equal to at least $10.20 per Unit
sold in the Initial Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust
Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself
out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the
Trust Account, as described below.
The Company will provide the holders of the outstanding
Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares either (i)
in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with
the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a
tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion
of the amount then in the Trust Account (initially to be $10.20 per Public Share, plus any pro rata interest then in the Trust Account,
net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
warrants. The Public Shares subject to redemption were recorded at a redemption value and classified as temporary equity upon the completion
of the Initial Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.”
If the Company seeks stockholder approval of the
Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted in
favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required
by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other
reasons, the Company will, pursuant to its second amended and restated certificate of incorporation (the “Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is
required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business
or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has
agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in
favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting,
and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company
seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate
of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
of the Public Shares, without the prior consent of the Company.
The holders of the Founder Shares have agreed
(a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion
of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares
if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other
provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company has not completed a Business Combination within 12 months,
by March 15, 2023, the Company may, by resolution of the board if requested by the sponsor, extend the period of time to consummate a
business combination up to two times, each by an additional three months (for a total of up to 18 months to complete a business combination,
by September 15, 2023), subject to the sponsor depositing additional funds into the trust account upon five days advance notice prior
to the applicable deadline (collectively the “Combination Period”). The Sponsor will deposit into the trust account $1,235,000,
on or prior to the date of the applicable deadline, for each of the available three-month extensions providing a total possible business
combination period of 18 months at a total payment value of $2,470,000. The Company deposited $1,235,000 into the trust account in March
2023 to fund the automatic 3-month extension to June 15, 2023. Any such payments would be made in the form of non-interest-bearing loans.
The Company may also seek to amend its charter or governing instruments to extend the time to consummate an initial business combination
in order to effectuate an initial business combination. If the Company completes an initial business combination, it will, at the option
of the sponsor, repay such loaned amounts out of the proceeds of the trust account released to the Company or convert a portion or all
of the total loan amount into warrants at a price of $1.00 per warrant, which warrants are identical to the private warrants.
If the Company has not completed a Business Combination
within the specified period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously
released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case
to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
There are no redemption rights or liquidating distributions with respect to the Company’s Units, which will expire worthless if
the Company fails to complete a Business Combination within the Combination Period.
The holders of the Founders Shares have agreed
to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the
Combination Period. However, if the holders of Founder Shares acquire Public Shares in or after the Initial Public Offering, such Public
Shares are entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within
the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held
in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event,
such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public
Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or
products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below (i) $10.20 per Public Share or (ii) such lesser 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 amount of interest which may be withdrawn to pay taxes, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the
Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to
be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.
The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have all vendors, service providers (except for the Company’s independent registered accounting firm), prospective
target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title,
interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
At December 31, 2022, the Company had cash outside
of trust of $545,655 and working capital deficit of $148,043. Further, the Company has incurred and expects to continue to incur significant
costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations
in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” management has determined that the Company has funds that are sufficient to fund the
working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated
in the Company’s amended and restated memorandum of association. However, management has determined that these liquidity risks,
as well as if the Company is unsuccessful in consummating an initial business combination within 15 months, or June 15, 2023 as the Company
deposited $1,235,000 into the trust account in March 2023 to fund the automatic 3-month extension, (or up to 18 months, by September
15, 2023, if the Company extends the period of time to consummate a business combination) from the closing of the IPO, the requirement
that the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the
ability to continue as a going concern for the next twelve months from the issuance of this filing. The balance sheets do not include
any adjustments that might result from the outcome of this uncertainty. The accompanying financial statements have been prepared
in conformity with generally accepted accounting principles in the United States of America (“US GAAP”), which contemplate
continuation of the Company as a going concern.
Risks and Uncertainties
In February 2022, the Russian Federation and Belarus
commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have
instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on
the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial
condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
Management is currently evaluating the impact
of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s
financial position, results of its operations, close of the Initial Public Offering and/or search for a target company, the specific impact
is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements are presented
in conformity with US GAAP and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart
Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it 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 independent registered public accounting firm attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved.
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. 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 election to opt out is irrevocable. The Company has 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, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s 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.
Use of Estimates
The preparation of financial statements in conformity
with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses
during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the balance sheet which management considered in formulating its estimate, could change in the near term due
to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and cash equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of December 31, 2022 and 2021.
Investments held in Trust Account
At December 31, 2022 and 2021, the Company had
$127.8 million and $0 in investments held in the Trust Account, respectively. The funds held in Trust are invested only in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in
any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule
2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and
(ii) the distribution of the funds held in the Trust Account. All of the Company’s investments held in the Trust Account are classified
as trading securities. Trading securities are presented on the balance sheet at fair value at the
end of each reporting period. Gains and losses resulting from the change in fair value of investments held in Trust Account are included
in Income earned on Investments held in Trust Account in the accompanying statements of operations. The estimated fair value of investments
held in Trust Account are determined using available market information.
Offering Costs associated with an Initial
Public Offering
The Company complies with the requirements of
the Financial Accounting Standards Board (“FASB”) ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic
5A, “Expenses of Offering.” Offering costs were allocated to the separable financial instruments issued in the Initial
Public Offering based on a relative fair value basis, compared to total proceeds received. Upon completion of the Initial Public Offering,
offering costs associated with the shares of Class A Common Stock were allocated between temporary equity and the Public Warrants by the
relative fair value method. Total offering costs at the close of the Initial Public Offering were $6,951,081. Other costs of $597,334
consisted principally of costs, such as professional, legal and other fees, incurred in connection with preparation for the Initial Public
Offering. These offering costs, together with the underwriter fees of $5,557,500 (of which 4,322,500 is deferred until successful initial
Business Combination), were allocated between temporary equity in a relative fair value method upon completion of the Initial Public Offering.
In addition, the Company recorded the fair value of $776,815 for representative shares issued upon close of the Public Offering as well
as the fair value of the remaining over-allotment option of $19,432 as offering costs.
Class A ordinary shares subject to possible
redemption
The Company accounts for its Class A common stock
subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity”.
Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable
common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other
times, common stock is classified as stockholders’ equity (deficit). The Company’s Class A common stock features certain redemption
rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future
events. Accordingly, at December 31, 2022, the shares of Class A common stock subject to possible redemption in the amount of $127,242,983
are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheets.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable Class A common stock to equal the redemption value at the end of
each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized a measurement adjustment from
initial book value to redemption amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges
against additional paid-in capital and accumulated deficit of approximately $12.9 million. The valuation of common stock subject to redemption
includes the Company’s estimate of interest held in the Trust Account that is available for payment of taxes, and excludes dissolution
expense of up to $100,000 since it is only taken into account in the event of the Company’s liquidation.
At December 31, 2022, the Class A common stock
subject to possible redemption reflected in the balance sheet is reconciled in the following table:
| Gross proceeds | |
$ | 123,500,000 | |
| Less: | |
| | |
| Proceeds allocated to Public Warrants | |
| (3,755,675 | ) |
| Class A common stock issuance costs | |
| (6,716,427 | ) |
| | |
| (10,472,102 | ) |
| | |
| | |
| Plus: | |
| | |
| Class A Common Stock Redeemable Remeasurement Adjustment at IPO | |
| 12,942,102 | |
| Remeasurement adjustment for the year ended December 31, 2022 | |
| 1,272,983 | |
| Class A common stock subject to possible redemption | |
$ | 127,242,983 | |
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021. The Company is currently not aware of
any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject
to income tax examinations by major taxing authorities since inception.
The Company has identified the United States as
its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception.
These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and
compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits
will materially change over the next twelve months.
The IR Act imposes a 1% excise tax on
the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased
is reduced by the fair market value of and newly issued shares during the taxable year. Redemption rights are ubiquitous to nearly
all SPACs. Shareholders have the ability to require the SPAC to repurchase their shares prior to the merger in what is known as a redemption
right, essentially getting their money back. There are two possible scenarios in which redemption rights come into play. First, they can
be exercised by the shareholders themselves because they are exiting the transaction, or second, they can be triggered because the SPAC
did not find a target with which to merge. The Company will continue to access the potential impact of the IR Act. Based on our preliminary
assessment, we do not expect a material impact on our financial statements.
Net Income (Loss) per Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per share of common stock is computed by
dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. The Company applies the
two-class method in calculating earnings per share. The remeasurement adjustment associated with the redeemable shares of Class A
Common Stock is excluded from income (loss) per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per
share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering and
(ii) the Private Placement since the exercise of the warrants is contingent upon the
occurrence of future events. As of December 31, 2022, the warrants are exercisable to purchase 11,580,000 shares of Class A
common stock in the aggregate. As a result, diluted income (loss) per share of common stock is the same as basic income (loss) per
common stock for the periods presented. On March 10, 2022, the Company effectuated a 1.1-for-1 share split on the Class B
common stock, resulting in an aggregate of 3,162,500 founder shares outstanding (up to 412,500 shares of which were subject to
forfeiture, of which 75,000 were forfeited, resulting in 337,500 common stock shares outstanding subsequent to March 10, 2022).
Basic net income per share of common stock excludes the 337,500 shares subject to forfeiture from weighted average shares
outstanding between January 1, 2022 through March 10, 2022 due to the contingency with forfeiture. Diluted net income per share of
common stock weighted average shares outstanding considers the 337,500 shares subject to forfeiture as outstanding during the entire
year ended December 31, 2022. For the period from June 14, 2021 (inception) through December 31, 2021, the 412,500 shares subject to
forfeiture were excluded from the basic and diluted weighted average shares outstanding.
The following table reflects the calculation of
basic and diluted net income (loss) per share of common stock.
| | |
For the
Year ended | |
| | |
December 31, | |
| | |
2022 | |
| Class A Redeemable Common Stock | |
| |
| Numerator: Income allocable to Class A Redeemable Common Stock | |
$ | 451,082 | |
| Denominator: Basic weighted average shares outstanding | |
| 9,846,164 | |
| Basic net income per share, Class A Redeemable Common Stock | |
$ | 0.05 | |
| | |
| | |
| Class A and Class B Non-Redeemable Common Stock | |
| | |
| Numerator: Income allocable to Class A and Class B Non-Redeemable Common Stock | |
$ | 142,823 | |
| Denominator: Basic weighted average shares outstanding | |
| 3,117,537 | |
| Basic net income per share, Class A and Class B Non-Redeemable Common Stock | |
$ | 0.05 | |
| | |
For the
Year ended | |
| | |
December 31, | |
| | |
2022 | |
| Class A Redeemable Common Stock | |
| |
| Numerator: Income allocable to Class A Redeemable Common Stock | |
$ | 448,713 | |
| Denominator: Diluted weighted average shares outstanding | |
| 9,846,164 | |
| Diluted net income per share, Class A Redeemable Common Stock | |
$ | 0.05 | |
| | |
| | |
| Class A and Class B Non-Redeemable Common Stock | |
| | |
| Numerator: Income allocable to Class A and Class B Non-Redeemable Common Stock | |
$ | 145,192 | |
| Denominator: Diluted weighted average shares outstanding | |
| 3,185,962 | |
| Diluted net income per share, Class A and Class B Non-Redeemable Common Stock | |
$ | 0.05 | |
| | |
For the Period From
June 14,
2021
(Inception) Through
December 31, | |
| | |
2021 | |
| | |
| |
| Class A Redeemable common stock | |
| |
Numerator: Loss allocable to Class A common stock | |
$ | — | |
Denominator: Basic and diluted weighted average shares outstanding | |
| — | |
Basic and diluted net loss per share, Class A Redeemable Common Stock | |
$ | (0.00 | ) |
| | |
| | |
| Class A and Class B Non-redeemable common stock | |
| | |
Numerator: Loss allocable to Class B common stock | |
$ | (1,430 | ) |
Denominator: Basic and diluted weighted average shares outstanding | |
| 2,750,000 | |
Basic and diluted net loss per share, Class A and Class B Non-Redeemable Common Stock | |
$ | (0.00 | ) |
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account.
Fair Value of Financial Instruments
Fair value is defined as the price that would
be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement
date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). See Note 8.
Warrants
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in ASC 480, and FASB ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment is conducted at the time warrant issuance
and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued
or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded at their
initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for outstanding warrants as equity-classified
instruments.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.
NOTE 3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 11,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable
warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at
a price of $11.50 per share, subject to adjustment (see Note 7).
On March 15, 2022, the underwriters purchased
an additional 1,350,000 Units pursuant to the partial exercise of the over-allotment option. The Units were sold at an offering price
of $10.00 per Unit, generating additional gross proceeds to the Company of $13,500,000.
NOTE 4 — PRIVATE PLACEMENTS
The Sponsor purchased an aggregate of 5,000,000
Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $5,000,000, from the Company
in private placements that occurred simultaneously with the closing of the Initial Public Offering. Each Private Placement Warrant is
exercisable to purchase one share of Common stock at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from
the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement
Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable
law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants (including the Common stock issuable upon
exercise of the Private Placement Warrants) will not be transferable, assignable or saleable until 30 days after the completion of an
Initial Business Combination, subject to certain exceptions.
On March 15, 2022, in connection with the exercise
of the over-allotment option, the Sponsor and the underwriter purchased an additional 405,000 Private Placement Warrants at a purchase
price of $1.00 per warrant generating additional gross proceeds to the Company of $405,000.
NOTE 5 — RELATED PARTIES
Founder Shares
On August 17, 2021, the Sponsor received 2,875,000
of the Company’s Class B common stock (the “Founder Shares”) for $25,000 paid for Company deferred offering costs. On
March 10, 2022, the Company effectuated a 1.1-for-1 share split, resulting in an aggregate of 3,162,500 Founder Shares outstanding (see
Note 7). All share amounts have been adjusted to reflect the share split. The Founder Shares include an aggregate of up to 412,500 shares
subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number
of Founder Shares equals, on an as-converted basis, approximately 20% of the Company’s issued and outstanding shares of common stock
after the Initial Public Offering. During the year ended December 31, 2022, as a result of the partial exercise of the over-allotment
option, the remaining 75,000 shares subject to forfeiture expired.
The holders of the Founder Shares have agreed,
subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after
the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class
A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y)
the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all
of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On July 27, 2021, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) March 31, 2022 or (ii) the consummation
of the Initial Public Offering (the “Original Maturity Date”). On May 20, 2022, the Company and the Sponsor amended and restated
the Promissory Note (the “Amended Note”) (i) to extend the Original Maturity Date to a new maturity date which shall be upon
the earlier of the closing of the Company’s initial business combination or the Company’s liquidation, and (ii) to permit
the holder of the Amended Note, in its sole discretion, to convert any or all of the unpaid principal under the Amended Note into warrants,
at a price of $1.00 per warrant, upon consummation of the Company’s initial business combination. As of December 31, 2022 and 2021,
there was $125,341 outstanding under the Promissory Note.
On May 20, 2022, the Company and the Sponsor entered
into the Amended Note (i) to extend the Original Maturity Date to a new maturity date which shall be upon the earlier of the closing of
the Company’s initial business combination or the Company’s liquidation, and (ii) to permit the holder of the Amended Note,
in its sole discretion, to convert any or all of the unpaid principal under the Amended Note into Warrants, at a price of $1.00 per warrant,
upon consummation of the Company’s initial business combination.
Advances from Related Parties
From time to time, affiliates of the Sponsor advance
funds to the Company or pay expenses on behalf of the Company for formation and operating costs. These advances are due on demand and
are non-interest bearing. During the year ended December 31, 2022, the related parties paid $2,841 of expenses on behalf of the Company,
respectively. As of December 31, 2022 and 2021, the outstanding balance due was $0 and $939, respectively.
General and Administrative Services
Commencing on the date of the Initial Public Offering,
the Company has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative
support for up to 18 months. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will
cease paying these monthly fees. During the year ended December 31, 2022, the Company recorded $95,000 of expenses related to the agreement,
respectively. As of December 31, 2022, there was no balance outstanding.
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans
would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the
lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into Warrants at a
price of $1.00 per Warrant. Such Units would be identical to the Private Placement Warrants. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans. As of December 31, 2022 and 2021, there were no amounts outstanding
under the Working Capital Loans.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement
Warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the
Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares)
are entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Initial
Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion
to shares of Class A common stock). The holders of these securities are entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights
with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to
register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides
that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until
the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day
option from the date of Initial Public Offering to purchase up to 1,650,000 additional Units to cover over-allotments, if any, at the
Initial Public Offering price less the underwriting discounts and commissions.
The underwriters were paid a cash underwriting
discount of $0.10 per Unit, or $1,235,000 upon the closing of the Initial Public Offering. EF Hutton, division of Benchmark Investments,
LLC, which is the representative of the underwriters in the Initial Public Offering, also received 123,500 shares of Class A common stock
as compensation in connection with the closing of the Initial Public Offering (the “Representative Shares”). In addition,
the underwriters are entitled to a deferred fee of $0.35 per Unit, or $4,322,500, which includes the additional deferred fee from the
exercise of the over-allotment option. he deferred fee will become payable to the underwriters from the amounts held in the Trust Account
solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
On March 15, 2022, the underwriters purchased
an additional 1,350,000 Units pursuant to the partial exercise of the over-allotment option. The Units were sold at an offering price
of $10.00 per Unit, generating additional gross proceeds to the Company of $13,500,000. The Company recorded the fair value of the remaining
over-allotment option of $19,432 as a liability on accordance with ASC 815-50 on March 15, 2022. On April 29, 2022, the remaining over-allotment
option expired and the liability was written off to the statements of operations. Upon consummation of the Initial Public Offering, the
Company used a modified Black-Scholes model to value the over-allotment option. See Note 8.
The Representative Shares have been deemed compensation
by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration
statement of which this prospectus forms a part pursuant to Rule 5110(e)(1) of the FINRA Manual. Upon close of the Initial Public Offering,
the Company recorded additional stock issuance costs of $776,815, the grant date fair value of the shares.
NOTE 7 — STOCKHOLDERS’ EQUITY
(DEFICIT)
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of December 31, 2022 and 2021, there
were no shares of preferred stock issued or outstanding.
Class A Common Stock — The
Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common
stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 123,500 and 0 shares of Class A common stock
issued and outstanding, respectively. In addition, there were 12,350,000 shares of Class A common stock in temporary equity on the balance
sheets.
Class B Common Stock — The
Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common
stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 3,087,500 and 3,162,500 shares of Class B
common stock issued and outstanding. At issuance, the Class B common stock included an aggregate of up to 412,500 shares of Class B common
stock originally subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in
part so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding common stock after the Initial
Public Offering. Upon the partial exercise of the over-allotment option, there were 75,000 shares which were forfeited during the year
ended December 31, 2022 when the remaining over-allotment option expired.
Only holders of the Class B common stock will
have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of
Class B common stock will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required
by law. In connection with our initial business combination, we may enter into a stockholders agreement or other arrangements with the
stockholders of the target or other investors to provide for voting or other corporate governance arrangements that differ from those
in effect upon completion of this offering.
The shares of Class B common stock will automatically
convert into Class A common stock at the time of a Business Combination, or earlier at the option of the holder, on a one-for-one basis,
subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which
shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of
the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance)
so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the
aggregate, on an as converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion
of Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection
with a Business Combination (net of the number of shares of Class A common stock redeemed in connection with a Business Combination),
excluding any shares or equity-linked securities issued or issuable to any seller of an interest in the target to us in a Business Combination.
Warrants — As of December
31, 2022, there were 11,580,000 warrants outstanding (5,405,000 Private warrants and 6,175,000 Public Warrants). Public Warrants may only
be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants
will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and
(b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any
shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of
the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the
Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will
be exercisable for cash or on a cashless basis, and the Company 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 residence of the exercising holder, or an exemption from registration is available.
The Company has agreed that as soon as practicable
after the closing of a Business Combination the Company will use its commercially reasonable efforts to file, and within 90 days following
a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock
issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the
warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not
listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a) (9) of the Securities Act and, in the event the Company so elects, the Company will not be
required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify
the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per
Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the
outstanding Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per Public
Warrant; |
| ● | upon a minimum of 30 days’
prior written notice of redemption, or the 30-day redemption period to each warrant holder; and |
| ● | if, and only if, the last reported
sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganization,
recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date
on which the Company sends the notice of redemption to warrant holders. |
If and when the warrants become redeemable by
the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
If the Company calls the Public Warrants for redemption,
as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on
a “cashless basis,” as described in the warrant agreement. The exercise price and number of common stock issuable upon exercise
of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or
recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted
for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash
settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company
liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public
Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such
Public Warrants. Accordingly, the Public Warrants may expire worthless.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units being sold in the Initial Public Offering.
NOTE 8 — FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for
its financial assets and liabilities that are re-measured and reported at fair value at each reporting period and non-financial assets
and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1—quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2—observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
Level 3—unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following table presents information about
the Company’s assets and liabilities that are measured at fair value at December 31, 2022, and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value:
| | |
| | |
December 31, | |
| Description: | |
Level | | |
2022 | |
| Assets: | |
| | |
| |
| Investments held in Trust Account | |
| 1 | | |
$ | 127,782,882 | |
The estimated
fair value of Investments held in Trust Account are determined using available market information.
On March 15, 2022, the Company recognized over-allotment
option liability in accordance with ASC 815-40 in the balance sheets of $19,432. The over-allotment option was measured at fair value
at inception, and re-measured at March 31, 2022. Upon expiration of the over-allotment option on April 29, 2022, the Company wrote-off
the option to the statements of operations. During the year ended December 31, 2022, the Company recorded a gain on the change in fair
value of $19,432 to the statements of operations.
The initial fair value measurement of the over-allotment
option liability as of March 15, 2022, and re-measurement at March 31, 2022, were calculated using the following range of weighted average
assumptions:
| | |
March 15, | | |
March 31, | |
| | |
2022 | | |
2022 | |
| Risk-free interest rate | |
| 0.055 | % | |
| 0.17 | % |
| Expected life of over-allotment option | |
| 0.12 years | | |
| 0.08 years | |
| Expected volatility of underlying stock | |
| 4.60 | % | |
| 4.60 | % |
| Dividends | |
| 0 | % | |
| 0 | % |
The 123,500 Representative Shares have a grant
date fair value of $6.29 per share or an aggregate of $776,815. The Company measured the fair value of the Representative Shares on the
grant date of the award utilizing a valuation model which considers certain assumptions. These assumptions include the offering price,
the marketability of the Company and the probability of initial business combination, which were considered Level 3 inputs. Upon the Initial
Public Offering, such amounts were allocated to offering costs within stockholders’ equity (deficit).
NOTE 9 — INCOME TAXES
The Company’s deferred tax assets are as
follows at December 31, 2022 and 2021:
| | |
December 31,
2022 | | |
December 31,
2021 | |
| Deferred tax asset | |
| | |
| |
| Net operating loss | |
$ | - | | |
$ | - | |
| Startup/organizational costs | |
| 147,881 | | |
| 300 | |
| Total deferred tax asset | |
| 147,881 | | |
| 300 | |
| Valuation allowance | |
| (147,881 | ) | |
| (300 | ) |
| Deferred tax asset, net of allowance | |
$ | - | | |
$ | - | |
The income tax provision (benefit) consists of the following for the
year December 31, 2022 and for the period from June 14, 2021 (inception) ended December 31, 2021:
| | |
December 31,
2022 | | |
December 31,
2021 | |
| Federal | |
| | |
| |
| Current | |
$ | 339,889 | | |
$ | - | |
| Deferred | |
| - | | |
| - | |
| State and Local | |
| | | |
| | |
| Current | |
| - | | |
| - | |
| Deferred | |
| - | | |
| - | |
| Income tax provision / (benefit) | |
$ | 339,889 | | |
$ | - | |
In assessing
the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
After consideration of all of the information available, management believes that significant uncertainty exists with respect to future
realization of the deferred tax assets and has therefore established a full valuation allowance. For the period ended December
31, 2022 and 2021, the change in the valuation allowance was $147,481 and $300, respectively.
A reconciliation of the statutory tax rate to the Company’s effective
tax rates for the periods ended December 31, 2022 and 2021:
| | |
Year
Ended
December 31,
2022 | | |
For
the
Period Ended
December 31,
2021 | |
| Statutory federal income tax rate | |
| 21.00 | % | |
| 21.00 | % |
| State taxes, net of federal tax benefit | |
| - | | |
| - | |
| Change in fair value of overallotment liability | |
| (0.44 | ) | |
| - | |
| Change in valuation allowance | |
| 15.84 | | |
| (21.0 | ) |
| Income tax provision (benefit) | |
| 36.40 | % | |
| 0.00 | % |
NOTE 10 — SUBSEQUENT EVENTS
The Company
evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were
issued. The Company did not identify any subsequent events, except as noted below, that would have required adjustment or disclosure in
the financial statements.
On February
16, 2023, the Company entered into a Merger Agreement (the “Merger Agreement”) by and among Honeycomb Battery Company, an
Ohio corporation (the “Honeycomb”), the Company, and Nubia Merger Sub, Inc., an Ohio corporation (“Merger Sub”)
and wholly-owned subsidiary of the Company, pursuant to which Merger Sub will merge with and into Honeycomb (the “Merger”)
with Honeycomb as the surviving corporation of the Merger and becoming a wholly-owned subsidiary of the Company. In connection with the
Merger, the Company will change its name to “Honeycomb Battery Company” or such other name designated by Honeycomb by notice
to the Company, which is referred to herein as the “Combined Company.” The board of directors of the Company (the “Nubia
Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated
thereby (collectively, the “Transactions”) and (ii) resolved to recommend approval of the Merger Agreement and related matters
by the stockholders of the Company.
The
Company will issue 70.0 million of its shares of common stock ($700.0 million) to the stockholders of Honeycomb, plus contingent earnout
payments of up to 22.5 million shares of common stock ($225.0 million) if certain stock price targets are met as set forth in the Merger
Agreement.
The
Merger Agreement contains customary representations and warranties of the parties.
The
Merger is expected to be accounted for as a reverse recapitalization with Honeycomb as the accounting acquirer.
In March 2023, $200,050 was withdrawn from the
Trust to pay taxes.
The Company deposited $1,235,000 into the trust
account in March 2023 to fund the automatic 3-month extension to June 15, 2023.
(b) Exhibits
| Exhibit No. |
|
Description |
| 1.1 |
|
Underwriting Agreement, dated March 10, 2022, by and between the Registrant and EF Hutton, division of Benchmark Investments, LLC, as representative of the several underwriters (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 3.1 |
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 3.2 |
|
Bylaws (incorporated by reference to Exhibit 3.3 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 4.1 |
|
Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 4.2 |
|
Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on November 16, 2021) |
| 4.3 |
|
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 4.4 |
|
Warrant Agreement, dated March 10, 2022, by and between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 16, 2022) |
| 4.5 |
|
Description of Securities |
| 10.1 |
|
Letter Agreement, dated March 10, 2022, by and among the Registrant and its officers, directors and the Sponsor (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.2 |
|
Investment Management Trust Agreement, dated March 10, 2022, by and between the Registrant and Continental Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.3 |
|
Registration Rights Agreement, dated March 10, 2022, by and among the Registrant and certain security holders (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.4 |
|
Administrative Support Agreement, dated March 10, 2022, by and between the Registrant and Mach FM Acquisitions LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.5 |
|
Indemnity Agreements, each dated as of March 10, 2022, by and between the Registrant and each of the officers and directors of the Registrant (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.6 |
|
Private Placement Warrants Subscription Agreement, dated March 10, 2022, by and between the Registrant and the Sponsor (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.7 |
|
Representative Share Letter, dated March 10, 2022 (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on March 16, 2022) |
| 10.12 |
|
Amended and Restated Promissory Note to Mach FM Acquisitions LLC, dated May 20, 2022. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities & Exchange Commission on May 20, 2022) |
| 14 |
|
Code of Ethics (incorporated by reference to Exhibit 14 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 31.1 |
|
Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14(a) under the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 |
|
Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14(a) under the Securities and Exchange Act of 1934, as amended., as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 |
|
Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 |
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 99.1 |
|
Form of Audit Committee Charter (incorporated by reference to Exhibit 99.1 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 99.2 |
|
Form of Compensation Committee Charter (incorporated by reference to Exhibit 99.2 to Amendment No. 7 to the Registration Statement on Form S-1/A filed with the Securities & Exchange Commission on March 8, 2022) |
| 101.INS |
|
Inline XBRL Instance Document. |
| 101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
ITEM 16. FORM 10-K SUMMARY
None.