As of March 27, 2023, there were 10,693,897 shares
of common stock, par value $0.0001 per share, of the registrant issued and outstanding.
PART
I
Item
1. Business.
Overview
We
are a Delaware blank check company incorporated in October 2020 whose business purpose is to effect our initial business combination.
While
we may pursue an initial business combination opportunity in any business, industry, sector or geographical location, we are currently
focusing on the restaurant, hospitality, food and beverage, retail, consumer, food and food related technology and real estate industries
such as “proptech,” including sectors that service or are connected to these industries in the United States and other
developed countries. These industries complement our leadership team’s extensive background and we are capitalizing on the ability
of our leadership team to identify and acquire a target business in such sectors.
We
are focusing our initial business combination efforts, such as the EUR Business Combination, on targets that (i) have strong brand
and business fundamentals; (ii) may have been adversely affected by COVID-related shutdowns, but have a definable path forward;
(iii) will benefit from our leadership team’s expertise in creating, building, marketing, distributing, leading and monetizing
brands and products; (iv) will likely benefit from enhanced data gathering to support cross-channel distribution; and (v) can
serve as a platform company to make future bolt-on acquisitions.
Initial
Public Offering
On
November 8, 2021, we consummated our initial public offering of 15,500,000 units. Each unit consists of one share of common stock, and
one-half of one redeemable warrant of the Company, with each warrant entitling the holder thereof to purchase one share of common stock
for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $155,000,000.
Simultaneously
with the closing of the initial public offering, we completed the private sale of an aggregate of 770,000 shares to our sponsor at a
purchase price of $10.00 per private placement share, generating gross proceeds of $7,700,000.
A total of $158,100,000, comprised of $152,805,604 of the proceeds
from the initial public offering and $5,294,396 of the proceeds of the sale of the private placement shares was placed in the trust account
maintained by Continental, acting as trustee.
Our
management team is led by Steve Salis, our Chairman of the Board of Directors and Chief Executive Officer, and Jamie Karson, our Non-Executive
Vice-Chairman of the Board of Directors. We must complete our initial business combination by August 8, 2023, which is the end of the
Combination Period. If our initial business combination is not consummated by August 8, 2023, then our existence will terminate, and
we will distribute all amounts in the trust account.
EUR
Business Combination
On
October 24, 2022, the Company, entered into the EUR Merger Agreement. Capitalized terms not defined but otherwise used in the following
description have the meanings ascribed to them in the EUR Merger Agreement.
Subject
to its terms and conditions, the EUR Merger Agreement provides that the Company and ELAT will become wholly-owned subsidiaries of PubCo,
a newly formed holding company. Pursuant to the EUR Merger Agreement, at the Closing, (a) Pubco will acquire all of the issued and outstanding
capital shares of ELAT from EUR in exchange for Pubco Ordinary Shares, and any shares EUR holds in Pubco shall be surrendered for no
consideration, such that ELAT becomes a wholly owned subsidiary of Pubco and EUR becomes a shareholder of Pubco, which we refer to as
the Share Exchange; and immediately thereafter (b) Merger Sub will merge with and into the Company, with the Company continuing as the
surviving entity and wholly owned subsidiary of Pubco.
Merger
Consideration
Subject
to the terms and conditions set forth in the EUR Merger Agreement, in connection with the Effective Time of the Business Combination:
| (i) | each
of the outstanding shares of the Company’s common stock will be exchanged for the right
to receive one Pubco Ordinary Share (and following such exchange the share of the Company’s
common stock will be cancelled); |
| (ii) | each
of the Company’s warrants will be assumed by Pubco and converted into the right to
receive a Pubco Warrants; and |
| (iii) | EUR
will receive Pubco Ordinary Shares in the Share Exchange, equal to the amount of shares consisting
of (i) Seven Hundred Fifty Million Dollars ($750,000,000), divided by (ii) the redemption
amount per share of the Company’s common stock payable to the Company’s stockholders
in connection with the closing of the Business Combination as provided in the EUR Merger
Agreement, and which we refer to as the Closing Share Consideration. |
Additional
Pubco Ordinary Shares will be contingently issuable to EUR, in the form of an earnout which is subject to certain terms and conditions
relating to the price of Pubco Ordinary Shares, during the five year period following the consummation of the Business Combination, and
which we refer to as the Earnout Shares. The Earnout Shares represent a number of Pubco Ordinary Shares equal to up to 10% of the Closing
Share Consideration, and half (or 5%) are issuable if Pubco Ordinary Shares’ VWAP (as defined in the EUR Merger Agreement) trade
above $15 dollars per share, and the other half (or 5%) are issuable if such price for Pubco Ordinary Shares trade above $20 per share,
in each case for any twenty trading days in any thirty day trading days during this period.
Representations
and Warranties
The
EUR Merger Agreement contains customary representations and warranties by each of the Company, ELAT, EUR, Pubco and the Merger Sub. Many
of the representations and warranties are qualified by materiality or Material Adverse Effect. “Material Adverse Effect”
as used in the EUR Merger Agreement means with respect to the relevant party, subject to certain customary exceptions, any event, state
of facts, condition, change, development, circumstance, occurrence or effect that, individually or in the aggregate, has had, or would
reasonably be expected to have, a materially adverse effect on the business, assets, financial condition or results of operations of
the Company or ELAT and its subsidiaries, as applicable, taken as a whole. Certain of the representations are subject to specified exceptions
and qualifications contained in the EUR Merger Agreement or in information provided pursuant to certain disclosure schedules to the EUR
Merger Agreement.
Covenants
of the Parties
The
EUR Merger Agreement contains certain customary covenants for transactions of this type by each of the parties during the period between
the signing of the EUR Merger Agreement and the earlier of the Closing or the termination of the EUR Merger Agreement in accordance with
its terms.
ELAT
and EUR also agreed to cooperate in good faith and use reasonable best efforts to obtain any consents required and to transfer certain
contracts from EUR to ELAT to enter into a new contract with the applicable counterparty on substantially identical terms to such contracts.
EUR
agreed that its board of directors will not withhold, withdraw or modify its recommendation that ELAT’s stockholders vote in favor
of the approval of the EUR Merger Agreement and the Business Combination and other matters relating thereto unless the ELAT’s board
of directors determines in good faith, after consultation with its legal and financial advisors, that it is required to do so in order
to comply with its fiduciary duties under applicable law (and then only subject to certain requirements).
The
parties also agreed to ensure Pubco’s board of directors immediately after the Closing consists of five directors, a majority of
which will be independent under the requirements of the Nasdaq Global Market (“Nasdaq”) (i) with ELAT being entitled to nominate
and appoint four directors (of which at least two will qualify as independent under the requirements of Nasdaq and be eligible to serve
on an audit committee) and (ii) with the Company being entitled to nominate and appoint one member to be reasonably approved by ELAT
(such member being qualified as independent and being eligible to serve on an audit committee).
The
parties further agreed that prior to the Closing, Pubco will approve and adopt, subject to the Company’s stockholder approval,
(i) an incentive equity plan (the “Incentive Equity Plan”), and (ii) an employee stock purchase plan (the “ESPP”),
in each case effective as of one business day prior to the Closing Date. The Incentive Equity Plan will have an initial share reserve
ranging from 5% to 10% of the outstanding number of Pubco Ordinary Shares immediately following the Closing, plus an annual “evergreen”
increase, which in each case will be based upon benchmarking against peer companies in consultation with an independent outside compensation
advisor. The ESPP will have an initial share reserve of no more than 2% of the outstanding number of Pubco Ordinary Shares immediately
following the Closing and an annual “evergreen” increase based upon benchmarking against peer companies in consultation with
an independent outside compensation advisor.
The
Company, EUR and Pubco also agreed to jointly prepare, and Pubco will file with the SEC, the EUR Registration Statement with respect
to the Pubco Ordinary Shares that constitute Merger Consideration and the Pubco warrants. The EUR Registration Statement will include
a proxy statement/prospectus for the purpose of soliciting proxies from the Company’s stockholders for the matters relating to
the Business Combination to be acted on at the special meeting of the Company’s stockholders and providing such stockholders with
an opportunity to participate in the Redemption. EUR agreed to prepare (with the Company’s reasonable cooperation) and file with
the ASX (at the sole cost and expense of EUR) the circular to be provided to the shareholders of EUR relating to the EUR Shareholders’
Meeting.
Survival
and Indemnification
None
of the representations and warranties of the parties to the EUR Merger Agreement will survive the Closing, and no claim for indemnification
may be made with respect thereto after the Closing.
None
of the covenants and agreements of the parties contained in the EUR Merger Agreement will survive the Closing, and no claim for indemnification
may be made with respect thereto after the Closing, except that those covenants and agreements that by their terms are required to be
performed in whole or in part after the Closing will survive the Closing and continue until fully performed in accordance with their
terms.
Conditions
to Closing
The
EUR Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived
by all of the parties): (i) approval of the shareholders of EUR and the Company’s stockholders of the Business Combination and
the other matters requiring shareholder approval; (ii) any required approvals of governmental authorities and completion of any antitrust
expiration periods; (iii) no law or order preventing the Business Combination; (iv) approval of Pubco’s Nasdaq listing application;
(v) the EUR Registration Statement having become effective in accordance with the Securities Act, without any stop order or proceeding
seeking such a stop order threatened or initiated by the SEC which remains pending; (vi) the satisfaction of the $5,000,001 minimum net
tangible asset test by the Company or Pubco; (vii) appointment of directors to the Pubco Board as contemplated under the EUR Merger Agreement;
(viii) adoption of the Amended and Restated Memorandum and Articles of Association of Pubco by the shareholders of Pubco; and (ix) Pubco
qualifying as a “foreign private issuer” pursuant to rule 3b-4 of the Exchange Act as of the Closing.
In
addition, unless waived by EUR, the obligations of ELAT, EUR, PubCo and Merger Sub to consummate the Transactions are subject to the
satisfaction of the following additional Closing conditions, in addition to the delivery by the Company of customary certificates and
other Closing deliverables: (i) the representations and warranties of the Company being true and correct as of the date of the EUR Merger
Agreement and as of the Closing (subject to a qualifier as to material adverse effect, other than with respect to specified fundamental
representations and warranties), except that a representation and warranty relating to absence of certain changes and events is required
to be true and correct only as of the date of the EUR Merger Agreement; (ii) the Company having performed all agreements and covenants
required by the EUR Merger Agreement and the Sponsor Support Agreement required to be performed by it at or prior to the Closing Date,
in each case in all material respects; (iii) no change, event state of facts, development or occurrence shall have occurred since the
date of the EUR Merger Agreement, that individually or in the aggregate with all other change, events, state of facts, developments or
occurrences, has had or would reasonably be expected to have a Company material adverse effect (as defined in the EUR Merger Agreement)
that is continuing; (iv) the Sponsor Support Agreement being in full force and effect; (v) the Company having upon the Closing cash and
cash equivalents (including funds remaining in the Trust Account after completion and payment of the Redemption and the proceeds of any
private placement financing), before payment of transaction expenses, at least equal to $40,000,000, which we refer to as the Minimum
Cash Condition; and (vi) EUR having obtained a written confirmation or ruling from the Australian Taxation Office confirming that the
sale of all of the Ordinary Shares of ELAT on the terms contemplated by the EUR Merger Agreement will satisfy the requirements for capital
gains tax rollover relief under the Income Tax Assessment Act 1997 (Cth) and for all other purposes.
Unless
waived by the Company, the obligations of the Company to consummate the Transaction are subject to the satisfaction of the following
additional Closing conditions, in addition to the delivery by ELAT and Merger Sub of customary certificates and other Closing deliverables:
(i) the representations and warranties of ELAT, EUR, Pubco and Merger Sub being true and correct as of the date of the EUR Merger Agreement
and as of the Closing (subject to a qualifier as to material adverse effect, other than with respect to specified fundamental representations
and warranties), except that a representation and warranty relating to an absence of an ELAT material adverse effect (as defined in the
EUR Merger Agreement) and absence of certain changes and events in each case is required to be true and correct only as of the date of
the EUR Merger Agreement; (ii) ELAT, PubCo, Merger Sub and EUR having performed all agreements and covenants required by the EUR Merger
Agreement required to be performed by it at or prior to the Closing Date, in each case in all material respects; (iii) no change, event
state of facts, development or occurrence shall have occurred since the date of the EUR Merger Agreement, that individually or in the
aggregate with all other change, events, state of facts, developments or occurrences, has had or would reasonably be expected to have
an ELAT material adverse effect (as defined in the EUR Merger Agreement) that is continuing; and (iv) each of the Investors Agreement,
Lock-Up Agreement and Registration Rights Agreement shall be in full force and effect as of the Closing.
Termination
The
EUR Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including:
(i) by mutual written consent of the Company and ELAT; (ii) by written notice by either the Company or ELAT if the Closing has not occurred
on or prior to May 3, 2023 (the “Outside Date”), other than by a party whose action or failure to act constitutes a material
breach of the EUR Merger Agreement and has been a principal cause of the failure of the Business Combination to occur; (iii) by either
the Company or ELAT in the event of the other party’s uncured breach of a representation, warranty covenant or agreement in the
EUR Merger Agreement (or with respect to the Company, a breach by the Company or Sponsor of the Sponsor Support Agreement), if such breach
would result in the failure of the related closing condition of that party in the EUR Merger Agreement, following 30 days written notice
to the other party of that party’s breach, which breach remains uncured, or following the Outside Date if the other party exercised
reasonable best efforts to cure such breach, other than by a party whose action or failure to act resulted in a breach of the applicable
closing condition; (iv) by either the Company or ELAT, if the Company holds the Special Meeting (including any postponement or adjournment
of the meeting) in which a vote is taken and the required approvals of the Company’s stockholders relating to the EUR Merger Agreement
and Business Combination are not obtained in accordance with applicable law and the Company’s organizational documents; (v) by
ELAT, if the Company’s Board has changed or fail to make as applicable its approval of the EUR Merger Agreement and Business Combination
or its resolution to recommend to the Company’s stockholders to vote at a special meeting in favor of the adoption of the EUR Merger
Agreement in accordance with the DGCL; (vi) by EUR, in order to substantially concurrently enter into a definitive agreement with respect
to a superior proposal, if EUR has paid to the Company the Expense Reimbursement; (vii) by the Company, prior to the approval of EUR
shareholders of the EUR Merger Agreement and the Business Combination, if (A) there has occurred a EUR Adverse Recommendation Change,
or (B) at any time after a EUR Competing Proposal has been publicly proposed or publicly announced the board of directors of EUR has
failed to publicly affirm the EUR Board Recommendation within 10 business days (after one written request by the Company relating to
any proposal or publicly disclosed material amendment to such proposal), provided that the Company has exercised this termination right
within 10 business days after being entitled to do so under this section; (ix) by the Company, if ELAT has not delivered audited financials,
for the years ended June 30, 2021 and 2022, on or prior to December 31, 2022 (unless the Company has not exercised this termination right
and ELAT delivers such audited financials); (x) by ELAT, if the Minimum Cash Condition is not anticipated to be met, as reasonably determined
by ELAT following the conclusion of an extension meeting to extend the time period for the Company to consummate a business combination;
or (x) by the Company, if an ELAT material adverse effect (as defined in the EUR Merger Agreement) following the date of the EUR Merger
Agreement is uncured and continuing for at least 30 days.
If
the EUR Merger Agreement is terminated, all further obligations of the parties under the EUR Merger Agreement (except for certain obligations
related to publicity, confidentiality and access to information, waiver of claims against the Trust Account, transaction litigation,
termination and related fees and general provisions) will terminate, and no party to the EUR Merger Agreement will have any further liability
to any other party thereto except for liability for willful breach.
If
the Company terminates the EUR Merger Agreement because of an EUR Adverse Recommendation Change (as defined above) or EUR terminates
as a result of a superior proposal, in each case, ELAT will pay the Company $5 million as expense reimbursement, which we refer to as
the Expense Reimbursement Fee. If the Merger Agreement is terminated when an EUR Competing Proposal has been publicly announced or disclosed
and not abandoned, and EUR enters into a definitive agreement relating to such EUR Competing Proposal within twelve months of such termination,
then EUR will pay the Company the Expense Reimbursement Fee.
Trust
Account Waiver
ELAT
and EUR each agreed that they and their affiliates will not have any right, title, interest or claim of any kind in or to any monies
in the Company’s trust account (including any distributions therefrom) held for its public stockholders, and agreed not to, and
waived any right to, make any claim against the trust account (including any distributions therefrom to Company’s public stockholders).
A
copy of the EUR Merger Agreement is filed with this Report as Exhibit 2.1 and is incorporated herein by reference, and the foregoing
description of the EUR Merger Agreement is qualified in its entirety by reference thereto.
First
Amendment to the EUR Merger Agreement
On
January 4, 2023, the parties to EUR Merger Agreement entered into the First Amendment which provided that the Company would pay the fee
of EUR to the Australian Stock Exchange, as well as the anti-trust and regulatory filing fees incurred prior to the Closing and other
fees payable to the SEC, Nasdaq and governmental entities, in each case in connection with the Business Combination. This amendment further
provided that, in the event of the consummation of the Business Combination, EUR would be reimbursed by Pubco for ELAT transaction expenses,
and clarified that Pubco would be responsible for the Company’s transaction expenses and ELAT transaction expenses (in each case
as defined in the EUR Merger Agreement) incurred or paid prior to Closing upon consummation of the Business Combination.
Additional
EUR Agreements
Sponsor
Support Agreement
Simultaneously
with the execution of the EUR Merger Agreement, ELAT, the Company and our sponsor, entered into a Sponsor Support Agreement (the “Sponsor
Support Agreement”) pursuant to which our sponsor agreed to support the EUR Business Combination and to vote all of its Company
common stock (and any other Company securities owned or acquired by the sponsor) in favor of the EUR Merger Agreement and the EUR Business
Combination. The sponsor also agreed to take certain other actions in support of the EUR Merger Agreement and the EUR Business Combination
and to refrain from taking such actions that would adversely impede the ability of the parties to perform the EUR Merger Agreement. The
Sponsor Support Agreement also prevents transfers of Company securities held by the sponsor between the date of the Sponsor Support Agreement
and the date of the Closing or earlier termination of the EUR Merger Agreement unless the transferee executes a joinder to the Sponsor
Support Agreement. The Sponsor also agreed to surrender 2,049,250 shares of Company Common Stock to the Company for no consideration
immediately prior to Closing.
A
copy of the Sponsor Support Agreement is filed as Exhibit 10.9 to this Report and is incorporated herein by reference, and the foregoing
description of the Sponsor Support Agreement is qualified in its entirety by reference thereto.
Lock-Up
Agreement
Simultaneously
with the execution of the EUR Merger Agreement, EUR, Pubco and the Sponsor, entered into a Lock-Up Agreement (the “Lock-Up Agreement”).
Pursuant to the Lock-Up Agreement, the Sponsor and EUR agreed not to, during the period commencing from the Closing and ending 180 days
after the date of the Closing: (A) sell, publicly offer to sell, enter into a contract or agreement to sell, hypothecation or pledge
of, grant of any option to purchase or otherwise disposition of or agreement to dispose of, in each case, directly or indirectly, or
establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position with
respect to, any security, (B) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise
or (C) publicly announce any intention to effect any transaction specified in clause (A) or (B), any Lock-up Shares (in each case, subject
to certain limited permitted transfers where the recipient takes the shares subject to the restrictions in the Lock-Up Agreement). “Lock-up
Shares” means (a) with respect to EUR or each of its permitted transferees, the Pubco Ordinary Shares (i) received by EUR as Closing
Share Consideration and (ii) received by EUR as Earnout Consideration and (b) with respect to the Sponsor, (i) the Pubco Ordinary Shares
it receives as Merger Consideration with respect to the shares of Company common stock that the Sponsor held immediately prior to the
Effective Time and (ii) any Pubco Ordinary Shares issued to the Sponsor in connection with the exercise or settlement of any Company
warrant or Pubco warrant.
A
copy of the Lock-Up Agreement is filed as Exhibit 10.10 to this Report and is incorporated herein by reference, and the foregoing description
of the Lock-Up Agreement is qualified in its entirety by reference thereto.
Investors
Agreement
The
EUR Merger Agreement provides that, at or before the Closing, and effective as of the Closing, PubCo and EUR will enter into an Investors
Agreement (the “Investors Agreement”), pursuant to which EUR will continue to be entitled to nominate and appoint certain
numbers of directors depending on its percentage ownership of PubCo Shares.
A
copy of the form of Investors Agreement is filed as Exhibit 10.11 to this Report and is incorporated herein by reference, and the foregoing
description of the form of Investors Agreement is qualified in its entirety by reference thereto.
Registration
Rights Agreement
Simultaneously
with the Closing, each of PubCo, the Company, the sponsor and EUR, together with certain other persons listed on the signature pages
thereto, will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, upon completion
of the EUR Business Combination, PubCo will grant certain registration rights to EUR, sponsor and certain other holders of PubCo Shares.
A
copy of the Form of Registration Rights Agreement is filed as Exhibit 10.12 to this Report and is incorporated herein by reference, and
the foregoing description of the Registration Rights Agreement is qualified in its entirety by reference thereto.
Warrant
Assignment, Assumption and Amendment Agreement
In
connection with the Closing, PubCo, the Company and Continental, as warrant agent, will enter into the Warrant Assignment, Assumption
and Amendment Agreement (the “Assumed Warrant Agreement”), which will amend that certain Warrant Agreement (the “Original
Warrant Agreement”), dated as of November 3, 2021, and filed with the SEC on November 8, 2021, by and between the Company and Continental,
which Original Warrant Agreement governs all of the Warrants issued by the Company. Pursuant to the Assumed Warrant Agreement, the Company
will assign to PubCo all of the Company’s right, title and interest in and to the Original Warrant Agreement and PubCo will assume,
and agree to pay, perform, satisfy and discharge in full, as the same become due, all of the Company’s liabilities and obligations
under the Original Warrant Agreement, as amended. As a result, each public warrant will automatically cease to represent a right to be
exercised into shares of the Company stock and will instead represent a right to be exercised into PubCo Shares pursuant to the terms
and conditions of the Original Warrant Agreement, as amended.
A
copy of the form of Warrant Assignment, Assumption and Amendment Agreement is filed as Exhibit 10.13 to this Report and is incorporated
herein by reference, and the foregoing description of the form of Warrant Assignment, Assumption and Amendment Agreement is qualified
in its entirety by reference thereto.
Other
than as specifically discussed, this Report does not assume the Closing of the EUR Business Combination.
Extension
Amendment and Redemptions
On
February 1, 2023, we held a special meeting of stockholders and approved, among other things, the Extension Amendment, which extended
the date by which we must consummate a business combination from February 8, 2023 to August 8, 2023 (or such earlier date as determined
by the board). In connection with the Extension Amendment, shareholders holding 11,076,703 shares of common stock exercised their right
to redeem such shares for a pro rata portion of the trust account. We paid cash in the aggregate amount of $114.3 million, or approximately
$10.32 per share to redeeming shareholders in the Extension Redemptions. For each one-month extension our sponsor will deposit in the
trust account a Contribution of $200,000 in the aggregate for shares of common stock not redeemed in connection with the Extension Amendment.
The first Contribution was made on February 6, 2023 and subsequent Contributions are payable monthly through the Company’s extension
date in August 2023 (if we fully extend the term we have to complete our initial business combination). Our board has the sole discretion
whether to continue extending for additional calendar months until August 8, 2023, the end of the Combination Period.
Industry
Opportunity
While
we may acquire a business in any industry, such as the EUR Business Combination, our focus was in the restaurant, retail, consumer, tech,
real estate, and hospitality industries. The leadership team has had demonstrable success over a period of years creating, buying and
managing businesses in these industries. The leadership team has demonstrated an ability to spot undervalued assets in one or more of
these industries. We also believe that businesses in these industries represent opportunities for growth and consolidation over the next
12-24 month period. Sales by businesses in these industries have been materially and adversely affected by COVID. While we expect
overall rents to decrease as a percentage of sales, this will be offset by increased labor and increased operating costs due to high
third-party delivery costs which represents a larger portion of the typical revenue mix. Revenue choppiness combined with increased
costs will result in a number of companies and their owners weighing their strategic alternatives.
Acquisition
Criteria
Consistent
with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective
target businesses. We use these criteria and guidelines in evaluating acquisition opportunities, including the EUR Business Combination,
but we may decide to enter into our initial business combination with a target business that meets some, but not all of these criteria
and guidelines.
|
● |
Large
Market Opportunity. We are seeking to acquire one or more businesses that operate in large addressable markets. We believe operating
in these market segments will create the opportunity for significant growth, including those with embedded or underexploited growth
opportunities and those that may benefit from synergistic bolt-on acquisitions, new product markets and geographies, increased
production capacity, expense reduction and increased operating leverage. |
|
● |
Strong
Potential Competitive Position. We are focusing on acquisition targets that have the potential to develop a leading, growing
or significant niche market position in their respective industries and that can form the foundation to add additional companies
in the future. We are analyzing the strengths and weaknesses of target businesses relative to their competitors. We are seeking to
acquire one or more businesses that we believe have the ability to demonstrate advantages such as improvements to quality of care
or significant measurable cost savings when compared to their competitors, which may help to develop and increase their market position
and profitability. |
|
● |
Experienced
Management Team. We are seeking to acquire one or more businesses with a complete and experienced management team that provides
a platform for us to further develop the acquired company. We are seeking to partner with a potential target’s management team
and expect that the operating and financial abilities of our leadership team will complement the acquired company’s existing
capabilities. |
|
● |
Benefit
from Being a Public Company. We intend to acquire one or more businesses that will benefit from being publicly traded and can
effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company. |
|
● |
Strong
Cash Flow. We are focusing on targets with cash flow metrics equal to or exceeding its public company competitors and which demonstrate
a clear path to gaining market share and profitable growth. |
|
● |
Opportunity
For Broader Consolidation. We are focusing on companies in underpenetrated market segments and distribution channels and present
expansion opportunities for their existing brands. We are seeking to obtain high-level efficiencies for back-office, including
but not limited to purchasing, HR, accounting and finance and construction management. |
|
● |
Strong
Millennial/Gen Z Consumers Base; Use of Data. We believe that target companies with a core base of millennial and Gen Z consumers
attract consumers of all different age groups. We believe that once the millennial and Gen Z consumer develops brand loyalty they
will market the concept or product through social media platforms thus creating brand buzz on a cost efficient basis. We also believe
that the use of data in consumer-facing businesses is becoming increasing important. We intend to find a suitable target where
data collection around consumer preferences could potentially result in increased guest frequency, higher per person check averages
and ultimately, higher revenues. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that from time to time
our leadership may deem relevant.
Effecting
a Business Combination
We
will either (1) seek stockholder approval of our initial business combination, such as the EUR Business Combination, at a meeting
called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed
business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net
of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and
thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will
seek stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in a tender offer will
be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would otherwise require us to seek stockholder approval. If we decide to allow stockholders to sell their
shares to us in a tender offer, we will file tender offer documents with the SEC that will contain substantially the same financial and
other information about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial
business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon consummation of such business
combination and, if we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, a
majority of the outstanding shares of common stock voted are voted in favor of the business combination. We have no specified maximum
percentage threshold for conversions in our amended and restated certificate of incorporation and even those public stockholders who
vote in favor of our initial business combination have the right to convert their public shares. As a result, this may make it easier
for us to consummate our initial business combination.
We
will have until August 8, 2023 to consummate an initial business combination. If we are unable to consummate an initial business combination
within such time period, we will redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account,
equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and
not previously released to us to pay our tax obligations, divided by the number of then outstanding public shares, subject to applicable
law and as further described herein, and then seek to dissolve and liquidate. We expect the pro rata redemption price to be approximately
$10.20 per share of common stock, without taking into account any interest earned on such funds. However, we cannot assure you that we
will in fact be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of our public
stockholders.
Fair
Market Value of Target Business
Nasdaq
listing rules require that the target business or businesses that we acquire must collectively have a fair market value equal to at least
80% of the balance of the funds in the trust account (excluding deferred underwriting commissions and taxes payable) at the time of the
execution of a definitive agreement for our initial business combination. Based on the valuation analysis of our management and board
of directors, we have determined that the fair market value of EUR was substantially in excess of 80% of the funds in the trust account
and that the 80% test was therefore satisfied. Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason,
we would no longer be required to meet the foregoing 80% fair market value test.
We
currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses.
We may, however, structure our initial business combination where we merge directly with the target business or a newly formed subsidiary
or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target
management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act. 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 of a target. In this case, we could 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 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% of trust account balance test.
The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the
financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation materials or
tender offer documents used by us in connection with any proposed transaction will provide public stockholders with our analysis of the
fair market value of the target business, as well as the basis for our determinations. If our board is not able to independently determine
that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking
firm, or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. We will
not be required to obtain an opinion from an investment banking firm as to the fair market value if our board of directors independently
determines that the target business complies with the 80% threshold. Based on the valuation analysis of our leadership and board of directors,
we have determined that the fair market value of EUR was substantially in excess of 80% of the funds in the trust account and that the
80% test was therefore satisfied.
Lack
of Business Diversification
We
may seek to effect a business combination with more than one target business, although we expect to complete our business combination
with just one business, such as EUR. Therefore, at least initially, the prospects for our success may be entirely dependent upon the
future performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination
with only a single entity, our lack of diversification may:
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subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to a business combination, and |
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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. |
If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of
such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may
make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations
(if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or
products of the acquired companies in a single operating business.
Limited
Ability to Evaluate the Target Business’ Management
Although
we scrutinize the management of a prospective target business, including the management team of EUR, when evaluating the desirability
of effecting a business combination, and plan to continue to do so if the EUR Business Combination is not consummated and we seek other
business combination opportunities, we cannot assure you that our assessment of the target business’ management will prove to be
correct. In addition, we cannot assure you that the future management will 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 a business
combination cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated
in senior management or advisory positions with us following a business combination, it is unlikely that they will devote their full-time efforts
to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation
of a 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 a 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, we
cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular
target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will 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.
Stockholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, including the EUR Business Combination, we will either (1) seek stockholder approval
of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell
their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata
share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to
sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such
as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. If
we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or
its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer documents with the SEC
which will contain substantially the same financial and other information about the initial business combination as is required under
the SEC’s proxy rules. Whether we seek stockholder approval or engage in a tender offer, we will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon consummation of such business combination
and, if we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, a majority of
the outstanding shares of common stock voted are voted in favor of the business combination. We have no specified maximum percentage
threshold for redemptions in our amended and restated certificate of incorporation and even those public stockholders who vote in favor
of our initial business combination have the right to redeem their public shares. As a result, this may make it easier for us to consummate
our initial business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the
Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working
capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such
initial business combination, we may need to have more than $5,000,001 in net tangible assets immediately prior to or upon consummation
and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may
not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable
time period, if at all. Public stockholders may therefore have to wait until August 8, 2023 in order to be able to receive a pro rata
share of the trust account.
Our
sponsor, officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed business
combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed initial business
combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial business combination.
None
of our officers, directors, sponsor, or their affiliates has purchased units or shares of common stock in our initial public offering,
or has since indicated any intention to do so from persons in the open market or in private transactions. However, if we hold a meeting
to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against such
proposed business combination or that they wish to convert their shares, our officers, directors, sponsor, or their affiliates could
make such purchases in the open market or in private transactions in order to influence the vote and reduce the number of conversions.
Notwithstanding the foregoing, our officers, directors, sponsor, and their affiliates will not make purchases of shares of common stock
if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential
manipulation of a company’s stock.
See
“EUR Business Combination” above for more information on the requisite approvals for the EUR Business Combination.
Conversion
Rights
At
any meeting called to approve an initial business combination, such as the EUR Business Combination, public stockholders may seek to
convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their
pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the
initial business combination, less any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the
opportunity to sell their shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote)
for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but
not yet paid.
Our
sponsor, initial stockholders and our officers and directors will not have conversion rights with respect to any shares of common stock
owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in our initial public
offering or in the aftermarket.
We
may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either (i) tender
their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the DWAC System,
at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve
the business combination. There is a nominal cost associated with the above-referenced delivery process and the act of certificating
the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker a nominal amount
and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of
whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion
rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking to exercise
conversion rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated
this may result in an increased cost to stockholders.
Any
proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate
whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would have
from the time the stockholder received our proxy statement up until the vote on the proposal to approve the business combination to deliver
his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific facts of each transaction.
However, as the delivery process can be accomplished by the stockholder, whether or not he is a record holder or his shares are held
in “street name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his
shares through the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this
fact.
Any
request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or the expiration
of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an election of their conversion
and subsequently decides prior to the applicable date not to elect to exercise such rights, he may simply request that the transfer agent
return the certificate (physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any shares delivered by public holders.
See
“EUR Business Combination” above for more information on any conversion rights associated with the EUR Business Combination.
Liquidation
if No Business Combination
Our
amended and restated certificate of incorporation, as amended, provides that we will have only the Combination Period, or until August
8, 2023, to complete an initial business combination, such as the EUR Business Combination. If we have not completed the EUR Business
Combination or another initial business combination by such date, we 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 100% of the outstanding public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any
interest not previously released to us but net of taxes payable, divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above)
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Leadership believes
that this condition raises substantial doubt about our ability to continue as a going concern.
Our
sponsor, officers and directors have agreed that they will not propose any amendment to our amended and restated certificate of incorporation
that would affect our public stockholders’ ability to convert or sell their shares to us in connection with a business combination
as described herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business
combination within the Combination Period unless we provide our public stockholders with the opportunity to convert their shares of common
stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest not previously released to us but net of franchise and income taxes payable, divided by the number of then outstanding
public shares. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by our sponsor,
executive officers, directors or any other person.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of
our outstanding public shares in the event we do not complete the EUR Business Combination, or another initial business combination within
the Combination Period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during
which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution. It is our intention to redeem our public shares as soon as reasonably possible following the
end of the Combination Period, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
well beyond the third anniversary of such date.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares
in the event we do not complete our initial business combination within the required time period is not considered a liquidation distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as
in the case of a liquidation distribution.
Because
we will not be complying with Section 280 of the DGCL, Section 281(b) of the DGCL requires us to adopt a plan, based on facts
known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought
against us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our
vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
We
are required to seek to have all third parties (including any vendors or other entities we engage after our initial public offering)
and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they may
have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening
the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision
for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account to
our public stockholders. Nevertheless, Marcum, our independent registered public accounting firm, and the underwriters of our initial
public offering, will not execute agreements with us waiving such claims to the monies held in the trust account. Furthermore, there
is no guarantee that other vendors, service providers and prospective target businesses will execute such agreements. Nor is there any
guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our sponsor has
agreed that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.20 per share by the claims of
target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products
sold to us, but we cannot assure you that it will be able to satisfy its indemnification obligations if it is required to do so. We have
not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient
funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore,
we believe it is unlikely that our sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally,
the agreement our sponsor entered into specifically provides for two exceptions to the indemnity it has given: it will have no liability
(1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving
any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims
for indemnification by the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.20 due to claims or
potential claims of creditors.
We
anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after the end of the Combination Period
and anticipate it will take no more than 10 business days to effectuate such distribution. The holders of the founder shares have waived
their rights to participate in any liquidation distribution from the trust account with respect to such shares. There will be no distribution
from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of any subsequent liquidation
from our remaining assets outside of the trust account.
If
we are unable to complete an initial business combination and expend all of the net proceeds of our initial public offering and the sale
of the private shares, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned
on the trust account, the per-share redemption price would be approximately $10.20. As discussed above, the proceeds deposited in
the trust account could become subject to claims of our creditors that are in preference to the claims of public stockholders.
Our
public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete a business
combination within the required time period, if the stockholders seek to have us convert or purchase their respective shares upon a business
combination which is actually completed by us or upon certain amendments to our amended and restated certificate of incorporation prior
to consummating an initial business combination. In no other circumstances shall a stockholder have any right or interest of any kind
to or in the trust account.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims
of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we
cannot assure you we will be able to return to our public stockholders at least $10.20 per share.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer”
or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after the end
of the Combination Period, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors
with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties
to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying
public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be
brought against us for these reasons.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public offering
that will apply to us until the consummation of our initial business combination. These provisions cannot be amended without the approval
of a majority of our stockholders. If we seek to amend any provisions of our amended and restated certificate of incorporation that would
affect our public stockholders’ ability to convert or sell their shares to us in connection with a business combination as described
herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination
by the end of the Combination Period, we will provide dissenting public stockholders with the opportunity to convert their public shares
in connection with any such vote. This conversion right shall apply in the event of the approval of any such amendment, whether proposed
by our sponsor, any executive officer, director or director nominee, or any other person. Our sponsor, officers and directors have agreed
to waive any conversion rights with respect to any founder shares and any public shares they may hold in connection with any vote to
amend our amended and restated certificate of incorporation. Specifically, our amended and restated certificate of incorporation provides,
among other things, that:
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we
shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or
do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable),
or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), in each case subject to the limitations described herein; |
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we
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to
or upon consummation of such business combination and, if we seek stockholder approval, unless otherwise required by applicable law,
regulation or stock exchange rules, a majority of the outstanding shares of common stock voted are voted in favor of the business
combination; |
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if
our initial business combination is not consummated by the end of the Combination Period, then we will redeem all of
the outstanding public shares and thereafter liquidate and dissolve our company; |
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upon
the consummation of our initial public offering, approximately $158.1 million, was placed into the trust account; |
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we
may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar transaction prior to our initial business combination; and |
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prior
to our initial business combination, we may not issue additional stock that participates in any manner in the proceeds of the trust
account, or that votes as a class with the common stock sold in our initial public offering on an initial business combination. |
Competition
In
identifying, evaluating and selecting a target business, we have and may continue to encounter intense competition from other entities
having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and
effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other
resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there may be numerous potential target businesses, such as EUR, that we could acquire with the net proceeds of our initial
public offering and the sale of the private shares, our ability to compete in acquiring certain sizable target businesses may be limited
by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek stockholder approval of a business combination or engage in a tender offer may delay the completion of a transaction; |
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our
obligation to convert or repurchase shares of common stock held by our public stockholders may reduce the resources available to
us for a business combination; and |
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our
outstanding warrants, and the potential future dilution they represent. |
Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our leadership believes,
however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive
advantage over privately held entities having a similar business objective as ours in acquiring a target business with significant growth
potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target
business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.
Employees
We
have two executive officers and one non-executive vice chairman of the board. These individuals are not obligated to devote any
specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time
they will devote in any time period varies based on the stage of the business combination process the company is in. Accordingly, once
a suitable target business to acquire has been located, such as EUR, management may spend more time investigating such target business
and negotiating and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to
locating a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe
is necessary to our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
Periodic
Reporting and Audited Financial Statements
We
have registered our units, common stock and warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports, including this Report, 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 any proxy solicitation materials,
such as the EUR Registration Statement, or tender offer documents sent to stockholders to assist them in assessing the target business.
These financial statements will need to be prepared in accordance with or reconciled to GAAP or international financial reporting standards
as promulgated by the International Accounting Standards Board. We cannot assure you that any particular target business identified by
us as a potential acquisition candidate will have the necessary financial statements. To the extent that this requirement cannot be met,
we may not be able to acquire the proposed target business.
We
are not required to have our internal control procedures audited for the fiscal year ending December 31, 2022 as required by the
Sarbanes-Oxley Act. A target company may also 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 acquisition.
Item
1A. Risk Factors.
As
a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However,
below is a partial list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:
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we
are a blank check company with no revenue or basis to evaluate our ability to select a suitable business target; |
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we
may not be able to select an appropriate target business or businesses and complete our initial business combination in the prescribed
time frame, including the EUR Business Combination; |
|
● |
our
expectations around the performance of a prospective target business or businesses, such as EUR, may not be realized; |
|
● |
we
may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination; |
|
● |
our
officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have
conflicts of interest with our business or in approving our initial business combination; |
|
● |
we
may not be able to obtain additional financing to complete our initial business combination, including the EUR Business Combination,
or reduce the number of shareholders requesting redemption; |
|
● |
we
may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing
market price of our shares at that time; |
|
● |
you
may not be given the opportunity to choose the initial business target or to vote on the initial business combination; |
|
● |
trust
account funds may not be protected against third party claims or bankruptcy; |
|
● |
an
active market for our public securities’ may not develop and you will have limited liquidity and trading; |
|
● |
the
availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to
the business combination; |
|
● |
our
financial performance following a business combination with an entity may be negatively affected by their lack an established
record of revenue, cash flows and experienced management; |
|
● |
there
may be more competition to find an attractive target for an initial business combination, which could increase the costs associated
with completing our initial business combination and may result in our inability to find a suitable target; |
|
● |
changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate
and complete an initial business combination; |
|
● |
we
may attempt to simultaneously complete business combinations with multiple prospective targets, in addition to or instead of EUR,
which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively
impact our operations and profitability; |
|
● |
we
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after the initial
public offering, which may include acting as a financial advisor in connection with an initial business combination or as placement
agent in connection with a related financing transaction. Our underwriters are entitled to receive deferred underwriting commissions
that will be released from the trust account only upon a completion of an initial business combination. These financial incentives
may cause them to have potential conflicts of interest in rendering any such additional services to us after the initial public offering,
including, for example, in connection with the sourcing and consummation of an initial business combination; |
|
● |
we
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all; |
|
● |
since
our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than
with respect to any public shares they may acquire during or after our initial public offering), and because our sponsor, officers
and directors may profit substantially even under circumstances in which our public stockholders would experience losses in connection
with their investment, a conflict of interest may arise in determining whether a particular business combination target is appropriate
for our initial business combination; |
|
● |
changes
in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws or regulations,
may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results
of operations; |
|
● |
the
value of the founder shares following completion of our initial business combination is likely to be substantially higher than the
nominal price paid for them, even if the trading price of our common stock at such time is substantially less than $10.00 per share; |
|
● |
resources
could be spent in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business. If we have not completed our initial business combination within the Combination
Period, our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless; |
|
● |
in
March 2022, the SEC issued proposed rules relating to certain activities of SPACs. Certain of the procedures that we, a potential business
combination target, or others may determine to undertake in connection with such proposals may increase our costs and the time needed
to complete our initial business combination and may constrain the circumstances under which we could complete an initial business combination.
The need for compliance with such proposals may cause us to liquidate the funds in the trust account or liquidate the Company at an earlier
time than we might otherwise choose; |
|
|
|
|
● |
if
we are deemed to be an investment company for purposes of the Investment Company Act, we would be required to institute burdensome
compliance requirements and our activities would be severely restricted. As a result, in such circumstances, unless we are able to
modify our activities so that we would not be deemed an investment company, we may abandon our efforts to complete an initial business
combination and instead liquidate the Company; |
|
|
|
|
● |
to
mitigate the risk that we might be deemed to be an investment company for purposes of the
Investment Company Act, we expect that we will, on or prior to the 24-month anniversary of
the effective date of our IPO Registration Statement, instruct the trustee to liquidate the investments held
in the trust account and instead to hold the funds in the trust account in an interest bearing
demand deposit account until the earlier of the consummation of our initial business combination
or our liquidation. As a result, following the liquidation of investments in the
trust account, we would likely receive less interest on the funds held in the trust account,
which would likely reduce the dollar amount our public stockholders would receive upon any
redemption or liquidation of the Company;
|
|
● |
we
may not be able to complete an initial business combination with certain potential target companies if a proposed transaction with
the target company may be subject to review or approval by regulatory authorities pursuant to certain U.S. or foreign laws or regulations,
including the Committee on Foreign Investment in the United States; |
|
● |
recent
increases in inflation and interest rates in the United States and elsewhere could make it more difficult for us to consummate an
initial business combination; |
|
● |
if
the funds held outside of our trust account are insufficient to allow us to operate until
at least August 8, 2023, our ability to fund our search for a target business or businesses
or complete an initial business combination may be adversely affected;
|
|
● |
military
conflict in Ukraine or elsewhere may lead to increased price volatility for publicly traded
securities, which could make it more difficult for us to consummate an initial business combination;
|
|
● |
a
1% U.S. federal excise tax may be imposed on us in connection with our redemptions of shares
in connection with a business combination or other stockholder vote pursuant to which stockholders
would have a right to submit their shares for redemption;
|
|
● |
we
have identified a material weakness in our internal control over financial reporting as of December 31, 2022. If we are unable to
maintain an effective system of our internal control over financial reporting, we will not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business
and operating results; |
|
|
|
|
● |
our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a going concern, due to liquidity shortage and necessity to cease all operations except for the purpose
of liquidating if we are unable to complete an initial business combination by August 8, 2023; |
|
● |
if
third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by
stockholders may be less than $10.20; and |
|
|
|
|
● |
our
search for an initial business combination, and any target business with which we ultimately consummate an initial business combination,
may be materially adversely affected by the recent coronavirus (COVID-19) outbreak and other events, and the status of debt and equity
markets. |
For
the complete list of risks relating to our operations, see the section titled “Risk Factors” contained in our (i) IPO Registration
Statement, (ii) Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022 and amended
by Amendment No. 1 on Form 10-K/A filed on June 13, 2022, (iii) Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, as
filed with the SEC on May 23, 2022, (iv) Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the SEC on
August 15, 2022; (v) Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, as filed with the SEC on November 10, 2022;
and (vi) Definitive Revised Proxy Statement on Schedule 14A, as filed with the SEC on January 17, 2023.
For
risks relating to the EUR Business Combination and the EUR Merger Agreement, please see the registration statement and amendments filed by Critical Metals.
Item
1B. Unresolved Staff Comments.
Not
applicable.
Item
2. Properties.
Our
executive offices are located at 4201 Georgia Avenue NW, Washington DC 20011, and our telephone number is (202) 846-0300. The cost for
our use of this space is included in the $10,000 per month fee we pay to an affiliate of our executive officers for office space, administrative
and shared personnel support services. We consider our current office space adequate for our current operations.
Item
3. Legal Proceedings.
To
the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers or directors
in their capacity as such or against any of our property.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART III
Item 10. Directors, Executive Officers and
Corporate Governance.
Directors and Executive Officers
As of the date of this Report,
our directors and officers are as follows:
Name | |
Age | |
Title |
Steve Salis | |
39 | |
Chairman of the Board of Directors and Chief Executive Officer |
Jamie Karson | |
65 | |
Non-Executive Vice-Chairman of the Board of Directors |
Daniel Lee | |
43 | |
Chief Financial Officer |
Karen Kelley | |
57 | |
Director |
Warren Thompson | |
63 | |
Director |
David Perlin | |
60 | |
Director |
Carolyn Trabuco | |
53 | |
Director |
The experience of our directors
and executive officers is as follows:
Steve Salis has
served as our Chairman and Chief Executive Officer since inception. Mr. Salis serves as the CEO of Salis Holdings, LLC, a company
he founded in 2015. Salis Holdings, LLC is a privately-held multi-brand, holding company, which owns restaurants and hospitality
assets in Washington D.C. and acquires brands with a high price and value correlation for sale through potentially multiple distribution
channels. Prior to founding Salis Holdings, Mr. Salis co-founded &pizza in July 2011, a fast casual pizza brand which
delivers individual pizzas cooked within 90 seconds, and served as its CEO from July 2011 to March 2015. As CEO, he assembled
successful leadership teams, implemented business and personnel evaluation tools and communicated on a regular basis with the investment
community. Additionally, since November 2016, he has served as the Chairman, President, and owner of Kramerbooks, a 44 year
old bookstore in Washington D.C. which he acquired in 2017. Prior to &pizza, Mr. Salis nurtured his entrepreneurial spirit
in New York City where he worked in the restaurant and hospitality space learning the business from the ground up, working with acclaimed
operators, including how to evaluate key operating and acquisition metrics for restaurant and hospitality companies. Mr. Salis attended
the University of New Hampshire from 2002-2004 where he studied Economics and Business Administration. Mr. Salis is well qualified
to serve on our board due to his business experience and financial acumen.
Jamie Karson has
served as our Non-Executive Vice Chairman since inception. Mr. Karson has served as Executive Chairman of Salis Holdings since
June 2018, a multi-brand, multi-platform holding company. Mr. Karson and Mr. Salis work closely together on a day-to-day
basis. Mr. Karson assists in analyzing operating performance while working with the team, on all strategic aspects of the business,
including analyzing potential acquisitions and strategic partnerships. This includes negotiating strategic initiatives with capital sources
such as private equity partners, family officers, credit funds and commercial banks. From 2001 to May 2008, Mr. Karson was the
CEO and Chairman of the Board of Steve Madden, where he partnered with the executive team, developing and acquiring new brands and new
channels of distribution, making retail store openings and closing decisions, managing shareholder communications and relationships, and
oversight. Additionally, from January 2009 to January 2014, he was the founder, CEO and COO of Think Pink, LLC which owned and
operated 5 branded QSR restaurants in Connecticut where his responsibilities including all hiring and firing, making all real estate decisions,
financial modeling and negotiation of the sale of the Company. From August 2015 to September 2017, Mr. Karson served as
the CEO and Chairman of the Board of Original Soupman (QTCQV:SOUP) where he increased annual revenues and cut monthly losses. During his
tenure, the company established distribution in key supermarket chains around the country including Kroger, Publix, ShopRite, Wegmans,
Stop & Shop, and Costco. SOUP filed a petition under Chapter 11 of the federal Bankruptcy Code in June 2017, which resulted in
a sale of the assets of the company to an investor group as part of the formal bankruptcy auction process in October, 2017. After the
sale was completed, the bankruptcy case ultimately converted into a Chapter 7. Mr. Karson left the company after the bankruptcy sale
was completed in October 2017. From October 2017 to June 2018, Mr. Karson served as an independent consultant. Mr. Karson
received a B.A. in Political Science from the University of North Carolina, Chapel Hill and his J.D. from New York Law School. Mr.
Karson is well qualified to serve on our board due to his business experience and financial acumen.
Daniel Lee has
served as our Chief Financial Officer since January 2023 and Head of Business and Corporate Development since November 2021. Since May
2018, Mr. Lee has been SVP of Business Development at Salis Holdings LLC, where he works on potential acquisitions and financings
for the company. Since December 2016, Mr. Lee has been a Managing Partner at Candlelight Capital Advisors, LLC, an advisory
and consulting firm providing outsourced business strategy and corporate development services for media, technology and consumer companies.
Mr. Lee served as the CFO of RiskSpan, Inc. from December 2017 to April 2019 and previously as the Director of Finance
from December 2016 to November 2017. At RiskSpan, Inc. he led corporate finance functions, including business planning and budgeting,
financial forecasting, cash flow management, and reporting for senior leadership and private equity investors. From October 2016
to August 2016, Mr. Lee was a partner at an early-stage venture firm in Washington D.C., NextGen Venture Partners, LLC
which focused on technology-enabled startups. Before NextGen, Mr. Lee was an Equity Analyst at Profit Investment Management
from November 2011 to December 2012, before becoming a Senior Equity Analyst in December 2012 where he was responsible
for identifying, analyzing and recommending new investment ideas for the financial, financial technology and industrial sectors, until
September 2015. Mr. Lee received a B.A. in Economics from the University of Virginia.
Karen Kelley has
served as one of our directors since November 2021. Currently, she is the COO of Jack’s Family Restaurants, a 200+ unit southern
American fast casual chain based in Birmingham, Alabama. As COO since May 2020, she is responsible for all aspects of operations
including human resources and field operations leadership. She also is responsible for centralized operation support such as training
and supply chain. Prior to Jack’s, she served as the Chief Restaurant Operation Officer of Panera Bread from December 2018
to May 2020, responsible for operations of over 2,000 restaurants with full profit and loss responsibility. Additionally, she was
the President and COO of Tatte Bakery from February 2018 to August 2018 and the President and COO of Sweetgreen from December 2013
to February 2018. She was also the president of DryBar and the COO of both Pinkberry and Jamba Juice. She has evaluated dozens of
restaurant and hospitality opportunities over the past 20+ years and is highly respected throughout the industry. Ms. Kelley attended
the University of Colorado for two years. Ms. Kelley is well qualified to serve on our board due to her extensive leadership and
development experience in the hospitality and customer services industry.
Warren Thompson has
served as one of our directors since November 2021. Currently, Mr. Thompson is President and Chairman of Thompson Hospitality Corporation,
the largest minority-owned food service and facilities management company in the U.S., where he began in October 1992.
Mr. Thompson has been a member of the board of directors for Compass Group North America, a foodservice and support services company,
since October 1997. Additionally, Mr. Thompson has been the owner and an officer of Professional Crew Services LLC, a support services
company, since April 2017. Also, since June 2017, Mr. Thompson has been the owner and an officer at Innovate Food Group LLC. Mr. Thompson
has been a member of the board of directors at Duke Realty since April 2019 and of Performance Food Group Company since November 2020.
Mr. Thompson received his Bachelor of Arts in Managerial Economics from Hampden-Sydney College and holds an MBA from the University
of Virginia’s Darden School of Business Administration. Mr. Thompson is well qualified to serve on the board due to his experience
in the food and beverage industries.
David Perlin has
served as one of our directors since November 2021. Currently, Mr. Perlin is a Senior VP at Shepherd Kaplan Krochuk, LLC, an SEC
Registered Investment Advisor based in Boston, where he began in January 2020. From April 2016 to December 2019, he was the CEO of Pearl
Investment Partners, a multi-family office investment firm and RIA, which he founded in 2016. From April 2013 to April 2016, he was
SVP and a Managing Director at Goldman Sachs, in the private wealth management division. From June 2004 to December 2006, Mr. Perlin
was a trader and partner at Keel Capital, a long-short equity fund. Additionally, Mr. Perlin has served as the Vice Chairman
of the Board of Teach for America, a non-profit in the D.C. Region, since January 2019. Mr. Perlin received a B.S. in Accounting
from New York University and an M.B.A. from New York University, Stern School of Business. Mr. Perlin is well qualified to serve
on the board due to his experience as an investment advisory and wealth management experience.
Carolyn Trabuco has
served as one of our directors since December 2021. Currently, Ms. Trabuco is Co-Founder and Independent Member of Public Company Board
of Directors at Azul Brazilian Airline (“Azul”) since April 2007, where she serves as Compensation Committee Chair and member
of the ESG Committee. Mrs Trabuco is a member of the Board of Directors and Audit Committee for Sizzle Acquisition Corp, a position she
has held since November 2021. Since December 2017, Ms. Trabuco has served as Founder and CEO of Thistledown Advisory Group, LLC, a USA
based strategic advisory and consulting firm. Prior to founding Thistledown, from 2009-2014 she was a portfolio manager and senior advisor
at Astenbeck Capital Markets / Phibro Energy Trading LLC, with responsibility for investing in global resources and energy equities. Prior
to that, from 2002-2009 Ms. Trabuco was a portfolio manager and senior equity research analyst at Pequot Capital Management where she
established the firm’s investment presence in global metals, mining and steel and in Brazil. Prior to that, Ms. Trabuco was a senior
equity research analyst at First Union Capital Markets from 1998-2002, at Montgomery Securities from 1996-1998 and Lehman Brothers from
1995-1996. She began her equity research career at Fidelity Investments where she worked from 1991-1995. Ms. Trabuco graduated from Georgetown
University with a B.A. in Art History and an M.B.A. from Sacred Heart University in Public Administration. She holds certificates in Corporate
Sustainability from Yale School of Management and in Compensation Committees from Harvard Business School. Mrs. Trabuco is well qualified
to serve on our board due to her business experience and financial acumen.
Strategic Advisors
Geovannie Concepcion has
served as one of our strategic advisors since November 2021. Mr. Concepcion is an accomplished restaurant executive with a strong
background in professional investing. Mr. Concepcion currently serves as the President and CEO of The Greene Turtle Franchising Corporation,
a private equity held restaurant platform company based in the Mid-Atlantic. Previously, he served as the Chief Operating Officer of Famous
Dave’s of America, a publicly traded franchise concept with over 150 locations nationwide. In his role as COO, Mr. Concepcion
oversaw all day-to-day operations and led a digital transformation resulting in positive same store sales comps in company owned
locations for six consecutive quarters after a multiyear decline. Prior to serving as COO of Famous Dave’s, Mr. Concepcion
served as the VP of Development where he had primary responsibility for executing on the company’s store optimization and refranchising
efforts. In addition, he led the company’s national efforts with third party delivery, online ordering and digital marketing. Before
joining Famous Dave’s, Mr. Concepcion served in various capacities with Wexford Capital LP, a registered investment advisor,
in the Private Equity and Real Estate Groups as well as the Global Macro Hedge Funds from June 2009 until April 2016. Mr. Concepcion
graduated from DePaul University with a B.S. in Accounting.
Rick Camac has
served as one of our strategic advisors since November 2021. Since April 2018, Mr. Camac has served as the Dean of the New York Institute
of Culinary Education, a leader in the culinary and hospitality industry, maintaining an active and robust alumni of supporters. Prior
thereto from May 2016 to February 2017, Mr. Camac was the Vice President of Concept Development as Asthetique Hospitality, where
he developed brands, built teams, and sourced locations to bring together new investments. From September 2004 to July 2016, Mr. Camac
concentrated on operations, sales, brand development and talent acquisition as a Partner at Fatty Crew.
Kevin Mulcahy
has served as one of our strategic advisors since March 2022. Since September 2019, Mr. Mulcahy has served as Partner and Co-Founder of
MBN Brands, a consumer-focused investment firm with more than 120 current restaurants under ownership across several leading franchise
brands. Prior thereto from September 2017 to September 2019, Mr. Mulcahy worked at Citadel Investment Group, where he focused on public
market software investments. From July 2015 to September 2017, Mr. Mulcahy worked at Falcon Edge Capital. Mr. Mulcahy graduated from Princeton
University with a A.B. in Economics and an M.B.A. from Columbia University.
Our advisors are currently
(i) assisting us in sourcing and negotiating with potential business combination targets, (ii) providing their business insights when
we assess potential business combination targets and (iii) upon our request, providing their business insights as we work to create additional
value in the businesses that we acquire. However, they have no written advisory agreement with us. Additionally, our advisors have no
other employment or compensation arrangements with us. Moreover, our advisors are not under any fiduciary obligations to us nor will they
perform board or committee functions, nor will they have any voting or decision-making capacity on our behalf. They will also not
be required to devote any specific amount of time to our efforts. Accordingly, if any of our advisors becomes aware of a business combination
opportunity which is suitable for any of the entities to which he or she has fiduciary or contractual obligations, he or she will honor
their 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 may modify or expand our roster of advisors as we source potential business combination targets
or create value in businesses that we may acquire.
Number and Terms of Office of Officers and
Directors
We currently have six directors.
Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except
for those directors appointed prior to our first annual 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 full year after our first fiscal year end following
our listing on Nasdaq.
The term of office of the
Class A directors, consisting of David Perlin and Carolyn Trabuco, will expire at our first annual meeting of stockholders. The term of
office of Class B directors, consisting of Karen Kelley and Warren Thompson, will expire at the second annual meeting of stockholders.
The term of office of the Class C directors, consisting of Messrs. Salis and Karson, 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.
Committees of the Board of Directors
Audit Committee
We have established an audit
committee of the board of directors, which consists of Karen Kelley, Carolyn Trabuco, and David Perlin, each of whom is an independent
director under Nasdaq’s listing standards. Mr. Perlin chairs the audit committee. The audit committee’s duties, which
are specified in our audit committee charter, include, but are not limited to:
|
● |
reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our Form 10-K, including this Report; |
|
● |
discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
|
● |
discussing with management major risk assessment and risk management policies; |
|
● |
monitoring the independence of the independent auditor; |
|
● |
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
|
● |
reviewing and approving all related-party transactions; |
|
● |
inquiring and discussing with management our compliance with applicable laws and regulations; |
|
● |
pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
|
● |
appointing or replacing the independent auditor; |
|
● |
determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
|
● |
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
|
● |
approving reimbursement of expenses incurred by our leadership team in identifying potential target businesses. |
The audit committee has been
and will at all times be composed exclusively of “independent directors” who are “financially literate” as defined
under Nasdaq’s listing standards. Nasdaq’s standards define “financially literate” as being able to read and understand
fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, we must certify
to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting,
requisite professional certification in accounting, or other comparable experience or background that results in the individual’s
financial sophistication. The board of directors has determined that Mr. Perlin qualifies as an “audit committee financial
expert,” as defined under rules and regulations of the SEC and has accounting or related financial management expertise.
Compensation Committee
We have established a compensation
committee of the board of directors, which consists of Karen Kelley and David Perlin, each of whom is an independent director under Nasdaq’s
listing standards. The compensation committee’s duties, which are specified in our compensation committee charter, include, but
are not limited to:
|
● |
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, 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 the compensation of all of our other executive officers; |
|
● |
reviewing 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 executive 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. |
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 participate in the consideration and recommendation of director nominees are Karen Kelley, Warren Thompson, Carolyn
Trabuco and David Perlin. 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. You can review this document by accessing our public filings at the SEC’s website at www.sec.gov.
In addition, a copy of the Code of Ethics will be provided without charge upon request from us. If we make any amendments to our Code
of Ethics other than technical, administrative or other non-substantive amendments, or grant any waiver, including any implicit waiver,
from a provision of the Code of Ethics applicable to our principal executive officer, principal financial officer principal accounting
officer or controller or persons performing similar functions requiring disclosure under applicable SEC or Nasdaq rules, we will disclose
the nature of such amendment or waiver on our website at https://sizzlespac.com/. The information included on our website is not incorporated
by reference into this Report or in any other report or document we file with the SEC, and any references to our website are intended
to be inactive textual references only.
Item 11. Executive Compensation.
No executive officer has received
any cash compensation for services rendered to us. We pay VO Leadership II, Inc., an affiliate of our executive officers, $10,000 per
month for providing us with office space and certain office and secretarial services. However, this arrangement is solely for our benefit
and is not intended to provide our officers or directors compensation in lieu of a salary. We may also pay consulting, finder or success
fees to our initial stockholders, officers, directors or their affiliates for assisting us in consummating our initial business combination
with such fee to be determined in an arms’ length negotiation based on the terms of the business combination.
Other than the $10,000 per
month administrative fee, the payment of consulting, success or finder fees to our sponsor, officers, directors, initial stockholders
or their affiliates in connection with the consummation of our initial business combination and the repayment of the up to $150,000 loan
made by our sponsor to us, no compensation or fees of any kind has been or will be paid to our sponsor, initial stockholders, members
of our leadership team or their respective affiliates, for services rendered prior to or in connection with the consummation of our initial
business combination (regardless of the type of transaction that it is). However, they receive reimbursement for any out-of-pocket expenses
incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due
diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations
of prospective target businesses to examine their operations. There is no limit on the amount of consulting, success or finder fees payable
by us upon consummation of an initial business combination. Additionally, there is no limit on the amount of out-of-pocket expenses
reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account,
such expenses would not be reimbursed by us unless we consummate an initial business combination.
After our initial business
combination, members of our leadership team who remain with us may be paid consulting, leadership or other fees from the combined company
with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished
to our stockholders. However, the amount of such compensation may not be known at the time of the stockholder meeting held to consider
an initial business combination, as it will be up to the directors of the post-combination business to determine executive and director
compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K or
a periodic report, as required by the SEC.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
The following table sets forth
information regarding the beneficial ownership of our common stock as of March 27, 2023 based on information obtained from the persons
named below, with respect to the beneficial ownership of common stock, by:
|
● |
each person known by us to be the beneficial owner of more than 5% of our outstanding common stock; |
|
● |
each of our executive officers and directors that beneficially owns our common stock; and |
|
● |
all our executive officers and directors as a group. |
In the table below, percentage
ownership is based on 10,693,897 shares of our common stock issued and outstanding as of March 27, 2023.
Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially
owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants
are not exercisable within 60 days of the date of this Report.
Name and Address of Beneficial Owner (1) | |
Number of Shares Beneficially Owned | | |
Approximate Percentage of
Outstanding Common Stock | |
Steve Salis (2) | |
| 6,147,750 | | |
| 57.5 | % |
Jamie Karson (2) | |
| 6,147,750 | | |
| 57.5 | % |
Karen Kelly (3) | |
| — | | |
| — | |
David Perlin (3) | |
| — | | |
| — | |
Warren Thompson (3) | |
| — | | |
| — | |
Daniel Lee (3) | |
| — | | |
| — | |
Carolyn Trabuco (3) | |
| — | | |
| — | |
VO Sponsor, LLC | |
| 6,147,750 | | |
| 57.5 | % |
All directors and executive officers as a group (7 individuals) (2) | |
| 6,147,750 | | |
| 57.5 | % |
| |
| | | |
| | |
Other 5% Stockholders | |
| | | |
| | |
Saba Capital Management, L.P. (4) | |
| 1,358,913 | | |
| 12.7 | % |
(1) |
Unless otherwise noted, the business address of each of the following entities or individuals is c/o Sizzle Acquisition Corp., 4201 Georgia Ave NW, Washington DC 20011. |
(2) |
Represents securities held by VO Sponsor, LLC, our sponsor, of which Steve Salis and Jamie Karson are managing members. Accordingly, all securities held by our sponsor may ultimately be deemed to be beneficially held by Messrs. Salis and Karson. Each such person disclaims beneficial ownership of the reported shares other than to the extent of his ultimate pecuniary interest therein. |
(3) |
Does not include any securities held by VO Sponsor, LLC, of which each person is a member. Each such person disclaims beneficial ownership of the reported shares other than to the extent of his ultimate pecuniary interest therein. |
(4) |
According to a Schedule
13G/A filed on February 14, 2023, Saba Capital Management, L.P., Boaz R. Weinstein, and Saba Capital Management GP, LLC
(collectively, “Saba Capital”) beneficially own 1,358,913 shares of common stock. The number of public shares held by Saba Capital is reported as of December 31, 2022, as stated in the Schedule 13G/A, which does not
reflect any redemption of shares by Saba Capital in connection with the Extension Amendment or any other transactions after December 31,
2022. Accordingly, the number of public shares and the percentages set forth in the table may not reflect Saba Capital’s current
beneficial ownership. The business address for each of the
reporting persons is 405 Lexington Avenue, 58th Floor, New York, New York 10174. |
Securities Authorized for Issuance Under Equity
Compensation Plans
None.
Changes in Control
None.
For more information on the
EUR Business Combination, please see “Item 1. Business”.
Item 13. Certain Relationships and Related
Transactions, and Director Independence.
In October 2020, we issued
an aggregate of 2,875,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.009 per share, to our initial
stockholders. On March 2, 2021, we effected a 1.25 for 1 dividend, and as a result our initial stockholders held 3,593,750 founder
shares of our common stock. On September 15, 2021, we effected an additional 1.4 for 1 dividend, and as a result our initial stockholders
hold 5,031,250 founder shares. The founder shares held by our initial stockholders included an aggregate of up to 656,250 shares
subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that
our initial stockholders would continue to own shares equal to 35% of the shares issued in our initial public offering (excluding the
private shares and assuming the initial stockholders did not purchase units in our initial public offering). In November 2021, the Company
effected a stock dividend of 1.08 shares for each share of common stock outstanding, resulting in our sponsor holding an aggregate of
5,425,000 founder shares (excluding the 8,750 shares forfeited due to a partial exercise by the underwriters of its over-allotment option).
Our sponsor and Cantor purchased
an aggregate of 770,000 private shares (722,750 shares by our sponsor and 47,250 shares by Cantor for a total purchase price
of $7,700,000). This purchase took place on a private placement basis simultaneously with the consummation of our initial public offering.
The purchase price for the private placement shares was deposited into the trust account simultaneously with the consummation of our initial
public offering. Our sponsor has agreed not to assign or sell any of the private placement shares (except to certain permitted transferees)
until after the completion of our initial business combination. In the event of a liquidation prior to our initial business combination,
the private placement shares will likely be worthless.
In order to meet our working
capital needs following the consummation of our initial public offering, our sponsor, officers and directors or their affiliates may,
but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion.
Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination,
without interest, or, at holder’s discretion, up to $1,500,000 of the notes may be converted into shares of common stock at a price
of $10.00 per share. These shares would be identical to the private placement shares. In the event that the initial business combination
does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds
from our trust account would be used for such repayment.
The holders of our founder
shares issued and outstanding on the date of the IPO Registration Statement, as well as the holders of the private placement shares and
any shares of common stock our sponsor, initial stockholders, officers, directors or their affiliates may be issued in payment of working
capital loans made to us, are entitled to registration rights pursuant to an agreement signed in connection with our initial public offering.
The holders of a majority of these securities are entitled to make up to two demands that we register such securities. The holders of
the majority of the founder shares and private placement shares can elect to exercise these registration rights at any time commencing
on the closing of the business combination. In addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to our consummation of a business combination. We will bear the expenses incurred in connection
with the filing of any such registration statements.
On November 19, 2020, the
Company issued an unsecured promissory note to the sponsor, pursuant to which the Company may borrow up to an aggregate principal amount
of $150,000. The Note is non-interest bearing and payable on the earlier of (i) December 31, 2021, (ii) the consummation of the initial
public offering or (iii) the date on which the Company determines not to proceed with the initial public offering. As of December 31,
2022 and 2021, the Company had $153,127 outstanding under the Note, which is now due on demand. The sponsor acknowledged that the Company
is not in default.
In connection with the Extension
Amendment, our sponsor agreed to loan us the Contribution, equal to $200,000 in the aggregate, for the shares of common stock that were
not redeemed at the time of the Extension, for each calendar month (commencing on February 9, 2023 and on the 8th day of each subsequent
month), or a portion thereof, that we need to complete an initial business combination until August 8, 2023 (if we fully extend the term
we have to complete our initial business combination). For example, if the Company takes until August 8, 2023 to complete its business
combination, which would represent six calendar months, the sponsor would make aggregate Contributions of $1.2 million. Each Contribution
will be deposited in the trust account within seven calendar days from the beginning of such calendar month (or portion thereof). The
sponsor has made the deposit for February 2023. Our board has the sole discretion whether to continue extending for additional calendar
months until August 8, 2023, the end of the Combination Period.
We have entered into agreements
with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended
and restated certificate of incorporation.
We may also pay consulting,
finder or success fees to our initial stockholders, officers, directors or their affiliates for assisting us in consummating our initial
business combination with such fee to be determined in an arms’ length negotiation based on the terms of the business combination.
Other than the payments to
Cohen & Company Capital Markets, an affiliate of a passive member of the sponsor, $10,000 per month administrative fee to VO Leadership
II, Inc., the payment of consulting, success or finder fees to our sponsor, officers, directors, or their affiliates in connection with
the consummation of our initial business combination and repayment of the Note, no compensation or fees of any kind have been or will
be paid to our sponsor, members of our leadership team or their respective affiliates, for services rendered prior to or in connection
with the consummation of our initial business combination (regardless of the type of transaction that it is). However, such individuals
will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying
potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling
to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on
the amount of consulting, success or finder fees payable by us upon consummation of an initial business combination. Additionally, there
is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed
the available proceeds not deposited in the trust account, such expenses would not be reimbursed by us unless we consummate an initial
business combination.
After our initial business
combination, members of our leadership team who remain with us may be paid consulting, management or other fees from the combined company
with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished
to our stockholders. However, the amount of such compensation may not be known at the time of the stockholder meeting held to consider
an initial business combination, as it will be up to the directors of the post-combination business to determine executive and director
compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K or
a periodic report, as required by the SEC.
All ongoing and future transactions
between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable
to us than are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our uninterested
“independent” directors or the members of our board who do not have an interest in the transaction, in either case who had
access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested
“independent” directors determine that the terms of such transaction are no less favorable to us than those that would be
available to us with respect to such a transaction from unaffiliated third parties.
For more information on the
agreements entered into in connection with the EUR Business Combination, please see “Item 1. Business”.
Director Independence
Currently, David Perlin, Karen
Kelley, Carolyn Trabuco, and Warren Thompson are each considered an “independent director” under the Nasdaq listing rules,
which 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 independent directors
have regularly scheduled meetings at which only independent directors are present.
Any affiliated transactions
will be on terms no less favorable to us than could be obtained from independent parties. Our board of directors will review and approve
all affiliated transactions with any interested director abstaining from such review and approval.
Item 14. Principal Accountant Fees and
Services.
The following is a summary
of fees paid or to be paid to Marcum, for services rendered.
Audit Fees
Audit
fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally
provided by Marcum in connection with regulatory filings. The aggregate fees of Marcum for professional services rendered for the audit
of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other
required filings with the SEC for the years ended December 31, 2022 and 2021, totaled approximately $187,460 and $91,155, respectively.
The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees
Audit-related fees consist
of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements
and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation
and consultations concerning financial accounting and reporting standards. During the years ended December 31, 2022 and 2021, we did not
pay Marcum any audit-related fees.
Tax Fees
We paid Marcum $8,755 and $7,210 for tax services, planning or advice
for the years ended December 31, 2022, and 2021, respectively.
All Other Fees
We did not pay Marcum for
any other services for the years ended December 31, 2022 and 2021.
Pre-Approval Policy
Our audit committee was formed
upon the consummation of our initial public offering. 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.
The accompanying notes
are an integral part of these financial statements.
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2022 AND
2021
Note
1 — Organization and Business Operations
Sizzle Acquisition Corp. (the “Company”
or “Sizzle”) was incorporated in Delaware on October 12, 2020. The Company is a blank check company formed for the purpose
of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business
combination with one or more businesses or entities.
As of December 31, 2022, the Company had not commenced
any operations. All activity for the period from October 12, 2020 (inception) through December 31, 2022 related to the Company’s
formation and the initial public offering (“IPO”), which is described below, and since the offering identifying and evaluating
prospective acquisition targets for a Business Combination. The Company will not generate any operating revenues until after the completion
of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the
proceeds derived from the IPO.
The Company’s Sponsor is VO Sponsor, LLC.
The registration statement for the Company’s
IPO was declared effective on November 3, 2021 (the “Effective Date”). On November 8, 2021, the Company consummated its IPO
of 15,500,000 Units at $10.00 per Unit (which included a partial exercise of the underwriters’ over-allotment option),
which is discussed in Note 3 and the sale of an aggregate of 770,000 shares at a price of $10.00 per Private Placement
Share in a private placement to the Sponsor and Cantor that closed simultaneously with the IPO. On November 8, 2021, the underwriter exercised 2,000,000 of
the full 2,025,000 over-allotment option available to them and forfeited the remainder.
Transaction costs amounted to $11,381,247 consisting
of $2,700,000 of underwriting commissions, $8,150,000 of deferred underwriting fees and $531,247 of other cash offering
costs.
The Company’s leadership has broad discretion
with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Shares, 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 a Business Combination having an aggregate
fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned on the Trust
Account) at the time of the agreement to enter into an initial Business Combination. 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 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 IPO, management has agreed that an
amount equal to at least $10.20 per Unit sold in the IPO, including the proceeds from the sale of the Private Placement Shares, will
be held in a 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 the 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 in the Trust Account, as described below.
Following the closing of the IPO on November 8,
2021, $158,100,000 ($10.20 per Unit) from the net proceeds sold in the IPO, including the proceeds of the sale of the Private
Placement Shares, was deposited in the Trust Account.
The Company will provide the public stockholders
with the opportunity to redeem all or a portion of the shares of common stock of the Company that were issued in the Company’s initial
public offering (the “Public Shares”) upon the completion of a Business Combination either (i) in connection with a stockholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. 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, solely in its discretion. 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
anticipated to be $10.20 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously
released to the Company to pay its tax obligations). 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 will be recorded at redemption value and classified
as temporary equity upon the completion of the IPO in accordance with the ASC Topic 480 “Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination
if the Company seeks stockholder approval and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC containing substantially
the same information as would be included in a proxy statement prior to completing a Business Combination. If, however, stockholder approval
of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal 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), EarlyBirdCapital (“EBC”) Shares (as defined in Note 7) and any Public Shares purchased during
or after the IPO (a) in favor of approving a Business Combination and (b) not to redeem any shares in connection with a stockholder vote
to approve a Business Combination or sell any shares to the Company in a tender offer in connection with a Business Combination. Additionally,
each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
On February 1, 2023, the Company held a special
meeting of stockholders (“Special Meeting”). At the Special Meeting, the Company’s stockholders approved an extension
of the date by which the Company must consummate an initial business combination from February 8, 2023 to August 8, 2023, or such earlier
date as determined by Sizzle’s board of directors (“the “Extension”).
In connection with the Special Meeting, stockholders
holding 11,076,703 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the trust account.
As a result, approximately $114.3 million (approximately $10.32 per Public Share) will be removed from the trust account to pay such holders
and approximately $45.6 million will remain in the trust account. Following redemptions, the Company will have 4,423,297 Public Shares
outstanding.
The Company will deposit an aggregate amount
of $200,000 (the “Extension Payment”) in its Trust Account for its public stockholders by February 9, 2023, which will
enable the Company to extend the period of time it has to consummate the proposed Business Combination to August 8, 2023, and will
deposit into the Trust Account the same amount of Extension Payment each additional month that is needed for Sizzle to consummate
the proposed Business Combination until August 8, 2023 (unless Sizzle’s board of directors decides to stop extending the time
period earlier than such date).
The Company has until August 8, 2023 to complete
an initial Business Combination. If it has not completed an initial Business Combination by such date, 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 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including any interest not previously released to it but net of taxes payable, divided by the number of then outstanding
Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject (in the case of (ii)
and (iii) above) to the obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor acquires Public Shares in or after the IPO, such Public Shares will be entitled to liquidating distributions from the Trust
Account if the Company fails to complete a Business Combination within the Combination Period. 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 IPO 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 vendor 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 $10.20 per Public Share, except as to any claims by a third party who executed
a valid and enforceable agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any
monies held in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of IPO against certain
liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third party, the insiders 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 insiders will have to indemnify the Trust Account due to claims of creditors by endeavoring
to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target
businesses or 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.
Merger
Agreement
On October 24, 2022, the Company, entered into
an Agreement and Plan of Merger (the “Merger Agreement”) with European Lithium Limited, an Australian Public Company limited
by shares (“EUR”), European Lithium AT (Investments) Limited, a BVI business company incorporated in the British Virgin Islands
and a direct, wholly-owned subsidiary of EUR (the “European Lithium”), Critical Metals Corp., a BVI business company incorporated
in the British Virgin Islands (“Pubco”) and Project Wolf Merger Sub Inc., a Delaware corporation and wholly owned subsidiary
of Pubco, pursuant to which, upon closing of the Business Combination (the “Closing”), Pubco will acquire all of the issued
and outstanding capital shares and equity interests of the European Lithium from EUR in exchange for ordinary shares of Pubco, European
Lithium shall become a wholly owned subsidiary of Pubco and EUR shall become a shareholder of Pubco (the “Share Exchange”);
and immediately thereafter Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and wholly
owned subsidiary of Pubco.
Further, (a) the Company’s issued and outstanding
shares common stock immediately prior to the effective time of the Merger, will be cancelled in exchange for the right of the holder thereof
to receive one ordinary share, par value $0.0001 per share, of Pubco (“Ordinary Share”), (b) all of the outstanding Public
Warrants of the Company, entitling the holder thereof to purchase one share of common stock at an exercise price of $11.50 per share will
be converted into the right to receive a warrant to purchase one Ordinary Share at the same exercise price, being an exercise price of
$11.50 per share, and (c) EUR will receive the number of Ordinary Shares in the Share Exchange that shall have an aggregate value equal
to the Closing Share Consideration (as defined in the Merger Agreement) consisting of $750,000,000 divided by the redemption amount per
share of common stock payable to the Company’s public stockholders that elect to redeem common stock in connection with the Closing,
and, subject to applicable terms and conditions, earnout consideration of up to an additional 10% of such Closing Share Consideration,
in each case subject to adjustment as set forth in the Merger Agreement, and all upon the terms and subject to the conditions set forth
in the Merger Agreement.
Liquidity, Capital Resources and Going Concern
As of December 31, 2022, the Company had $823,945
of cash in its operating bank account and a working capital deficit of $436,721 (excluding franchise and income taxes payable). As
of December 31, 2021, the Company had $1,046,646 of cash in its operating bank account and a working capital of $1,079,831 (excluding
franchise tax payable).
The Company’s liquidity needs up to December 31, 2022 have been
satisfied through a payment from the Sponsor of $25,000 (see Note 5) for the Founder Shares and the loan under an unsecured promissory
note from the Sponsor of $150,000 (see Note 5), which was fully drawn down as of December 31, 2022. In addition, in order to finance
transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of
the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans, as defined below
(see Note 5). As of December 31, 2022, and 2021, there were no amounts outstanding under any Working Capital Loans.
The Company has incurred and expects to continue
to incur significant costs in pursuit of its financing and acquisition plans. If the Company’s estimates of the costs of identifying
a target business, undertaking in-depth due diligence, and negotiating a Business Combination are less than the actual amount necessary
to do so, the Company may have insufficient funds to operate its business prior to an initial business combination. The Company has until
August 8, 2023, to consummate a Business Combination (the “Combination Period”). It is uncertain that the Company will be
able to consummate a Business Combination within the Combination Period. If a Business Combination is not consummated within the Combination
Period, there will be a mandatory liquidation and subsequent dissolution.
As a result of the above, 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 liquidity condition, in addition to possibility that Company would not be able to close a business combination through August 8, 2023,
raise substantial doubt about the Company’s ability to continue as a going concern through that date. These financial statements
do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be
necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management is currently evaluating the impact
of the COVID-19 pandemic and Russia-Ukraine war and has concluded that while it is reasonably possible that the virus
and the war could have a negative effect on the Company’s financial position, 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.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act
of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise
tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded
foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its
shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased
at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the
fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition,
certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority
to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase that occurs
after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise
would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business
Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE”
or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination
but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment
of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company’s ability to complete a Business Combination.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to current period’s presentation. As of December 31, 2021, and for the year ended December 31, 2021 the amount of Franchise
tax expense and payable of $85,711 was included in the total amount of Accrued offering costs and Formation and operating cost.
Such reclassifications have no effect on net loss as previously reported.
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The accompanying
financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging
Growth Company Status
The Company
is an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Business
Startups Act of 2012, ( 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure
obligations regarding executive compensation in its 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.
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. The Company intends to take advantage of the benefits of this extended transition period.
Use
of Estimates
The preparation
of the financial statements in conformity with 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 financial statements, 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 has $823,945 and $1,046,646
in cash as of December 31, 2022 and December 31, 2021, respectively. The Company did not have any cash equivalents as of December 31,
2022 and 2021.
Investments Held in Trust Account
As of December 31, 2022, and 2021, the assets held in the Trust Account
were held in U.S. Treasury Bills with a maturity of 185 days or less. During the years ended December 31, 2022 and 2021, the Company withdrew
$762,917 and $0, respectively, of the interest income from the Trust Account to pay its tax obligations.
The Company classifies its United States Treasury
securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity
securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’
fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment
is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery
and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered
in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent
to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the
investee operates.
Premiums and discounts are amortized or accreted
over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization
and accretion are included in the “interest income” line item in the statements of operations. Interest income is recognized
when earned.
Offering Costs
The Company complies with the requirements of
ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses of Offering.” Offering costs consist of underwriter,
accounting, filing and legal expenses incurred through the balance sheet date that are directly related to the IPO and were charged to
temporary equity and stockholders’ (deficit) equity based on the underlying instruments’ relative fair value upon the completion
of the IPO. If the IPO had proved to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, would have
been charged to operations.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Fair Value Measurement
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. 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). The Company’s financial instruments are classified as either Level
1, Level 2 or Level 3. These tiers include:
|
● |
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
● |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
|
● |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The carrying value, excluding gross unrealized
holding gain (loss) and fair value of held to maturity securities on December 31, 2022 and December 31, 2021 are classified as Level 1
and are as follows:
| |
Carrying Value as of December 31, 2022 | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value as of December 31, 2022 | |
U.S. Treasury Securities | |
$ | 159,750,571 | | |
$ | 77,162 | | |
$ | — | | |
$ | 159,827,733 | |
| |
Carrying Value as of December 31, 2021 | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value as of December 31, 2021 | |
U.S. Treasury Securities | |
$ | 158,108,357 | | |
$ | 1,846 | | |
$ | — | | |
$ | 158,110,203 | |
Common Stock Subject to Possible Redemption
The Company accounts for its shares of common
stock subject to possible redemption in accordance with guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Shares of common stock subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value.
Conditionally redeemable shares of common stock (including shares that feature 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) are classified
as temporary equity. At all other times, shares of common stock are classified as stockholders’ deficit. The Company’s shares
of common stock sold in the IPO feature certain redemption rights that are considered to be outside of the Company’s control and
subject to the occurrence of uncertain future events.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of shares of redeemable common stock to equal the redemption value at the end
of each reporting period. Such changes are reflected in additional paid-in capital, or in the absence of additional capital, in accumulated
deficit.
All of the 15,500,000 common stock sold
as part of the Units in the IPO contain a redemption feature which allows for the redemption of such Public Shares in connection with
the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection
with certain amendments to the Company’s second amended and restated certificate of incorporation. In accordance with SEC and its
staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within
the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Ordinary liquidation
events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions
of ASC 480. Accordingly, as of December 31, 2022 and December 31, 2021, all shares of common stock subject to possible redemption is presented
as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
The common stock subject to possible redemption
reflected on the balance sheets as of December 31, 2022 and December 31, 2021 is reconciled in the following table:
Gross Proceeds |
|
$ |
155,000,000 |
|
Less: |
|
|
|
|
Fair Value of public warrants |
|
|
(6,062,414 |
) |
Common stock issuance costs |
|
|
(10,936,100 |
) |
Plus: |
|
|
|
|
Remeasurement of carrying value to redemption value |
|
|
20,098,514 |
|
Common stock subject to possible redemption (December 31, 2021) |
|
$ |
158,100,000 |
|
Plus: |
|
|
|
|
Remeasurement of carrying value to redemption value |
|
|
1,660,746 |
|
Common stock subject to possible redemption (December 31, 2022) |
|
$ |
159,760,746 |
|
Net Loss Per Common Stock
The Company applies the two-class method in calculating
earnings per share, with one class being the redeemable shares and one class being the non-redeemable shares. The contractual formula
utilized to calculate the redemption amount approximates fair value. Changes in fair value are not considered a dividend for the purposes
of the numerator in the earnings per share calculation. Net loss per common stock is computed by dividing the pro rata net loss between
the redeemable common stock and the non-redeemable common stock by the weighted average number of shares of common stock outstanding for
each of the periods. The calculation of diluted loss per share of common stock does not consider the effect of the warrants issued in
connection with the IPO since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such
warrants would be anti-dilutive.
Reconciliation of Net Loss per Common Stock
The Company’s net loss is adjusted for the
portion of net loss that is allocable to each class of common stock. The allocable net loss is calculated by multiplying net loss by the
ratio of weighted average number of shares outstanding attributable to common stock to the total weighted average number of shares outstanding
for the period. Accordingly, basic and diluted loss per common stock is calculated as follows:
|
|
For the
year ended
December 31,
2022 |
|
|
For the
year ended
December 31,
2021 |
|
Redeemable Common Stock |
|
|
|
|
|
|
Net loss allocable to redeemable common stock |
|
$ |
(180,721 |
) |
|
$ |
(122,090 |
) |
Basic and diluted weighted average shares outstanding, redeemable common stock |
|
|
15,500,000 |
|
|
|
2,293,151 |
|
Basic and diluted net loss per common stock |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
Non-Redeemable Common Stock |
|
|
|
|
|
|
|
|
Net loss allocable to non-redeemable common stock |
|
$ |
(73,112 |
) |
|
$ |
(223,401 |
) |
Basic and diluted weighted average shares outstanding, non-redeemable common stock |
|
|
6,270,600 |
|
|
|
4,195,998 |
|
Basic and diluted net loss per common stock |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, including funds held in Trust on behalf
of the Company, which, at times, may exceed the Federal Deposit Insurance Company coverage of $250,000. The Company has not experienced
losses on this account.
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 statements 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. 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 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 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.
Recent
Accounting Pronouncements
The Company’s management does not believe
that there any recently issued, but not effective, accounting standards, which, if currently adopted, would have a material effect on
the Company’s financial statements.
Note
3 — Initial Public Offering
On November
8, 2021, the Company consummated its IPO of 15,500,000 Units, which included the partial exercise of 2,000,000 of the underwriters’
full 2,025,000 over-allotment option, at a price of $10.00 per Unit, generating gross proceeds of $155,000,000. Each Unit consists of
one share of common stock, par value $0.0001 per share and one-half of one redeemable warrant. Each Public Warrant entitles the holder
to purchase one share of common stock at a price of $11.50 per share.
Note
4 — Private Placement Shares
Simultaneously
with the closing of the IPO and the sale of the Units, the Sponsor, and Cantor have purchased an aggregate of 770,000 Private Placement
Shares at a price of $10.00 per Private Placement Share, for an aggregate purchase price of $7,700,000. Of the total Private Placement
Shares sold, 722,750 were purchased by the Sponsor and 47,250 were purchased by Cantor.
The proceeds
from the Private Placement Shares were added to the proceeds from the IPO 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 Shares will be used to fund
the redemption of the Public Shares (subject to the requirements of applicable law). The Private Placement Shares are identical to the
shares in the Units sold to the public, except that the purchasers of the Private Placement Shares have also agreed not to transfer, assign
or sell any of the Private Placement Shares (except in connection with the same limited exceptions that the Founder Shares may be transferred
as described below) until after the completion of the Business Combination.
Note
5 — Related Party Transactions
Founder
Shares
On November
20, 2020, the Sponsor paid $25,000 in consideration for 2,875,000 shares of common stock (the “Founder Shares”). On March
2, 2021, the Company effected a stock dividend of 1.25 for 1 for each common stock held by the Sponsor, resulting in the Sponsor holding
an aggregate of 3,593,750 common stock, of which up to 468,750 shares were subject to forfeiture. On September 15, 2021, the Company effected
an additional 1.4 for 1 dividend, resulting in 5,031,250 Founder Shares, of which up to 656,250 shares were subject to forfeiture to the
extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor collectively owns shares
equal to 35% of the shares issued in the IPO.
On November
3, 2021, the Company effected an additional 1.08 for 1 dividend, and as a result, the Company’s initial stockholders held 5,433,750
Founder Shares, which included an aggregate of up to 708,750 shares subject to forfeiture. On November 8, 2021 the underwriter partially
exercised their over-allotment option and purchased an additional 2,000,000 Units out of the 2,025,000 available to them and forfeited
the remainder. As a result, 8,750 Founder Shares were forfeited resulting in aggregate Founder Shares outstanding of 5,425,000.
The Company’s
Sponsor, officers and directors have agreed not to transfer, assign or sell any Founder Shares or Private Placement Shares until the date
of the consummation of our initial Business Combination. The limited exceptions include transfers, assignments or sales to the Company’s
or the Sponsor’s officers, directors, consultants or their affiliates, to an entity’s members upon its liquidation, to relatives
and trusts for estate planning purposes, by virtue of the laws of descent and distribution upon death, pursuant to a qualified domestic
relations order, to the Company for no value for cancellation in connection with the consummation of our initial Business Combination,
or in connection with the consummation of a Business Combination at prices no greater than the price at which the shares were originally
purchased, in each case where the transferee agrees to be bound by these transfer restrictions.
Promissory
Note — Related Party
On December
19, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company
may borrow up to an aggregate principal amount of $150,000. The Promissory Note is non-interest bearing and expired upon the consummation
of the IPO. As of December 31, 2022, and December 31, 2021, the Company had $153,127 outstanding under the Promissory Note, which is now
without fixed terms and due on demand. The Sponsor acknowledged that the Company is not in default.
Administrative
Support Agreement
The Company
has agreed, commencing on the effective date of the IPO through the earlier of the Company’s consummation of a Business Combination
and its liquidation, to pay an affiliate of the Company’s management a total of $10,000 per month for office space, utilities and
secretarial support. For the year ended December 31, 2022, $120,000 had been incurred and paid. For the period from October 12,
2020 (Inception) through December 31, 2021, $20,000 had been recorded and paid.
Related
Party Loans
In addition,
in order to finance transaction costs in connection with a Business Combination, the Sponsor or certain of the Company’s officers
and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required. Each loan would be evidenced
by promissory note. 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 notes may be converted upon completion of a Business Combination into Units at a price of $10.00 per unit. 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 December 31, 2021, no such Working Capital Loans were outstanding.
Note
6 — Commitments and Contingencies
Registration
Rights
The holders of the Founder Shares and EBC Shares,
as well as the holders of any warrants the Company’s Sponsor, officers, directors or their affiliates may be issued in payment of
working capital loans made to the Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement
to be signed prior to or on the effective date of the offering. The holders of a majority of these securities are entitled to make up
to two demands that we register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration
rights at any time commencing three months prior to the date on which these shares of common stock are to be released from lock up. The
holders of a majority of the Founder Shares, EBC Shares, and warrants issued to the Sponsor, officers, directors or their affiliates in
payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights at any
time after consummation of the Business Combination. Notwithstanding anything to the contrary, EBC and Cantor may only make a demand on
one occasion and only during the five-year period beginning on the Effective Date of the registration statement of which the prospectus
forms a part. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to consummation of the Business Combination; provided, however, that EBC and Cantor may participate in a “piggy-back”
registration only during the seven-year period beginning on the Effective Date of the registration statement of which this prospectus
forms a part. 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 IPO to purchase up to 2,025,000 additional Units to cover over-allotments, if any, at the IPO price less the
underwriting discounts and commissions. On November 8, 2021, the underwriters partially exercised this option and purchased an additional 2,000,000 Units
and forfeited the remaining 25,000 available.
The underwriters received a cash underwriting
discount of 2.0% of the gross proceeds of the IPO, or $2,700,000 (which is capped at $2,700,000 with the remaining $400,000 deferred
to the close of the Business Combination with the rest of the deferred underwriting discount due to the underwriters’ partial over-allotment exercise).
The underwriters will be entitled to a cash underwriting
discount of 5.0% of the gross proceeds of the IPO, or $6,750,000 (or up to $8,150,000, inclusive of the $400,000 deferral
noted above, if the underwriters’ over-allotment is exercised in full) upon consummation of the Business Combination.
The underwriters agreed to reimburse the Company
a portion of expenses related to the IPO. A total of $543,450 was reimbursed to the Company by the underwriters in pursuant of this
agreement.
Consulting
and Advisory Services Fees
The Company
engaged Cohen & Company Capital Markets (“CCM”), an affiliate of a passive member of the Sponsor, to provide consulting
and advisory services in connection with the IPO, for which it received an advisory fee equal to 0.6% of the aggregate proceeds of the
IPO, net of underwriter’s expenses. This fee was deducted from the underwriting fees paid to Cantor as described above. Affiliates
of CCM have and manage investment vehicles with a passive investment in the Sponsor. CCM agreed to defer the portion of its fee resulting
from exercise of the underwriters’ over-allotment option until the consummation of our initial Business Combination. The Company
has also engaged CCM as an advisor in connection with our initial Business Combination for which it will earn an advisory fee of 1.5%
of the proceeds of the IPO payable at closing of the Business Combination, which will be deducted from the deferred underwriting fee paid
to Cantor as described above. CCM’s fees will be offset from the underwriting fees described above and will not result in any incremental
fees to the Company.
CCM is engaged
to represent the Company’s interests only and did not participate in the IPO as defined in FINRA Rule 5110(j)(16); it is acting
as an independent financial adviser as defined in FINRA Rule 5110(j)(9). As such, CCM did not act as an underwriter in connection with
the IPO, it did not identify or solicit potential investors in the IPO or otherwise be involved in the distribution of the IPO.
On April 25,
2022, the Company entered into an agreement with BTIG for capital market advisory services in relationship with management of the redemptions
of Public Shares in connection with the anticipated business combination as described in Note 8 below. The Company will pay BTIG
a base advisory fee of $1,500,000, plus an additional fee of up to $3,750,000 depending on the amount of funds remaining in the trust
account. The advisory fee is to be paid upon completion of the business combination.
On August 11,
2022, the Company entered into an additional agreement with CCM for financial and market advisory services in connection with the anticipated
business combination as described in Note 8 below. The agreement stipulates a transaction fee of $5,000,000 to be paid upon successful
completion of the business combination.
On August 18,
2022, the Company entered into an agreement with CCM and Jett Capital to act as co-placement agents in the event the Company raises
a PIPE financing in connection with the business combination. As compensation for their services as co-placement agents, CCM and
Jett Capital are collectively entitled to a cash fee of 5% of the PIPE financing proceeds, to be shared equally between the CCM and Jett
Capital.
On September 10,
2022, the Company entered in a consulting agreement with the ICR LLC (“ICR”) to provide certain services related to the business
combination. ICR’s compensation consists of the following:
| ● | $20,000 per month until the three (3) month anniversary
of the announcement date of the business combination, pro-rated for any partial month, which is expensed by the Company as incurred; |
| ● | a transaction fee of $250,000, payable immediately upon completion
of the business combination (and which shall be waived if the business combination is not completed for any reason); and |
| ● | a performance-based fee of $250,000, payable immediately
upon completion of the business combination, based on certain performance indicators related to market capitalization of the combined
company. |
Except for
ICR’s monthly fees, which the Company records in its results of operations as they are incurred, all other arrangements described
in this section are contingent upon closing of the business combination and related PIPE financing and will be recorded upon their completion.
Note
7 — Stockholders’ Deficit
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and
with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of
directors. As of December 31, 2022 and 2021, there was no preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share.
As of December 31, 2022 and 2021, there were 6,270,600 shares of common stock issued and outstanding, which includes 5,425,000 Founder
Shares, 75,600 EBC Shares and 770,000 Private Placement Shares, but excludes the 15,500,000 Public Shares that are subject to possible
redemption.
EBC Shares
— On October 12, 2020, the Company issued to the designees of EBC 100,000 EBC Shares for nominal consideration. On March 2, 2021,
the Company effected a 1.25 for 1 dividend resulting in 125,000 EBC Shares, 25,000 of which EBC returned to the Company, at no cost, resulting
in 100,000 EBC shares. On March 9, 2021, the Company issued to EBC and its designees an additional 100,000 EBC Shares at a price of $0.0001
per share, resulting in 200,000 EBC Shares being outstanding.
On July
12, 2021, EBC returned 150,000 EBC Shares to the Company, at no cost, which were subsequently cancelled. This return resulted in EBC shares
outstanding of 50,000 pre-dividend. The number of EBC Shares outstanding increased to 70,000 after giving effect to the stock dividend
of 1.4 for 1 on September 15, 2021, which is what was outstanding as of September 30, 2021.
On November 3, 2021, the Company issued a stock dividend of 1.08 for 1, which resulted in 75,600 EBC Shares outstanding.
The Company
accounted for the EBC Shares as a charge directly to stockholders’ deficit. The Company estimated the fair value of representative
shares to be $870.
The holders
of the EBC Shares have agreed not to transfer, assign or sell any such shares without our prior consent until the completion of our initial
Business Combination. In addition, the holders of the EBC Shares have agreed (i) to waive their conversion rights (or right to participate
in any tender offer) with respect to such shares in connection with the completion of our initial Business Combination and (ii) to waive
their rights to liquidating distributions from the Trust Account with respect to such shares if we fail to complete our initial Business
Combination within the Combination Period.
Public
Warrants — As of December 31, 2022 and 2021, there were 7,750,000 Public Warrants issued or outstanding. The Public
Warrants will become exercisable 30 days after the completion of a Business Combination. No warrants will be exercisable for cash unless
the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants
and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering
the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation
of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period
when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to
the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another
exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire
five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Redemption
of warrants
The Company
may redeem the Public Warrants:
|
● |
in whole and not in part; |
|
● |
at a price of $0.01 per warrant; |
|
● |
at any time after the warrants become exercisable; |
|
● |
if, and only if, the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending on the third business day prior to the notice of redemption to the warrant holders; |
|
● |
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants |
If the Company
calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of common stock
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization,
reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of common
stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the 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 warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire
worthless.
In addition,
if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per common stock (with such issue price
or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and
interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of
redemptions), and (z) the volume weighted average trading price of its common stock during the 20 trading day period starting on the trading
day prior to the day on which the Company consummates its Business Combination (such price, the “Market Value”) is below $9.20
per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) Market
Value or (ii) the price at which the Company issue the additional shares of common stock or equity-linked securities.
Note 8 — Income Tax
The Company’s net deferred tax assets are
as follows:
|
|
December 31,
2022 |
|
|
December 31,
2021 |
|
|
|
|
|
|
|
|
Deferred tax asset (liability) |
|
|
|
|
|
|
Organizational costs/Start-up costs |
|
$ |
474,562 |
|
|
|
56,256 |
|
Unrealized gain on Trust Account |
|
|
(212,062 |
) |
|
|
|
|
Federal net operating loss |
|
|
— |
|
|
|
16,297 |
|
Total deferred tax asset (liability) |
|
|
262,500 |
|
|
|
72,553 |
|
Valuation allowance |
|
|
(474,562 |
) |
|
|
(72,553 |
) |
Deferred tax asset (liability), net of allowance |
|
$ |
(212,062 |
) |
|
|
— |
|
The income tax provision consists of the following:
|
|
December 31,
2022 |
|
|
December 31,
2021 |
|
|
|
|
|
|
|
|
Federal |
|
|
|
|
|
|
Current |
|
$ |
233,251 |
|
|
|
— |
|
Deferred |
|
|
(189,947 |
) |
|
|
(72,553 |
) |
State |
|
|
|
|
|
|
|
|
Current |
|
|
— |
|
|
|
— |
|
Deferred |
|
|
— |
|
|
|
— |
|
Change in valuation allowance |
|
|
402,009 |
|
|
|
72,553 |
|
Income tax provision |
|
$ |
445,313 |
|
|
|
— |
|
The Company’s federal net operating loss
carryforward as of December 31, 2022 and 2021 amounted to $0 and $77,604, respectively, and will be carried forward indefinitely.
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 years ended December 31, 2022 and 2021, the change in the
valuation allowance was $402,009 and $72,553, respectively.
A reconciliation of the federal income tax rate
to the Company’s effective tax rate at December 31, 2022 and 2021 are as follows:
|
|
December 31,
2022 |
|
|
December 31,
2021 |
|
Statutory federal income tax rate |
|
$ |
21.00 |
% |
|
|
21.00 |
% |
Deferred tax liability change in rate |
|
|
|
|
|
|
|
|
Non-deductible interest |
|
|
1.61 |
% |
|
|
— |
|
Change in valuation allowance |
|
|
209.95 |
% |
|
|
(21.00 |
)% |
Effective tax rate |
|
$ |
232.56 |
% |
|
|
— |
|
The Company files income tax returns in the U.S.
federal jurisdiction, in various state and local jurisdictions and is subject to examination by the various taxing authorities, since
inception.
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up through the date that the financial statements were issued. Based upon this review, except
as disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial
statements.
On February 1, 2023, the Company held a Special
Meeting, at which the Company’s stockholders approved the Extension.
In connection with the Special Meeting, stockholders
holding 11,076,703 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account.
As a result, approximately $114.3 million (approximately $10.32 per Public Share) was removed from the Trust Account to pay such holders
and approximately $45.6 million remained in the Trust Account. Following redemptions, the Company has 4,423,297 Public Shares outstanding.
The Company made monthly $200,000 Extension Payments in its Trust Account
for its public stockholders on each of February 6, 2023 and March 7, 2023 and will deposit into the Trust Account the same amount of Extension
Payment for each additional month that is needed for Sizzle to consummate the proposed Business Combination until August 8, 2023 (unless
Sizzle’s board of directors decides to stop extending the time period earlier than such date).