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EON Resources Inc.(EONR) - 2022 Q4 - Annual Report
EONREON Resources Inc.(EONR)2023-03-31 20:57

Financial Condition - As of December 31, 2022, the company had 75,612incashandaworkingcapitaldeficitof75,612 in cash and a working capital deficit of 788,689[152]. - The company has net tangible assets exceeding 4,600,000,exemptingitfromcertainSECrulesprotectinginvestorsinblankcheckcompanies[181].−Approximately4,600,000, exempting it from certain SEC rules protecting investors in blank check companies[181]. - Approximately 800,000 will be available outside the trust account for working capital requirements, which may be insufficient if offering expenses exceed this amount[190]. - Claims against the company could reduce the proceeds held in the trust account, potentially lowering the per-share redemption amount for stockholders[193]. - The company may not be able to protect funds in the trust account from third-party claims, which could impact the amount available for public stockholders[194]. - If the trust account proceeds are reduced below 10.30pershare,theindependentdirectorsmaychoosenottoenforceindemnificationobligationsagainstthesponsor,furtherreducingavailablefunds[198].−Thecompanyanticipatesthatifitdoesnotcompleteitsinitialbusinesscombinationwithintheprescribedtimeframe,publicstockholdersmayreceiveapproximately10.30 per share, the independent directors may choose not to enforce indemnification obligations against the sponsor, further reducing available funds[198]. - The company anticipates that if it does not complete its initial business combination within the prescribed time frame, public stockholders may receive approximately 10.30 per share upon liquidation of the trust account[207]. - Public stockholders may only receive approximately 10.30pershareuponredemptioniftheinitialbusinesscombinationisnotcompleted[185].BusinessCombinationRequirements−Thecompanymustcompleteitsinitialbusinesscombinationwithin15monthsfromFebruary15,2022,orwithin18monthsifextended[167].−Thecompanyrequiresaminimumnettangibleassetof10.30 per share upon redemption if the initial business combination is not completed[185]. Business Combination Requirements - The company must complete its initial business combination within 15 months from February 15, 2022, or within 18 months if extended[167]. - The company requires a minimum net tangible asset of 5,000,001 upon consummation of the initial business combination to avoid SEC's "penny stock" rules[161]. - Initial stockholders own 22.48% of the outstanding shares, potentially needing only 3,315,538 public shares (28.51%) to approve a business combination[156]. - If stockholder approval is sought, initial stockholders have agreed to vote in favor regardless of public stockholder votes[155]. - The company may not hold a stockholder vote unless required by law or NYSE American rules[154]. - The NYSE American requires a minimum stockholders' equity of 2,500,000andaminimumof300publicholderstomaintainlisting[178].−ThecompanycannotassurethatitssecuritieswillcontinuetobelistedontheNYSEAmericanpriortotheinitialbusinesscombination[178].−ThecompanymayfacesignificantadverseconsequencesifdelistedfromtheNYSEAmerican,includingreducedliquidityandlimitedmarketquotationsforitssecurities[179].TargetBusinessandIndustryFocus−Thecompanyplanstofocusitssearchforatargetbusinessprimarilyintheenergyindustry,butitmaypursueopportunitiesinanyindustryorsector[218].−Thecompanyintendstofocusitssearchforatargetbusinessintheenergyindustry,whichincludessectorssuchasoil,naturalgas,andalternativefuels[220].−Thecompanyexpectsintensecompetitionfromotherentitiesforbusinesscombinationopportunities,whichmaylimititsabilitytoacquiresizabletargetbusinesses[186].−Thecompanyhasnotyetidentifiedorapproachedanyspecifictargetbusinessforabusinesscombination,makingitdifficulttoevaluatethemeritsorrisksofpotentialoperations[218].−Thecompanymaypursueacquisitionopportunitiesoutsideofitsmanagement′sareasofexpertise,whichcouldleadtochallengesinevaluatingandoperatingtheacquiredbusiness[222].−Risksintheenergyindustryincludevolatilityinoilandnaturalgasprices,regulatorychanges,andenvironmentalrisks[220][221].ManagementandOperationalRisks−Thesuccessoftheinitialbusinesscombinationisdependentontheeffortsofkeypersonnel,whosedeparturecouldadverselyaffectoperationsandprofitability[234][235].−Themanagementofaprospectivetargetbusinessmaylackthenecessaryskillstomanageapubliccompany,potentiallyimpactingpost−combinationoperations[239][240].−Conflictsofinterestmayariseasexecutiveofficersanddirectorsallocatetheirtimetootherbusinesses,whichcouldnegativelyimpacttheabilitytocompletetheinitialbusinesscombination[242].−Thecompanymayfaceconflictsofinterestduetoaffiliationsofitsexecutiveofficersanddirectorswithotherentitiesengagedinsimilarbusinessactivities[244].−Thecompanymaynotmaintaincontrolofatargetbusinesspost−combination,affectingoperationalprofitability[267].−Thecompanymaypursuesimultaneousbusinesscombinations,whichcouldincreasecostsandrisks,negativelyimpactingoperations[264].FinancialStructureandSecurities−Thecompanyhasnetproceedsof2,500,000 and a minimum of 300 public holders to maintain listing[178]. - The company cannot assure that its securities will continue to be listed on the NYSE American prior to the initial business combination[178]. - The company may face significant adverse consequences if delisted from the NYSE American, including reduced liquidity and limited market quotations for its securities[179]. Target Business and Industry Focus - The company plans to focus its search for a target business primarily in the energy industry, but it may pursue opportunities in any industry or sector[218]. - The company intends to focus its search for a target business in the energy industry, which includes sectors such as oil, natural gas, and alternative fuels[220]. - The company expects intense competition from other entities for business combination opportunities, which may limit its ability to acquire sizable target businesses[186]. - The company has not yet identified or approached any specific target business for a business combination, making it difficult to evaluate the merits or risks of potential operations[218]. - The company may pursue acquisition opportunities outside of its management's areas of expertise, which could lead to challenges in evaluating and operating the acquired business[222]. - Risks in the energy industry include volatility in oil and natural gas prices, regulatory changes, and environmental risks[220][221]. Management and Operational Risks - The success of the initial business combination is dependent on the efforts of key personnel, whose departure could adversely affect operations and profitability[234][235]. - The management of a prospective target business may lack the necessary skills to manage a public company, potentially impacting post-combination operations[239][240]. - Conflicts of interest may arise as executive officers and directors allocate their time to other businesses, which could negatively impact the ability to complete the initial business combination[242]. - The company may face conflicts of interest due to affiliations of its executive officers and directors with other entities engaged in similar business activities[244]. - The company may not maintain control of a target business post-combination, affecting operational profitability[267]. - The company may pursue simultaneous business combinations, which could increase costs and risks, negatively impacting operations[264]. Financial Structure and Securities - The company has net proceeds of 87,975,000 from its Initial Public Offering and the sale of private placement units, available for business combination, assuming no redemptions[261]. - The sponsor holds 2,501,250 founder shares, which cannot be transferred until 180 days post-initial business combination or under certain conditions[252]. - The sponsor purchased 505,000 private placement units for a total of 5,050,000,pricedat5,050,000, priced at 10.00 per unit[253]. - The company may issue additional shares of common stock or preferred stock to complete its initial business combination, which could dilute existing shareholders' interests[229][231]. - The company issued warrants to purchase 8,625,000 shares of common stock as part of its Initial Public Offering, which could increase the number of outstanding shares and reduce the value of shares issued to complete a business combination[297]. - The company may amend the terms of the warrants in a manner that could be adverse to holders with the approval of at least 50% of the then outstanding public warrants[293]. - The company may redeem unexpired warrants prior to their exercise, potentially making them worthless for holders[285]. Regulatory and Compliance Issues - If the company is deemed to be an investment company under the Investment Company Act, it may face burdensome compliance requirements that could hinder its ability to complete a business combination[203]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs of completing an acquisition[312]. - The company may incur additional costs if material weaknesses in internal controls are not remediated in a timely manner[319]. - Proposed SEC rules regarding SPACs may materially affect the ability to negotiate and complete initial business combinations[335]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[373]. - Changes in tax laws, such as the 1% excise tax on corporate stock repurchases from the Inflation Reduction Act, could adversely impact the company's financial position[332]. - The company is evaluating the potential impacts of the Inflation Reduction Act, but currently does not expect it to materially affect financial statements[332]. - Compliance with laws and regulations may be difficult and costly, and changes in these laws could adversely affect business operations[334]. Historical Performance and Future Outlook - The company has no historical operations or financial results, making the determination of the offering price arbitrary[300]. - The company is newly formed with no operating results and lacks an operating history, making it difficult to evaluate its ability to achieve business objectives[328]. - There are no plans or arrangements for a business combination with any prospective target business, which may hinder revenue generation[328]. - Past performance of the management team is not indicative of future performance, and there is no guarantee of successfully identifying a suitable candidate for a business combination[329]. - The market for directors and officers liability insurance has become less favorable, which may increase costs and complicate the negotiation of an initial business combination[275]. - If the company cannot obtain adequate directors and officers liability insurance, it may adversely impact its ability to attract and retain qualified officers and directors post-business combination[276].