ESH Acquisition (ESHA) - 2023 Q4 - Annual Report

IPO and Fundraising - The Company completed its IPO on June 16, 2023, raising gross proceeds of $115,000,000 from the sale of 11,500,000 units at$10.00 per unit, including the full exercise of the underwriters' over-allotment option[18]. - The Company also sold 7,470,000 Private Placement Warrants at $1.00 each, generating additional gross proceeds of$7,470,000[18]. - The net proceeds from the IPO and Private Placement Warrants, totaling $116,725,000, were placed in a Trust Account, amounting to$10.15 per unit sold[18]. - Offering costs incurred by the Company amounted to $5,368,092, which included a cash underwriting discount of$2,300,000 and other associated costs[21]. - The company has $2,320,000 in proceeds held outside the Trust Account after liability insurance payments, but cannot assure sufficient funds for dissolution costs[38]. - Total funds available for the Initial Business Combination, after deducting a marketing fee of$3,500,000, amount to $98,000,000[154]. Initial Business Combination - The Company intends to pursue an Initial Business Combination with a target business that has an aggregate fair market value of at least 80$10.15 per share or less upon liquidation[76]. - The company has not yet identified a target business, making it difficult to ascertain capital requirements for any potential transaction[106]. Risks and Challenges - Key risks include potential conflicts of interest, lack of working capital, and dependence on a single target business[52]. - The company may face challenges in completing an Initial Business Combination due to regulatory reviews or approvals required by U.S. or foreign laws[58]. - The pool of potential targets for the Initial Business Combination could be limited due to foreign ownership restrictions, which may adversely affect competition with other SPACs[62]. - The company faces competition from other entities with similar business objectives, which may limit its ability to acquire larger target businesses[49]. - The company may face challenges in obtaining additional financing for its Initial Business Combination, which could lead to restructuring or abandonment of the transaction[106]. - The company may face burdensome compliance requirements if deemed an investment company under the Investment Company Act, which could restrict its activities[166]. Financial Performance - For the year ended December 31, 2023, the company reported a net income of $1,946,899, influenced by$3,275,366 in interest earned on investments held in the Trust Account[196]. - Cash used in operating activities for the year ended December 31, 2023, was $796,580, compared to$43,418 for the year ended December 31, 2022[196]. - The company has not generated any operating revenues to date and does not expect to do so until after completing its Initial Business Combination[204]. - As of December 31, 2023, the company had cash of $1,879,227 available for identifying and evaluating target businesses[213]. Shareholder Rights and Redemption - Public stockholders can only receive funds from the Trust Account upon completion of the Initial Business Combination or other specified events[48]. - If the Initial Business Combination is not completed, public stockholders will cease all operations except for winding up and redeem their shares at a price based on the Trust Account balance[77]. - The per-share redemption amount received by public stockholders could be less than$10.15 due to potential claims against the Trust Account[131]. - If stockholders fail to comply with redemption procedures, their shares may not be redeemed, impacting their ability to recover investments[81]. - The company intends to redeem its Public Shares as soon as reasonably possible following the end of the Combination Period, without complying with certain procedures that could limit stockholder liability[140]. Management and Governance - The management team currently consists of two executive officers who will devote time as necessary until the Initial Business Combination is completed[50]. - The company is classified as a blank check company, limiting its operational history and increasing investment risks[52]. - The company’s executive offices are located at 228 Park Avenue S, Suite 89898, New York, NY, with a monthly cost of $5,000 for office space and administrative support[186]. - The Sponsor holds 2,875,000 Founder Shares for an aggregate purchase price of$25,000, approximately $0.009 per share, with up to 375,000 shares subject to forfeiture[126]. Conflicts of Interest - Conflicts of interest may arise as executive officers and directors are involved in multiple business endeavors, potentially impacting their commitment to the company[122]. - The company does not have a policy prohibiting executive officers and directors from having financial interests in target businesses, which may lead to conflicts[125]. - The company may face conflicts of interest if acquiring businesses affiliated with its Sponsor or executives, which could affect the terms of the business combination[97]. Compliance and Regulatory Issues - The company is subject to potential litigation asserting that it should be considered an investment company under the Investment Company Act, which could impose additional regulatory burdens[169]. - The company intends to avoid being deemed an "investment company" by restricting investments in the Trust Account to U.S. government treasury bills or money market funds[168]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an Initial Business Combination[182].