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TKB Critical Technologies 1(USCT) - 2022 Q4 - Annual Report
USCTTKB Critical Technologies 1(USCT)2023-04-04 00:52

IPO and Trust Account - The company completed its initial public offering on October 29, 2021, raising gross proceeds of 230millionfromthesaleof23millionunitsat230 million from the sale of 23 million units at 10.00 per unit[21]. - A total of 234.6millionfromtheIPOproceedsandprivatewarrantssalewasplacedinatrustaccount[22].−AsofJanuary30,2023,thecompanyhadapproximately234.6 million from the IPO proceeds and private warrants sale was placed in a trust account[22]. - As of January 30, 2023, the company had approximately 56.7 million remaining in its trust account after redemptions totaling approximately 181.9million[24].−Theestimatedper−shareredemptionamountforshareholdersis181.9 million[24]. - The estimated per-share redemption amount for shareholders is 10.38 as of January 27, 2023, which may be less than the initial 10.20persharedepositedintheTrustAccount[55].−TheTKBSponsorwillbeliableifclaimsreducetheTrustAccountfundsbelow10.20 per share deposited in the Trust Account[55]. - The TKB Sponsor will be liable if claims reduce the Trust Account funds below 10.20 per public share, but this liability does not apply to claims from parties who executed waivers[56]. - If the Trust Account proceeds fall below 10.20perpublicshare,shareholdersmaynotreceivetheexpectedredemptionamount[57].−ThecompanyaimstohavevendorsandserviceproviderswaiveclaimstotheTrustAccountfunds,butthereisnoguaranteethatallwillcomply[58].−Intheeventofbankruptcy,theTrustAccountfundsmaybesubjecttoclaimsfromcreditors,potentiallyreducingtheamountreturnedtoshareholders[59].−ShareholderscanonlyaccessTrustAccountfundsunderspecificconditions,suchasfailingtocompletetheinitialbusinesscombinationwithintheCombinationPeriod[60].−Theestimatedredemptionpriceforpublicsharesisapproximately10.20 per public share, shareholders may not receive the expected redemption amount[57]. - The company aims to have vendors and service providers waive claims to the Trust Account funds, but there is no guarantee that all will comply[58]. - In the event of bankruptcy, the Trust Account funds may be subject to claims from creditors, potentially reducing the amount returned to shareholders[59]. - Shareholders can only access Trust Account funds under specific conditions, such as failing to complete the initial business combination within the Combination Period[60]. - The estimated redemption price for public shares is approximately 10.38 per share as of January 27, 2023[93]. - If the initial business combination is not completed, public shareholders may only receive their pro rata portion of the funds in the Trust Account, and warrants will expire worthless[98]. Business Combination with Wejo - The proposed business combination with Wejo is expected to close in the second quarter of 2023, subject to shareholder approvals and other customary conditions[28]. - Wejo provides software and technology solutions utilizing high-value datasets, primarily in North America and Europe, targeting various sectors including automotive and transportation[29]. - The business combination agreement includes a floating exchange ratio for TKB Class A Shares, with a maximum price of 3.00andaminimumpriceof3.00 and a minimum price of 0.50 for Wejo shares[32]. - The proposed business combination with Wejo is subject to shareholder approval, and public shareholders will have redemption rights upon completion[48]. - The proposed Business Combination with Wejo does not include a minimum cash condition, but high redemption rates could jeopardize the transaction's success[87]. - If too many public shareholders exercise their redemption rights, TKB may not meet closing conditions for the business combination[84]. - The company intends to complete the proposed Business Combination with Wejo but may pursue multiple targets if the initial combination fails, increasing complexity and costs[130]. - The company has obtained a fairness opinion for the proposed Business Combination with Wejo, but is not required to obtain one for alternate transactions[125]. - If the initial business combination with Wejo is not completed, public shareholders may only receive their pro rata share of the Trust Account funds, and warrants may expire worthless[158]. Shareholder Rights and Approvals - TKB shareholders approved an extension to complete the business combination until June 29, 2023, with 17,533,296 public shares redeemed for approximately 181.9million[49].−TKB′sArticlesrestrictpublicshareholdersfromseekingredemptionrightsformorethan15181.9 million[49]. - TKB's Articles restrict public shareholders from seeking redemption rights for more than 15% of shares sold in the initial public offering without prior consent[48]. - TKB's initial shareholders own approximately 51% of the issued and outstanding ordinary shares, allowing them to approve business combinations even without public shareholder support[80]. - Amendments to TKB's Articles require a two-thirds majority vote or unanimous written resolution, potentially facilitating easier changes compared to other SPACs[139]. - TKB's initial shareholders may participate in votes to amend Articles, potentially impacting shareholder rights[140]. - Any amendments to agreements related to the initial public offering can be made without shareholder approval, which may affect investor interests[143]. Financial and Operational Risks - TKB evaluated over 350 potential target businesses, including Wejo, conducting thorough due diligence reviews[41]. - The company faces potential litigation risks due to the identified material weaknesses and the restatement of financial results[76]. - The company is actively working on remediation measures for its internal control weaknesses, but these may be time-consuming and costly[72]. - The management's ability to assess the target business's management may be limited, potentially leading to a post-combination business lacking necessary skills[164]. - The company may incur substantial debt to complete the business combination, which could adversely affect its leverage and financial condition[126]. - The company may face competition from other entities for business combination opportunities, which could limit its ability to complete a deal[99]. - The company may face risks if it completes a business combination with a target that does not meet its general criteria and guidelines, potentially leading to shareholder redemption[124]. - The investigation and negotiation for the business combination will require substantial management time and costs, which may not be recoverable if the deal does not proceed[159]. Regulatory and Compliance Issues - The company qualifies as an "emerging growth company," allowing it to take advantage of certain reporting exemptions[64]. - The company is also classified as a "smaller reporting company," which permits reduced disclosure obligations[67]. - Compliance with Sarbanes-Oxley Act requirements may increase costs and complexity in completing the initial business combination[148]. - The SEC has proposed new rules that could increase costs and time for completing the business combination with Wejo[111]. - Changes in laws or regulations could adversely affect the company's ability to complete the proposed business combination[119]. Securities and Share Structure - The company issued 11,500,000 public warrants and 10,750,000 private placement warrants, each exercisable at 11.50 per share[214]. - The company may redeem outstanding public warrants at 0.01perwarrantifthesharepriceexceeds0.01 per warrant if the share price exceeds 18.00 for 20 out of 30 trading days[211]. - The company may issue additional TKB Class A Shares or preference shares to complete an alternate initial business combination, which could dilute existing shareholders[203]. - The potential issuance of additional TKB Class A Shares upon warrant exercise could reduce the value of shares issued in a business combination[215]. - The company’s unit structure includes one-half of one warrant, potentially making the units less valuable compared to other SPACs that include a whole warrant[216]. - If the TKB Class A Shares are not registered under the Securities Act, warrant holders may only exercise their warrants on a cashless basis, resulting in fewer shares received[200]. Management and Key Personnel - TKB's management team has over 100 years of combined operating experience and has completed more than 50 global technology transactions[43]. - Key personnel's efforts are crucial for the success of the business combination, and their loss could negatively impact operations and profitability[160]. - Past performance of the management team is not indicative of future success, and reliance on historical performance may be misplaced[173]. - The management team may not be able to maintain control of the target business post-combination, impacting operational success[166]. Miscellaneous - The company may face legal action if the sponsor does not fulfill indemnification obligations, potentially reducing funds available for public shareholders[107]. - The company may abandon efforts to complete the business combination if deemed an investment company, leading to liquidation[117]. - The market for directors' and officers' liability insurance has become less favorable, potentially complicating the negotiation of the business combination[150]. - The company believes it was a PFIC for the taxable year ended December 31, 2022, and may be classified as a PFIC for the current taxable year[193]. - Conflicts of interest may arise due to the personal and financial interests of directors and officers in identifying and selecting a target business[180].