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TKB Critical Technologies 1(USCT) - 2023 Q4 - Annual Report
USCTTKB Critical Technologies 1(USCT)2024-04-11 21:09

IPO and Financial Status - 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[15]. - As of June 29, 2023, the company had approximately 56.7millionremaininginitsTrustAccountafterredemptionstotalingapproximately56.7 million remaining in its Trust Account after redemptions totaling approximately 181.9 million[18]. - The company has a net tangible asset requirement of at least 5,000,001,whichmaylimittheredemptionofpublicsharesiftoomanyareredeemed[34].−Theestimatedper−shareredemptionamountcouldbelessthantheinitial5,000,001, which may limit the redemption of public shares if too many are redeemed[34]. - The estimated per-share redemption amount could be less than the initial 10.20 per share due to potential claims against the Trust Account[36][38]. - The estimated redemption price for public shares is approximately 11.08pershareasofDecember31,2023[68].−Thecompanyhadcashof11.08 per share as of December 31, 2023[68]. - The company had cash of 13,755 held outside the Trust Account to fund working capital requirements as of December 31, 2023[75]. - The company has approximately 23,332,031remaininginitsTrustAccountasofDecember31,2023,afteraccountingfor23,332,031 remaining in its Trust Account as of December 31, 2023, after accounting for 8,800,000 of deferred underwriting commissions[95]. - The net proceeds from the initial public offering and private placement of warrants provided the company with 231,950,000forcompletingitsinitialbusinesscombination[95].−AsofDecember31,2023,thecompanyhad231,950,000 for completing its initial business combination[95]. - As of December 31, 2023, the company had 13,755 in cash and a working capital deficit of 1,291,564,raisingsubstantialdoubtaboutitsabilitytocontinueasagoingconcern[187].BusinessCombinationandShareholderActions−ShareholdersapprovedanextensiontocompleteabusinesscombinationuntilOctober29,2024,allowingforadditionaltimetoidentifysuitabletargets[19].−ThecompanyplanstoliquidatetheTrustAccountandredeem901,291,564, raising substantial doubt about its ability to continue as a going concern[187]. Business Combination and Shareholder Actions - Shareholders approved an extension to complete a business combination until October 29, 2024, allowing for additional time to identify suitable targets[19]. - The company plans to liquidate the Trust Account and redeem 90% of the public shares approximately 2-3 weeks after the adoption of the Amendment Proposal[21]. - Shareholders have the opportunity to redeem their public shares upon completion of the initial business combination at a price equal to the amount in the Trust Account divided by the number of outstanding public shares[28]. - The company has waived redemption rights for its Class B Shares and any public shares held in connection with the initial business combination[29]. - If the initial business combination is not completed by October 29, 2024, the company will redeem public shares at a price based on the amount in the Trust Account, which may be less than the estimated 11.08 per share[32][36]. - If the company fails to complete its initial business combination by the deadline, it will cease operations and redeem public shares[65]. - The company may not redeem public shares if it would cause net tangible assets to fall below 5,000,001,potentiallycomplicatingbusinesscombinationefforts[62].−ThecompanyissubjecttomandatoryliquidationifitdoesnotcompleteaninitialbusinesscombinationbyOctober29,2024[118].−Publicshareholdersmaybeforcedtowaitbeyond36monthstoreceivefundsfromtheTrustAccountiftheinitialbusinesscombinationisnotcompleted[150].TargetBusinessEvaluationandCompetition−Thecompanyhasevaluatedover350potentialtargetbusinessesforitsinitialbusinesscombination,butonlyenteredintooneagreementthatwassubsequentlyterminated[24].−Thecompanyexpectstofacecompetitionfromotherentitiesinidentifyingandselectingtargetbusinessesforacquisition,whichmaylimititsabilitytoacquirelargertargets[43].−Thecompanymayfacesignificantcompetitionfromotherentitieswithsimilarbusinessobjectives,whichcouldlimititsabilitytocompleteaninitialbusinesscombination[74].−Thecompanymayfacechallengesinfindingasuitabletargetbusinessduetomarketconditionsandotherexternalfactors,includingtheimpactofCOVID−19[66].−Thecompanymayfacechallengesincompletinginitialbusinesscombinationswithprivatecompaniesduetolimitedpublicinformation,potentiallyleadingtolessprofitableoutcomes[100].RegulatoryandComplianceIssues−Thecompanyisclassifiedasan"emerginggrowthcompany,"allowingittotakeadvantageofcertainreportingexemptions,whichmayaffecttheattractivenessofitssecuritiestoinvestors[46].−Thecompanyisclassifiedasan"emerginggrowthcompany"andcandelaytheadoptionofcertainaccountingstandardsuntiltheyapplytoprivatecompanies[48].−CompliancewiththeSEC′sSPACRulesmayincreasecostsandtimeneededtocompletetheinitialbusinesscombination,potentiallyleadingtoearlierliquidation[86].−CompliancewiththeSarbanes−OxleyActmayincreasethetimeandcostsnecessarytocompleteaninitialbusinesscombination[114].−Thecompanyisclassifiedasa"smallerreportingcompany,"whichallowsittoprovideonlytwoyearsofauditedfinancialstatementsuntilcertainthresholdsaremet,includingamarketvalueof5,000,001, potentially complicating business combination efforts[62]. - The company is subject to mandatory liquidation if it does not complete an initial business combination by October 29, 2024[118]. - Public shareholders may be forced to wait beyond 36 months to receive funds from the Trust Account if the initial business combination is not completed[150]. Target Business Evaluation and Competition - The company has evaluated over 350 potential target businesses for its initial business combination, but only entered into one agreement that was subsequently terminated[24]. - The company expects to face competition from other entities in identifying and selecting target businesses for acquisition, which may limit its ability to acquire larger targets[43]. - The company may face significant competition from other entities with similar business objectives, which could limit its ability to complete an initial business combination[74]. - The company may face challenges in finding a suitable target business due to market conditions and other external factors, including the impact of COVID-19[66]. - The company may face challenges in completing initial business combinations with private companies due to limited public information, potentially leading to less profitable outcomes[100]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to take advantage of certain reporting exemptions, which may affect the attractiveness of its securities to investors[46]. - The company is classified as an "emerging growth company" and can delay the adoption of certain accounting standards until they apply to private companies[48]. - Compliance with the SEC's SPAC Rules may increase costs and time needed to complete the initial business combination, potentially leading to earlier liquidation[86]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete an initial business combination[114]. - The company is classified as a "smaller reporting company," which allows it to provide only two years of audited financial statements until certain thresholds are met, including a market value of 250 million or annual revenues of 100million[190].InternalControlandFinancialReporting−Thecompanyidentifiedamaterialweaknessinitsinternalcontroloverfinancialreporting,whichmayadverselyaffectinvestorconfidenceandoperatingresults[52].−ArestatementoftheauditedbalancesheetrevealedanerrorinthevalueofClassASharessubjecttoredemption,whichshouldhavebeenrecordedas100 million[190]. Internal Control and Financial Reporting - The company identified a material weakness in its internal control over financial reporting, which may adversely affect investor confidence and operating results[52]. - A restatement of the audited balance sheet revealed an error in the value of Class A Shares subject to redemption, which should have been recorded as 234.6 million instead of $230 million[53]. - The company may face litigation risks due to identified material weaknesses in internal control over financial reporting[58]. Shareholder Rights and Governance - The company’s initial shareholders own approximately 73% of the issued and outstanding ordinary shares, allowing them to approve business combinations even without public shareholder support[60]. - Holders of Class A Shares will not have voting rights on the appointment of directors prior to the initial business combination[154]. - The company has provisions in its memorandum and articles of association that may discourage unsolicited takeover proposals, including a staggered board of directors[191]. - The company has not adopted a policy to prevent directors and officers from having financial interests in transactions, which may lead to conflicts of interest[145]. - The company may engage in business combinations with affiliated entities, which could raise potential conflicts of interest[147]. Risks and Uncertainties - The company may face significant write-downs or write-offs post-business combination, negatively impacting financial condition and securities prices[121]. - The company may struggle to assess the management capabilities of a target business, risking operational profitability[129]. - If the company pursues a target business outside the U.S., it may encounter additional risks, including regulatory and operational challenges[132]. - The company may not be able to secure additional financing necessary for completing a business combination or funding operations, which could lead to restructuring or abandonment of the transaction[110]. - The company may face claims of punitive damages if it distributes proceeds to shareholders before addressing creditor claims in the event of bankruptcy[82]. Securities and Share Structure - The company has the authorization to issue up to 200,000,000 Class A Shares, 20,000,000 Class B Shares, and 1,000,000 preference shares[169]. - If the company completes an initial business combination, it may issue additional Class A Shares or preference shares, which could dilute existing shareholders' interests[168]. - The company may issue Class A Shares upon the conversion of Class B Shares at a ratio greater than one-to-one, which is subject to anti-dilution provisions[170]. - The company may not be able to register or qualify the shares underlying the warrants under applicable state securities laws, which could lead to warrants expiring worthless[162]. - The potential issuance of a substantial number of additional Class A Shares upon exercise of warrants could make the company a less attractive acquisition vehicle[179]. Management and Operational Concerns - The company has seven executive officers who will devote time as needed until the initial business combination is completed, with no full-time employees planned prior to that[45]. - The company is dependent on a small group of executive officers and directors, and their loss could adversely affect operations[140]. - Executive officers and directors may face conflicts of interest due to their commitments to other businesses, potentially impacting the completion of the initial business combination[141]. - Key personnel's retention may be conditioned on employment agreements, potentially leading to conflicts of interest[127]. Market and Trading Information - The company's units, Class A Shares, and warrants are traded on the Nasdaq Global Market under the symbols "USCTU," "USCT," and "USCTW," respectively[209]. - If Nasdaq delists the company's securities, it could face significant adverse consequences, including reduced liquidity and limited market quotations[152].