IPO and Financial Overview - The company completed its IPO on December 14, 2021, raising gross proceeds of $287.5 million from the sale of 28,750,000 units at an offering price of $10.00 per unit[28]. - Stockholders redeemed 18,141,822 shares of Class A Common Stock at a redemption price of approximately $10.37 per share, totaling an aggregate redemption amount of approximately $188.1 million[31]. - The balance in the trust account as of December 31, 2023, was approximately $114.6 million after the June redemptions[31]. - The company deposited $300,000 in the trust account on multiple occasions in 2023 to support the extension of the initial business combination deadline[32]. - As of December 31, 2023, the balance in the trust account was approximately $114,641,527 after the satisfaction of the June Redemptions[54]. - Approximately $6 million of deferred underwriting fees will be paid, providing various options for target businesses such as liquidity events or capital for growth[54]. - The amount in the trust account as of December 31, 2023, was approximately $10.80 per public share[84]. - A total of 1,710,340 public shares, or 16.1% of the 10,608,178 remaining public shares, need to be voted in favor of the initial business combination for approval[87]. Business Combination Plans - The Board approved extensions for the initial business combination deadline multiple times, with the latest extension to March 14, 2024[33][34]. - The company aims to identify and complete an initial business combination that creates substantial long-term value for stockholders, focusing on North American targets in power and digital infrastructure[36]. - The initial business combination must involve target businesses with an aggregate fair market value of at least 80% of the assets held in the trust account[42]. - The company intends to effectuate its initial business combination using cash from the IPO proceeds, private placements, equity, debt, or a combination of these[55]. - The company may pursue business combinations with financially unstable companies, which could expose it to inherent risks[67]. - The company may need to obtain additional financing if the transaction requires more cash than available from the trust account[58]. - The management team will conduct thorough due diligence, including meetings with management and reviews of financial information, before proceeding with a target business[68]. - The company may face challenges in completing a desirable business combination due to potential stockholder redemptions affecting its financial condition[126]. - The requirement to complete a business combination by March 14, 2024, may limit the time available for due diligence and negotiation with target businesses[131]. Redemption and Stockholder Rights - The company plans to conduct redemptions in connection with a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing requirements[85]. - If stockholder approval is required, the company will conduct redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act[88]. - The company will provide public stockholders with the opportunity to redeem shares at a per-share price equal to the aggregate amount in the trust account[84]. - Redemption rights require public stockholders to tender their shares prior to the vote on the business combination, ensuring irrevocability once approved[95]. - If public stockholders tender more shares than the company is permitted to redeem, the tender offer will be withdrawn[90]. - The company will not complete the initial business combination if the cash consideration required exceeds the available cash[91]. - The company has until March 14, 2024, to complete an initial business combination, with the possibility of extensions approved by stockholders or the Board[97]. - If the initial business combination is not completed, public stockholders will receive a redemption price of approximately $10.80 per share based on the trust account balance as of December 29, 2023[99]. - The company will cease operations and redeem public shares if no business combination is completed by the deadline, with a cash payment equal to the amount in the trust account[99]. Risks and Challenges - An investment in the company's securities involves a high degree of risk, which could materially affect business and financial conditions[120]. - The company has no operating history and no revenues, making it difficult for investors to evaluate its ability to achieve business objectives[121]. - The lack of diversification may pose risks as the company's success may depend entirely on the performance of a single business post-combination[71]. - The company may face significant competition from other special purpose acquisition companies (SPACs) and private investors, which may hinder its ability to complete an initial business combination[139]. - The company may face challenges in obtaining additional financing for its initial business combination, which could lead to restructuring or abandonment of the transaction[173]. - The company may encounter adverse tax consequences if it effects a business combination with a target company organized in another jurisdiction[193]. - The complexity of tax obligations in multiple jurisdictions could negatively affect the company's after-tax profitability and financial condition[194]. - The ongoing geopolitical tensions, including the invasion of Ukraine by Russia and the Israel-Hamas war, have created global security concerns that could significantly impact regional and global economies[191]. - The company may face challenges in completing a business combination due to potential market disruptions and volatility in capital markets resulting from geopolitical events[192]. Internal Controls and Compliance - The company is required to evaluate internal control procedures for the fiscal year ending December 31, 2023, as mandated by the Sarbanes-Oxley Act[116]. - As of December 31, 2023, the company has identified a material weakness in its internal control over financial reporting, particularly related to accrued general and administrative expenses and the tax provision[163]. - The company continues to evaluate steps to remediate the identified material weakness in internal controls, which could impact investor confidence and stock price[164]. - The company is not required to comply with the independent registered public accounting firm attestation requirement on its internal control over financial reporting as long as it remains an emerging growth company[161]. - Compliance with laws and regulations may be difficult and costly, potentially affecting the ability to complete initial business combinations[222]. Management and Governance - The company has four executive officers who will devote necessary time to affairs until the initial business combination is completed[114]. - Conflicts of interest may arise as executive officers and directors allocate their time between the company's affairs and other business endeavors[207]. - Directors and officers may have financial interests that conflict with those of public stockholders, particularly regarding the selection of target businesses[215]. - The company may not maintain control of a target business post-combination, potentially affecting operational success[217]. - The company may pursue acquisition opportunities outside of its management's expertise, which could lead to inadequate risk assessment and potential value reduction for stockholders[154]. Financial Projections and Future Outlook - The company has incurred and expects to continue incurring costs related to its financing and acquisition plans, which may affect its liquidity[165]. - The company's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern[165]. - If the company fails to complete its initial business combination within 24 months, it may be forced to liquidate, impacting investor returns[220]. - The company may incur substantial debt to complete a business combination, which could adversely affect its financial condition and stockholder value[179].
Power & Digital Infrastructure Acquisition II (XPDB) - 2023 Q4 - Annual Report