IPO and Financing - 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[23]. - The private placement of 11,125,000 warrants generated total proceeds of $11.125 million, sold at $1.00 per warrant[24]. - The company has approximately $290.4 million available for business combinations after paying $10.1 million in deferred underwriting fees[42]. - The company intends to use cash from the IPO proceeds, private placements, equity, or debt for the initial business combination[44]. - The company has $290,375,000 available from its IPO and private placement warrants to complete its business combination and cover related fees and expenses[186]. Business Combination Strategy - 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[26]. - The management team has over 20 years of experience in energy and power investing, providing a significant pipeline of opportunities for initial business combinations[25]. - The acquisition strategy includes targeting businesses with sound financial performance and unique business attributes that ensure long-term profitability[32]. - The company seeks to bridge the gap between renewable energy and high-density energy consumers in the digital infrastructure industry[29]. - The company intends to acquire businesses with a fair market value of at least 80% of the assets held in the trust account at the time of signing a definitive agreement[32]. Due Diligence and Risk Management - The management team will conduct thorough due diligence on prospective target businesses to evaluate inherent risks[33]. - The management team will conduct thorough due diligence on prospective target businesses, including meetings with management and reviews of financial information[58]. - The company may need additional financing to complete the initial business combination if the transaction requires more cash than available or if a significant number of public shares are redeemed[47]. - The company may pursue business combination targets affiliated with its sponsor, officers, or directors, provided an independent opinion on fairness is obtained[51]. - The company does not intend to purchase multiple businesses in unrelated industries in conjunction with the initial business combination[54]. Redemption Rights and Shareholder Approval - A total of 10,781,251 public shares, or 37.5% of the 28,750,000 shares sold in the IPO, must be voted in favor of the initial business combination for approval[78]. - If anchor investors acquire 2,300,000 public shares and vote in favor, only 8,481,251 shares, or 29.5%, are needed for approval[78]. - Public stockholders must tender their shares or deliver them electronically to exercise redemption rights, with a deadline of two business days prior to the vote on the business combination[84]. - The company will not redeem public shares if it would cause net tangible assets to fall below $5,000,001, ensuring compliance with SEC "penny stock" rules[74]. - Redemption rights will not apply to warrants upon completion of the initial business combination[72]. Timeframe and Extensions - The company has 18 months from the IPO closing to complete an initial business combination, with the possibility of extending this period by two additional three-month periods[90]. - If the initial business combination is not completed, public stockholders will receive a redemption price of approximately $10.20 per share if extended once, or $10.30 if extended twice, excluding interest[91]. - The company has the right to extend the period to complete its initial business combination up to 24 months without stockholder vote or redemption rights[144]. - If the company does not complete the initial business combination within the specified time frame, it will redeem public shares at a price based on the trust account balance, potentially affecting stockholder rights[100]. Competition and Market Conditions - The company may face intense competition from other entities, including blank check companies and private equity groups, which may limit its ability to acquire larger target businesses[105]. - Increased competition from other special purpose acquisition companies may hinder the company's ability to complete its initial business combination[140]. - Geopolitical tensions, particularly from the invasion of Ukraine by Russia, have created volatility in global markets that could adversely affect the company's search for business combinations[196]. - The COVID-19 pandemic could materially adversely affect the company's search for a business combination and the operations of any target business[128]. Conflicts of Interest - The company may engage in business combinations with affiliated entities, which could raise potential conflicts of interest[217]. - The sponsor and executive officers may profit from business combinations even if public stockholders incur losses, creating a conflict of interest[218]. - The personal and financial interests of directors and officers may misalign with public stockholders' interests during the business combination process[219]. - Key personnel may negotiate employment agreements with a target business, potentially creating conflicts of interest[183]. Financial Reporting and Compliance - The company is required to evaluate internal control procedures for the fiscal year ending December 31, 2022, as mandated by the Sarbanes-Oxley Act[110]. - The company has identified a material weakness in its internal control over financial reporting as of December 31, 2022, which could affect its ability to accurately report financial results[171]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs of completing an acquisition[169]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[111]. Operational Challenges - The company has no operating history and did not commence operations until obtaining funding through its IPO, which may affect its ability to achieve its business objectives[116]. - The company may not be able to find a suitable target business within the required timeframe, which could negatively impact its operations and financial condition[130]. - The complexity of potential business combinations may require significant operational improvements, which could delay achieving desired results[204]. - The company may face challenges in acquiring target businesses due to limited financial resources compared to competitors[141]. Shareholder Rights and Governance - Holders of Class A common stock will not have voting rights on director appointments prior to the initial business combination, limiting their influence on management decisions[201]. - The company is not required to hold an annual meeting of stockholders until one year after the first fiscal year end following its Nasdaq listing[159]. - The company may amend its charter and governing instruments to facilitate the completion of an initial business combination, requiring approval from 65% of common stockholders[176]. - The absence of a specified maximum redemption threshold may allow the company to complete a business combination even if a majority of stockholders do not agree[174].
Power & Digital Infrastructure Acquisition II (XPDB) - 2022 Q4 - Annual Report