Zalatoris II Acquisition (ZLS) - 2021 Q4 - Annual Report

PART I. Business and Risk Factors Outlines the company's blank check business, acquisition strategy, competitive environment, and critical risk factors Item 1. Business Overview XPAC Acquisition Corp. is a blank check company seeking a Brazilian business combination, leveraging XP Inc.'s platform - XPAC Acquisition Corp. is a blank check company incorporated on March 11, 2021, aiming to effect a Business Combination, primarily in Brazil's healthcare, financial services, education, consumer goods & retail, and technology sectors, leveraging the XP Inc. platform[15] Initial Public Offering and Private Placement Details | Event | Date | Units/Warrants | Price per Unit/Warrant | Gross Proceeds | |---|---|---|---|---| | Initial Public Offering | Aug 3, 2021 | 20,000,000 Units | $10.00 | $200,000,000 | | Private Placement | Aug 3, 2021 | 4,000,000 Private Warrants | $1.50 | $6,000,000 | | Over-Allotment Exercise | Aug 19, 2021 | 1,961,131 Units | $10.00 | $19,611,310 | | Additional Private Warrants | Aug 19, 2021 | 261,485 Private Warrants | $1.50 | $392,228 | | Total Funds in Trust Account | N/A | N/A | N/A | $219,611,310 | - The company must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account[21] Overview Effecting a Business Combination Our Business Strategy - The company's strategy is to create shareholder value by identifying and completing an initial Business Combination with a company in Brazil's focus sectors, leveraging the XP group's extensive network and expertise[25][26] - Management aims to work with acquisition candidates to access capital markets, attract top-tier management, and execute tailored value-creation business plans for growth[26] Business Combination Criteria - Key criteria for target businesses include being leading players in the Brazilian economy with strong growth potential, resilient business models, consistent operational and financial performance, and strong, experienced management teams[31] - The company also seeks targets with defensible market positions, diversified customer bases, potential for strategic add-on acquisitions or international expansion, attractive risk-adjusted returns, and a strong corporate governance and ESG framework[31][37] Acquisition Process - The acquisition process involves thorough due diligence, including document reviews, financial analysis, management meetings, and consultations with industry experts[36] - Potential conflicts of interest may arise due to the management team's affiliations with XP Inc. and its subsidiaries, which are active in investment banking, asset management, and financial services, and may compete for acquisition opportunities[37][38][41][43] Initial Business Combination - The initial Business Combination must meet Nasdaq's 80% fair market value test, based on the value of the Trust Account's net assets[48] - The company aims to acquire 100% of a target's equity or assets, but may acquire less, provided it secures a controlling interest (50% or more of voting securities) to avoid Investment Company Act registration[49] Competition - The company faces intense competition from other entities, including private investors and other blank check companies, many of whom possess greater technical, human, and financial resources[51] - The increasing number of SPACs has intensified competition for attractive targets, potentially leading to higher costs and difficulty in finding suitable acquisition opportunities[83][84] Employees - The company currently has three officers and no full-time employees, with management dedicating time as necessary until the initial Business Combination is completed[52] Item 1.A. Risk Factors Details risks for business combination, post-acquisition, management conflicts, securities, and going concern status - Public shareholders may not have the opportunity to vote on the proposed Business Combination, as the company may complete it without shareholder approval unless required by law or stock exchange rules[54][56][58] - Failure to complete a Business Combination within 24 months from the IPO closing will lead to liquidation, redemption of public shares at approximately $10.00 per share (or less), and warrants expiring worthless[63][64] - The independent auditor's report expresses substantial doubt about the company's ability to continue as a 'going concern' due to limited cash and significant expected costs for acquisition plans[217] - The company may be classified as a Passive Foreign Investment Company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. investors[220][223][224] Risks Relating to Our Search for, and Consummation of or Inability to Consummate, a Business Combination Risks Relating to the Post-Business Combination Company Risks Relating to Our Management Team Risks Relating to Our Securities General Risk Factors Item 1.B. Unresolved Staff Comments No unresolved staff comments from the SEC - There are no unresolved staff comments[228] Item 2. Properties Executive offices in New York, NY; no administrative fees charged by Sponsor as of December 31, 2021 - The company's executive offices are located at 55 West 46th Street, 30th floor, New York, NY 10036[230] - The Sponsor may charge a $10,000 monthly fee for office and administrative services, but has not charged and does not intend to charge for these services as of December 31, 2021[230] Item 3. Legal Proceedings No material legal proceedings are currently active or threatened against the company or its officers - The company is not currently involved in any material legal proceedings, nor are any threatened against it or its officers or directors[231] Item 4. Mine Safety Disclosures No mine safety disclosures are applicable to the company - No mine safety disclosures are applicable to the company[232] PART II. Financial Information Covers market, equity, management's financial analysis, market risk, and financial statements Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Units and shares trade on Nasdaq; few holders; no dividends; Sponsor purchased Founder Shares and Private Warrants - The company's Units (XPAXU) began trading on Nasdaq on July 30, 2021, with Class A ordinary shares (XPAX) and redeemable warrants (XPAXW) commencing separate trading on September 20, 2021[235] - As of March 29, 2022, the company had approximately one holder of record for its Units, one for Class A ordinary shares, and two for redeemable warrants[236] - The company has not paid cash dividends and does not intend to prior to completing its initial Business Combination[237](index=