Financial Proceeds and Trust Account - The company raised gross proceeds of $189.75 million from its initial public offering of 18,975,000 units, including 2,475,000 units from the underwriters' over-allotment option[16]. - A private placement of 7,942,500 warrants generated additional gross proceeds of $7.94 million at a price of $1.00 per warrant[16]. - The net proceeds of the initial public offering and private placement amounted to $191.65 million, which is held in a trust account and invested in U.S. government securities[17]. - The company has available funds for a business combination amounting to $184,206,250, assuming no redemptions, after accounting for $6,641,250 in deferred underwriting fees and estimated offering expenses of $800,000[48]. - The anticipated per-share redemption amount upon dissolution is approximately $10.10, but this may be subject to claims from creditors[97]. - The company expects to fund costs associated with dissolution from proceeds held outside the trust account, but cannot assure sufficient funds will be available[96]. - The trust account may be reduced below $10.10 per public share due to claims from creditors, potentially affecting the redemption price for shareholders[100]. - The company has access to up to $1,450,000 from the proceeds of its initial public offering to cover potential claims, with estimated liquidation costs around $100,000[101]. - If the initial business combination is not completed within 18 months, or up to 24 months with extensions, the company will redeem public shares at a per-share price based on the trust account balance[93]. - Public shareholders can only receive funds from the trust account upon completion of an initial business combination or under specific conditions related to shareholder votes[105]. Business Combination Strategy - The company aims to identify and complete a business combination with businesses in the "new economy sectors" across Frontier Growth Markets, including technology and financial services[22]. - The business strategy includes leveraging local knowledge and CIM's global investment platform to identify and evaluate potential targets[24]. - The company seeks to partner with businesses that have established business models, strong unit economics, and scalability potential[27]. - The initial business combination must involve one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the trust account[36]. - The company anticipates structuring the initial business combination to acquire 100% of the issued and outstanding equity interests or assets of the target business, but may acquire less than 100% under certain conditions[38]. - The company has not selected any specific business combination target and has not engaged in substantive discussions with any potential targets[51]. - The company may seek to raise additional funds through a private offering of debt or equity securities in connection with the initial business combination[52]. - The company will conduct a thorough due diligence review of prospective target businesses, including meetings with management and document reviews[57]. Management and Operational Risks - The management team has over 85 years of combined experience in investing in Frontier Growth Markets, enhancing credibility and due diligence processes[15]. - The company is not currently engaged in any operations and intends to use cash from the initial public offering and private placement warrants for the initial business combination[49]. - There is uncertainty regarding the management team's ability to effectively manage the combined company post-business combination[60]. - Key personnel's retention in senior management positions after the business combination is not guaranteed[61]. - The company may seek to recruit additional managers to enhance the target business's management, but success in this effort is uncertain[62]. - The company may face risks due to lack of business diversification, relying on a single business for future performance[59]. - The time and costs associated with selecting and evaluating a target business for the initial business combination are currently uncertain[58]. Shareholder Rights and Redemption - Shareholder approval may be required for the initial business combination if certain conditions are met, such as issuing over 20% of Class A ordinary shares[63]. - The company has a restriction on redemption rights for public shareholders, limiting the ability to redeem more than 15% of shares sold in the initial public offering[82]. - Public shareholders must tender their share certificates or deliver shares electronically to exercise redemption rights, with a tender offer period of not less than 20 business days[83]. - If shareholder approval is sought, initial shareholders have agreed to vote in favor of the business combination, representing at least 20% of the voting shares[80]. - The company may not complete the business combination if cash requirements exceed available cash, leading to a search for alternative opportunities[81]. - The company may complete a business combination without seeking shareholder approval, limiting public shareholders' ability to influence the decision[118]. - Initial shareholders collectively own 20% of the ordinary shares and will control the appointment of the board of directors until the initial business combination is completed[192]. Competition and Market Conditions - The number of blank check companies competing for acquisition targets has increased, potentially limiting the company's ability to compete effectively due to financial resource constraints[111]. - The company may face challenges in completing a business combination if too many public shareholders exercise their redemption rights, potentially impacting its financial condition and capital structure[119]. - The ongoing COVID-19 pandemic and other global events may adversely affect the company's ability to find suitable business combination targets and complete transactions[129]. - The number of special purpose acquisition companies (SPACs) has increased significantly, leading to heightened competition for attractive targets, which may increase costs and complicate the acquisition process[141]. - The company may face challenges in completing its initial business combination due to limited resources and significant competition from other entities, including private investors and other blank check companies[139]. Financial and Regulatory Considerations - The company is classified as an "emerging growth company" and will remain so until certain revenue or market value thresholds are met[46]. - The company is also classified as a "smaller reporting company," allowing it to provide reduced disclosure obligations[47]. - The company must maintain net tangible assets of at least $5,000,001 after redemptions to proceed with a business combination, which could limit its options[121]. - The company may incur significant costs in pursuit of acquisition plans, and available funds outside the trust account may not be sufficient to operate for at least 24 months following the initial public offering[143]. - Compliance with the Sarbanes-Oxley Act may increase the time and costs associated with completing an acquisition, particularly if the target business is not compliant[200]. - The company must provide financial statements for the target business, which may limit the pool of potential acquisition candidates[199]. - The company may face additional risks and complexities if pursuing a target business outside the United States, including regulatory approvals and currency fluctuations[201]. Potential Conflicts and Liabilities - The potential conflicts of interest may arise if the company engages in business combinations with entities affiliated with its sponsor, directors, or officers[175]. - Shareholders may be held liable for claims against the company if distributions are made while the company is unable to pay its debts[159]. - The company’s sponsor is liable for claims that reduce the trust account funds below $10.10 per public share, but there is no guarantee that the sponsor has sufficient funds to cover these obligations[150]. - Claims of creditors may have priority over shareholders' claims, potentially reducing the per-share amount received in liquidation[155]. - The company may face challenges in completing its initial business combination within 24 months of the IPO, which could delay shareholder redemptions[158]. Share Structure and Dilution - The company is authorized to issue up to 500 million Class A ordinary shares, with no authorized but unissued Class A shares as of December 31, 2022[170]. - As of December 31, 2022, there were 4,743,750 Class B ordinary shares available for issuance, which may dilute the interest of existing shareholders[171]. - The company may issue additional shares or preference shares to complete its initial business combination, which could significantly dilute public investors' equity interests[171]. - The initial shareholders hold 4,743,750 founder shares, which will be worthless if the initial business combination is not completed[176]. - The aggregate implied value of the founder shares could reach $47,437,500 if the trading price is $10.00 per share upon completion of the initial business combination[184]. - The company has issued 9,487,500 warrants to purchase Class A ordinary shares at a price of $11.50 per share, which may affect the attractiveness of the company as an acquisition vehicle[196]. Miscellaneous Risks - The absence of a specified maximum redemption threshold may allow the company to complete a business combination even if a substantial majority of shareholders do not agree[186]. - The company may face increased leverage from potential target businesses due to the time constraints imposed by the requirement to complete a business combination within a specified timeframe[125]. - Limited public information about private companies may lead to business combinations with less profitable entities than anticipated[209]. - Post-business combination, the company may incur significant write-downs, restructuring, or impairment charges that could adversely affect financial condition and results of operations[210]. - Economic, political, and social conditions in the operating country could significantly impact business prospects and demand for spending in certain industries[211]. - The company may not maintain control of a target business after the initial business combination, potentially affecting operational profitability[212].
CSLM Acquisition Corp.(CSLMU) - 2022 Q4 - Annual Report