CXApp (US:CXAI)2021-03-29 16:00Financial Proceeds and Trust Account - The company raised gross proceeds of $276 million from the Initial Public Offering by selling 27,600,000 units at $10.00 per unit[19]. - An additional $10.28 million was generated from the sale of 10,280,000 Private Placement Warrants at $1.00 each[20]. - A total of $278.76 million was placed in a Trust Account, invested in U.S. government securities, with a per unit value of $10.10[21]. - Public Stockholders can redeem their shares for a pro rata portion of the Trust Account, initially valued at $10.10 per share[25]. - If the initial Business Combination is not completed within the prescribed time frame, public stockholders may only receive $10.10 per share upon liquidation[56]. - The Trust Account is intended as a holding place for funds pending the completion of an initial Business Combination or the return of funds to public stockholders if no Business Combination occurs within 18 months[101]. - If the Trust Account balance falls below $242,400,000 due to negative interest rates, the per-share redemption amount may be less than $10.10[92]. - The company is obligated to pay cash for redeemed shares, which may reduce available resources for the initial Business Combination[75]. - Public stockholders may receive approximately $10.10 per share on redemption if the initial Business Combination is not completed[73]. - If the company cannot complete its initial Business Combination, public stockholders may receive approximately $10.10 per share upon liquidation of the Trust Account[156]. Business Combination Requirements - The company must complete a Business Combination with a fair market value of at least 80% of the net assets held in the Trust Account[22]. - The company must complete its initial Business Combination within 18 months from the closing of the Initial Public Offering[58]. - The company needs only 10,350,001 public shares, or approximately 37.5%, to be voted in favor of a Business Combination, assuming all outstanding shares are voted[44]. - If only the minimum number of shares representing a quorum are voted, only 1,725,001 public shares, or approximately 6.25%, are needed for approval[44]. - The company may seek an amendment to extend the time for completing a Business Combination beyond 18 months, requiring approval from at least 65% of outstanding common stock[59]. - The company has provisions in its certificate of incorporation that allow amendments with the approval of at least 65% of outstanding common stock, which is lower than some other blank check companies[150]. - The company may only be able to complete one Business Combination with the proceeds from its Initial Public Offering, leading to a lack of diversification and increased operational risk[138]. - The company must maintain net tangible assets of at least $5,000,001 to proceed with the Business Combination after redemptions[48]. Competition and Market Conditions - The company aims to acquire businesses with transformational technology and a validated business model in a significant and growing market[27]. - The company may face competition from other entities with similar business objectives, which may limit its ability to acquire larger target businesses[38]. - The company faces intense competition from other entities, including private investors and other blank check companies, which may limit its ability to acquire sizable target businesses[74]. - The number of special purpose acquisition companies has increased significantly, leading to heightened competition for attractive targets[77]. - The COVID-19 pandemic may adversely affect the company's ability to consummate a Business Combination due to travel restrictions and market conditions[61]. Risks and Challenges - The company has not generated any operating revenue to date and is classified as a "shell company" with nominal assets[23]. - The ability of public stockholders to redeem shares may deter potential target businesses from entering into a Business Combination[47]. - The company may need to reserve cash in the Trust Account to meet closing conditions, which could limit the ability to complete the most desirable Business Combination[51]. - The company may face challenges in negotiating favorable terms for initial Business Combinations due to increased competition and market conditions[79]. - The company may incur substantial costs related to the investigation and negotiation of target businesses, which would not be recoverable if a Business Combination is not completed[130]. - The company may face significant risks related to proprietary network communications technology, including the inability to develop successful new products or improve existing ones[174]. - There is a risk of losing key management personnel, which could seriously harm the business[174]. - The company may be subject to regulatory investigations that could incur substantial costs or require changes in business practices[174]. - Economic conditions in the operating country could impact business demand and profitability, particularly if there is a downturn[180]. - The company may not maintain control over the target business post-combination, which could affect operational success[181]. - Management's ability to assess the target business's management may be limited, potentially leading to poor operational performance[184]. - Conflicts of interest may arise if management negotiates employment agreements with the target business, influencing their decision-making[193]. - The company has not adopted a policy to prevent conflicts of interest among directors and officers, which may affect business combinations[202]. Stockholder Rights and Securities - Investors may have limited rights to funds from the Trust Account, potentially forcing them to sell shares at a loss[205]. - The company must maintain a minimum stockholders' equity of $2,500,000 and at least 300 public holders to continue listing its securities on Nasdaq prior to the initial Business Combination[208]. - If the company fails to complete its initial Business Combination within 18 months from the closing of the Initial Public Offering, public stockholders may be forced to wait beyond this period to receive funds from the Trust Account[206]. - If the company's securities are delisted and not listed on another national exchange, they may be quoted on an over-the-counter market, leading to reduced liquidity and market quotations[209]. - Holders of warrants may not exercise their warrants unless the underlying shares of Class A common stock are registered or an exemption is available[212]. - The company may amend the terms of the warrants with the approval of at least 50% of the then-outstanding public warrants, potentially increasing the exercise price or shortening the exercise period[213]. - If the company is unable to register or qualify the underlying shares of Class A common stock, warrant holders may be forced to exercise their warrants on a cashless basis[212]. - The company may face significant adverse consequences if its securities are delisted, including reduced analyst coverage and a determination that its Class A common stock is a "penny stock"[209]. - The company is subject to federal statutes that prevent states from regulating the sale of certain securities, but could face state regulation if it is no longer listed on Nasdaq[211].