Southport Acquisition (US:PORT)2023-05-30 21:27IPO and Trust Account - The company completed its IPO on December 14, 2021, raising gross proceeds of $230 million from the sale of 23 million units at $10.00 per unit[15]. - A total of $234.6 million from the IPO and private placement was deposited into a trust account, which will be used for a business combination, assuming no redemptions[16]. - The underwriter waived its entitlement to a deferred fee of $8.05 million from the trust account, which was initially payable upon completion of a business combination[16]. - Public stockholders have the opportunity to redeem shares at an anticipated price of $10.20 per share upon completion of the initial business combination[37]. - If the initial business combination is not completed by June 14, 2023, public shares will be redeemed at the amount in the Trust Account, subject to certain conditions[44]. - The Trust Account may be reduced below $234,600,000 due to negative interest rates, potentially lowering the per share redemption amount below $10.20[113]. - If the initial business combination is not completed by June 14, 2023, public stockholders may receive only $10.20 per share upon redemption, or potentially less[77]. - The Trust Account funds may be subject to claims from creditors, which could reduce the per share amount available to public stockholders[128]. - The sponsor is liable if claims reduce the Trust Account amount below $10.20 per public share, but there is no guarantee the sponsor can fulfill this obligation[120]. - The Trust Account will only release funds under specified circumstances, ensuring protection for public stockholders[212]. Business Combination Strategy - The company is focused on acquiring a financial services software or FinTech partner with revenues between $50 million and $100 million and a valuation of $1 billion to $2 billion[21]. - The acquisition process will involve extensive due diligence, including commercial and industry assessments, management meetings, and financial reviews[30]. - The company aims to complete its initial business combination with a target business that has a fair market value equal to at least 80% of the net assets held in the trust account[31]. - The management team will seek companies with a competitive advantage, promising financial models, and experienced management teams[22][23][24]. - The company plans to focus on businesses in growing industries with favorable dynamics and potential for consolidation[25]. - The initial business combination may involve acquiring less than 100% of the target business, but the post-transaction company must own at least 50% of the voting securities[34]. - The company may seek additional funds through equity or debt offerings in connection with the completion of its initial business combination[36]. - The company may depend on loans from its management team or sponsor to fund its search for a target business if funds outside the Trust Account are insufficient[66]. - The company may not be able to complete its initial business combination if the securities in the Trust Account bear a negative rate of interest, reducing the per share redemption amount[66]. - The company may pursue multiple business combinations simultaneously, which could increase costs and risks, negatively impacting financial results[203]. Competition and Market Conditions - The company faces intense competition from other entities seeking similar business combinations, which may limit its ability to acquire larger target businesses[54]. - The ongoing geopolitical tensions, particularly due to the invasion of Ukraine, could adversely affect the company's search for a business combination and the operations of potential target businesses[79]. - The COVID-19 pandemic has previously impacted global economies and could hinder the ability to complete a business combination if travel restrictions or economic downturns persist[82]. - Increased competition among special purpose acquisition companies (SPACs) may make it more challenging to find attractive targets, potentially increasing costs or delaying business combinations[86]. - The market for directors and officers liability insurance has become less favorable, which could complicate negotiations for completing an initial business combination[89]. - The company may face challenges in finding attractive business combination targets due to increased competition from other special purpose acquisition companies[61]. Financial Condition and Reporting - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements for up to five years post-IPO[50]. - The company is also a "smaller reporting company," which allows for reduced disclosure obligations, including only two years of audited financial statements[53]. - As of December 31, 2022, the company had $50,858 in cash held outside the Trust Account and a working capital deficit of $929,527[66]. - The company has no operating history and no revenues, making it difficult to evaluate its ability to achieve business objectives[64]. - The company expects to incur significant costs in pursuit of acquisition plans, which may require additional loans from affiliates[109]. - The company may incur substantial debt to complete the initial business combination, which could adversely affect leverage, liquidity, and financial condition[197]. Governance and Management - The company currently has one officer and does not plan to hire full-time employees before completing the initial business combination[58]. - The company identified a material weakness in its internal control over financial reporting, which could lead to misstatements in financial statements[66]. - The company's sponsor, officers, and directors may vote in favor of the initial business combination, potentially influencing the outcome despite public stockholder votes[68]. - The management team may face conflicts of interest due to their involvement in other business activities, potentially impacting the ability to complete the initial business combination[172]. - The company has not adopted a policy to prevent its sponsor, officers, or directors from having financial interests in other entities, which may lead to conflicts of interest[189]. - The unexpected loss of key personnel could have a detrimental effect on the company, as operations depend on a relatively small group of individuals[174]. - The company does not have employment agreements or key-man insurance for its officers and directors, which could pose risks if key personnel depart[174]. Regulatory and Compliance Issues - The company is required to file regular reports with the SEC, including Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q[46]. - The SEC proposed new rules for special purpose acquisition companies (SPACs) that would require them to complete initial business combinations within 24 months of their IPO registration statement effective date[132]. - If a SPAC fails to complete its business combination within the specified timeframe, it may be deemed an unregistered investment company, potentially leading to liquidation[133]. - Changes in laws or regulations could materially affect the company's ability to negotiate and complete its initial business combination[135]. - The SEC's proposed rules may impose additional disclosure requirements and amend financial statement requirements for SPACs, but the timeline for adoption remains uncertain[137]. Stockholder Rights and Redemption - Redemption rights are limited to a maximum of 15% of public shares for stockholders acting in concert without prior consent[43]. - If too many public stockholders exercise their redemption rights, the company may not meet closing conditions for a business combination, potentially limiting its options[72]. - The company must complete its initial business combination by June 14, 2023, or it will cease operations and redeem public shares at approximately $10.20 per share[61]. - The company must redeem 100% of public shares if the initial business combination is not completed by June 14, 2023, or during any Extension Period[213]. - Stockholders may pursue remedies for breaches of the amended and restated certificate of incorporation, but must do so through derivative actions[213]. - The company has established a framework to ensure that public stockholders have rights to redeem their shares in connection with initial business combinations[213].