IPO 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[11]. - 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[12]. - As of December 31, 2023, the company had $2,171,553 in cash outside the Trust Account and a working capital deficit of $2,808,465, raising concerns about its ability to continue as a "going concern"[67]. - The Trust Account held $44,709,805 in funds available to complete the initial business combination as of December 31, 2023[190]. - The Trust Account funds may only be invested in direct U.S. Treasury obligations or certain money market funds, which could yield negative interest rates, potentially reducing the per-share redemption amount below $10.20[107]. Business Combination Plans - The company has extended the deadline for its initial business combination to December 14, 2024, allowing for a total of 27 months from the IPO closing date[15][18]. - The company is targeting financial services software or FinTech partners with revenues between $50 million and $100 million and valuations between $1 billion and $2 billion[22]. - The company plans to focus on businesses with competitive advantages, promising financial models, and experienced management teams[23][24][25]. - The acquisition process will involve extensive due diligence, including commercial and industry assessments, management meetings, and financial reviews[32]. - The company anticipates structuring its initial business combination to acquire 100% of the equity interests or assets of the target business, but may also acquire less than 100% under certain conditions[35]. Redemption and Shareholder Rights - Public stockholders will have the opportunity to redeem shares at a price initially anticipated to be $10.20 per share, subject to potential reductions due to creditor claims[38]. - The company aims to limit public stockholders from redeeming more than 15% of their shares without prior consent to prevent large block accumulations[44]. - If the company fails to complete its initial business combination by December 14, 2024, it will cease operations and redeem public shares based on the amount in the Trust Account[45]. - If too many public stockholders exercise their redemption rights, the company may not meet the minimum cash requirements for a business combination, potentially leading to an unsuccessful transaction[74]. - If the initial business combination is not completed by December 14, 2024, public stockholders may receive approximately $10.20 per share or less upon liquidation of the Trust Account[104]. Financial Condition and Risks - The company has no operating history or revenues, making it difficult to evaluate its ability to achieve its business objectives[64]. - The company faces significant competition from other entities seeking business combinations, which may limit its ability to acquire larger target businesses[56]. - The company has identified a material weakness in its internal control over financial reporting, which could lead to misstatements in its financial statements[66]. - The ongoing geopolitical conditions, including the Russia-Ukraine conflict, may adversely affect the company's search for a business combination[67]. - 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]. Governance and Management - The management team believes it is well-suited to identify and execute acquisition opportunities that can generate attractive risk-adjusted returns for shareholders[28]. - The company must ensure that any initial business combination has a fair market value equal to at least 80% of the net assets held in the trust account[33]. - The completion of the initial business combination will require a majority vote from outstanding shares, with sponsors and directors agreeing to vote in favor[42]. - The sponsor, officers, and directors collectively hold approximately 58% of the company's outstanding capital stock, which may facilitate the approval of the initial business combination[69]. - The company is dependent on a small group of officers and directors, and their unexpected departure could adversely affect operations[168]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements for up to five years post-IPO[51]. - The company intends to utilize an extended transition period for complying with new accounting standards, which may affect the comparability of its financial statements[52]. - The SEC's new rules regarding SPACs create uncertainty about the applicability of the Investment Company Act, affecting the company's operations[124]. - Compliance with the new SPAC Rules may increase costs and extend the time required to negotiate and complete an initial business combination[131]. - The company must ensure it does not qualify as an investment company under the Investment Company Act, which could impose burdensome compliance requirements[121]. Potential Conflicts of Interest - The potential for conflicts of interest exists as the company's officers and directors may be involved with other entities engaged in similar business activities[178]. - Key personnel's ability to negotiate employment or consulting agreements with a target business may create conflicts of interest regarding business combination decisions[172]. - The company may pursue business combinations with affiliated entities if deemed in its best interests, despite potential conflicts of interest[183]. - The agreements with the sponsor, officers, and directors do not provide public stockholders with the ability to pursue remedies for breaches, limiting their recourse options[203]. - The company may face challenges in assessing the management of prospective target businesses, which could negatively impact post-combination operations[176]. Share Dilution and Securities - The company may issue additional shares of Class A common stock or preferred stock to complete its initial business combination, which could dilute existing shareholders' interests[162]. - Issuing additional shares may significantly dilute the equity interest of existing investors and could adversely affect prevailing market prices for the company's units, common stock, and/or warrants[164]. - The absence of a specified maximum redemption threshold may allow the company to complete the initial business combination despite substantial stockholder disagreement[198]. - The warrants may become exercisable for a security other than Class A common stock if the company is not the surviving entity in the initial business combination[140]. - If the registration statement for the Class A common stock is not effective within 60 business days post-business combination, warrant holders may exercise their warrants on a cashless basis[141].
Southport Acquisition (PORT) - 2023 Q4 - Annual Report