IPO and Fundraising - The company completed its initial public offering on February 15, 2022, raising gross proceeds of $143.75 million from the sale of 14,375,000 units at $10.00 per unit[31]. - An additional private sale of 653,750 units generated gross proceeds of $6.54 million, bringing total funds placed in the trust account to $146.63 million[32][33]. - A total of $146,625,000 from the IPO proceeds was placed in a trust account, which may only be invested in U.S. government securities or money market funds[143]. - The company has $141,593,750 available for an initial business combination after a business combination fee of $5,031,250, assuming no redemptions[62]. - The company has approximately $1,565,000 held outside the trust account to cover potential claims and expenses related to liquidation, with estimated costs not exceeding $100,000[112]. Business Strategy and Target Markets - The company aims to identify a target business in the cannabis industry with an enterprise value between $500 million and $1 billion, focusing on fast-growing markets and strong revenue drivers[41]. - The company is exploring business combinations not only in the cannabis sector but also in related industries such as health & wellness, technology, and consumer packaged goods[21][35]. - The cannabis industry is experiencing rapid growth, with full federal legalization in Canada and 36 U.S. states allowing legal use, creating significant investment opportunities[22]. - The cannabis industry is projected to continue growing rapidly, driven by evolving public perception and increasing demand for therapeutic applications[30]. - The company is focused on acquiring businesses that are compliant with applicable laws and regulations, particularly in the cannabis sector[23][35]. Acquisition and Due Diligence - The management team is leveraging extensive industry relationships to identify potential acquisition targets, aiming to provide operational and financial expertise to support growth[37][36]. - The management team will conduct thorough due diligence, including financial data review and discussions with management and customers[47]. - The company aims to acquire target companies at attractive prices relative to their intrinsic value, considering future cash flow potential and industry valuation metrics[48]. - The company will evaluate opportunities for follow-on strategic acquisitions and divestitures to enhance stockholder value[49]. - The company must complete one or more business combinations with an aggregate fair market value of at least 80% of the assets held in the trust account at the time of signing a definitive agreement[70]. Business Combination Timeline and Conditions - The company must complete its initial business combination by February 15, 2023, with a possible extension to August 15, 2023[34]. - The company can extend the time to consummate a business combination up to 18 months by depositing $1,437,500 for each three-month extension[1]. - The company intends to structure its initial business combination to acquire 100% of the equity interests or assets of the target business[1]. - The company will only complete an initial business combination in which it owns or acquires 50% or more of the outstanding voting securities of the target[71]. - If the initial business combination is not completed by February 15, 2023, or August 15, 2023 (if extended), the company will redeem public shares at a per-share price based on the trust account balance, estimated to be approximately $10.20 per share[108]. Stockholder Rights and Redemption - Public stockholders will have the opportunity to redeem shares of Class A common stock at a per-share price of $10.20 upon completion of the initial business combination[86]. - The redemption offer will remain open for at least 20 business days, and the completion of the initial business combination will be conditioned on public stockholders not tendering more than a specified number of public shares[89]. - A public stockholder can only seek redemption rights for a maximum of 15% of the shares sold in the initial public offering, which is intended to discourage large block accumulations[96]. - If stockholder approval is required, the initial business combination will only be completed if a majority of the outstanding shares voted are in favor[91]. - The company must maintain net tangible assets of at least $5,000,001 after redemptions to avoid being subject to SEC's "penny stock" rules[92]. Financial Performance and Reporting - The company reported a net loss of $7,102 for the period from April 13, 2021, through December 31, 2021, with formation and operating costs of $5,597[149]. - As of December 31, 2021, the company had $42,194 in cash and a working capital deficit of $168,715[150]. - Transaction costs for the IPO amounted to $3,890,326, including $1,437,500 in underwriting commissions[152]. - The company has not generated any revenues since its inception on April 13, 2021, and has engaged in limited operations[171]. - The company is required to file periodic reports with the SEC, including annual and quarterly reports[121]. Governance and Management - The company has a diverse board of directors with extensive experience in the cannabis industry and corporate governance[183][187][188][189][190]. - The Chief Executive Officer has over 15 years of experience in the legal cannabis sector and has co-founded multiple cannabis-focused companies[183]. - The Chief Financial Officer has over 30 years of experience in investment banking and the cannabis industry, previously leading successful brands[187]. - The audit committee is composed of three independent directors, including Francis Knuettel II, who serves as the chair[194]. - The compensation committee, chaired by Emily Paxhia, is responsible for reviewing and recommending compensation arrangements prior to the initial business combination[199]. Risks and Challenges - The company may face intense competition from other blank check companies and private equity groups in identifying suitable target businesses[119]. - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a going concern if the initial business combination is not completed by February 15, 2023[133]. - The company may not be able to complete its initial business combination within the prescribed time frame, which could adversely affect stockholder returns[127]. - There is no guarantee that third parties will waive claims against the trust account, which could affect the funds available for public stockholders[109]. - The trust account may be subject to bankruptcy claims, potentially affecting the ability to return $10.20 per share to public stockholders[117].
Relativity Acquisition (RACY) - 2021 Q4 - Annual Report