ShoulderUp Technology Acquisition (SUAC) - 2021 Q4 - Annual Report

Business Combination Approval and Requirements - To approve an initial business combination, the company needs 8,017,040, or 30.25%, of the 26,500,000 public shares to vote in favor[76]. - The company must complete its initial business combination within 18 months after the IPO, or it will cease operations and redeem public shares[85]. - If too many public stockholders exercise their redemption rights, the company may not meet minimum cash requirements for a business combination[78]. - The company may not conduct a stockholder vote for the initial business combination unless required by law or stock exchange rules[75]. - If the initial business combination is unsuccessful, public stockholders may have to wait for liquidation to redeem their shares[80]. - The company will require public stockholders seeking to exercise their redemption rights to submit a written request for redemption two business days prior to the vote[91]. - The company may face increased competition for attractive targets due to the rising number of special purpose acquisition companies, potentially increasing the cost of initial business combinations[95]. - The company may only be able to complete one business combination with the proceeds from the initial public offering, leading to a lack of diversification and increased operational risks[147]. - The company may need to seek additional financing if the cash portion of the purchase price exceeds available funds, which could lead to restructuring or abandonment of the business combination[128]. - The company may face claims from creditors that could deplete the trust account, reducing the per-share amount available to stockholders[110]. Financial Condition and Proceeds - The net proceeds from the initial public offering and the sale of private placement units amount to $296,475,000, available for completing the initial business combination after accounting for $11,200,000 in deferred underwriting commissions[147]. - Only $1,675,000 of the net proceeds from the initial public offering and the sale of private placement units will be available outside the trust account for working capital requirements[101]. - If the offering expenses exceed the estimated $525,000, the amount available outside the trust account will decrease correspondingly[102]. - The company has used $227,836 of the net proceeds from the IPO and the private placement for general and administrative expenses and franchise taxes[230]. - The company reported a net loss of approximately $224,668 for the period from May 20, 2021 (inception) through December 31, 2021, primarily due to general and administrative expenses of approximately $103,950 and franchise tax expense of approximately $123,886[239][263]. - As of December 31, 2021, the company had total assets of approximately $307.3 million, including $306 million held in the Trust Account and $1.7 million available for working capital purposes[259][241]. - The company had current liabilities totaling approximately $452,636, which included accounts payable of $304,778 and franchise tax payable of $123,886[259]. - The company has alleviated substantial doubt about its ability to continue as a going concern, with sufficient working capital and borrowing capacity to meet its needs through the consummation of a business combination or one year from the filing date[243]. - The company has classified all public shares outside of permanent equity due to the redemption feature associated with the Class A common stock[245]. - The total cash used in operating activities amounted to $593,295[267]. Risks and Challenges - The company may face challenges in finding a suitable target business due to market conditions and the COVID-19 pandemic[86]. - The ability of public stockholders to redeem shares for cash may deter potential business combination targets[78]. - The company may incur substantial debt to complete a business combination, which could adversely affect its leverage and financial condition, impacting stockholder investment value[144]. - The company may pursue business combinations with early-stage or financially unstable entities, which could lead to volatile revenues and challenges in retaining key personnel[118]. - The company may experience conflicts of interest if key personnel negotiate employment agreements tied to the business combination[135]. - The unexpected loss of key personnel could negatively impact the operations and profitability of the post-combination business[156]. - The company may face additional risks associated with cross-border business combinations, including regulatory approvals and currency fluctuations[140]. - The company may face risks related to technology and cybersecurity businesses if it completes a business combination in that sector[211]. Stockholder Rights and Interests - Initial stockholders own approximately 28% of the outstanding common stock immediately following the IPO, which may influence the approval of business combinations[76]. - Purchases of shares by initial stockholders or affiliates may influence the outcome of the business combination vote and reduce public float[88]. - Stockholders may be held liable for claims by third parties to the extent of distributions received upon redemption of their shares[111]. - The company does not intend to comply with certain Delaware corporate governance procedures, which may expose stockholders to additional liabilities[112]. - The nominal purchase price for founder shares was $25,000, resulting in a per share price of approximately $0.00239234, which may significantly dilute the implied value of public shares if an initial business combination is consummated[157]. - The company’s founder shares will convert into Class A Common Stock on a one-for-one basis upon the initial business combination, subject to adjustments[180]. - Stockholders holding more than 15% of Class A Common Stock may lose the ability to redeem shares in excess of that percentage without prior consent[173]. Regulatory and Compliance Issues - The company is exempt from certain SEC rules protecting investors in blank check companies due to having net tangible assets exceeding $5,000,000[94]. - The company is subject to various laws and regulations, and failure to comply could adversely affect its ability to complete the initial business combination[210]. - The Sarbanes-Oxley Act compliance obligations may increase the time and costs associated with completing an initial business combination[121]. - If the company is deemed an investment company under the Investment Company Act, it may face burdensome compliance requirements that could hinder its ability to complete a business combination[171]. - Compliance with federal proxy rules may limit the pool of potential target businesses due to the requirement for historical and pro forma financial statements[120]. Share Structure and Securities - The company has authorized the issuance of up to 300,000,000 shares of Class A Common Stock, with 268,650,000 shares available for issuance[178]. - The company may issue additional shares of Class A Common Stock or preferred stock to complete its initial business combination, which could dilute existing stockholders' interests[177]. - The company issued warrants to purchase 15,000,000 shares of Class A Common Stock as part of the initial public offering, along with 1,350,000 private placement units at a price of $10.00 per unit, totaling $13,500,000[192]. - Each private placement warrant is exercisable to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustments[192]. - The company has established a unit structure where each unit contains one-half of one warrant, which may result in the units being worth less than those of other SPACs that include a whole warrant[194]. - The registration rights granted to initial stockholders may adversely affect the market price of Class A Common Stock and complicate the completion of the initial business combination[197]. Operational History and Future Plans - The company is a blank check company with no operating history or revenues, and it will not commence operations until obtaining funding through the initial public offering[206]. - The initial public offering (IPO) generated gross proceeds of $300 million from the sale of 30,000,000 units at a price of $10.00 per unit[234]. - Following the IPO, $306,000,000 was deposited into the Trust Account, with $1,656,890 held outside for working capital purposes[228][231]. - The company has not paid any cash dividends to date and does not intend to do so prior to completing its initial business combination[224]. - The company has not selected any specific Business Combination target as of the reporting date[269]. - The company will not generate operating revenues until after completing its initial Business Combination[270]. - The fiscal year end for the company is December 31[270].