Business Combination Requirements - The Business Combination Agreement requires a minimum cash and cash equivalents of $6 million at closing, including cash in the trust account and proceeds from financing after deducting transaction expenses[66]. - The company must complete its initial business combination by May 19, 2024, which may limit the time available for due diligence and negotiations with potential target businesses[69]. - The company must complete its initial business combination by May 19, 2024, or during any extension period, or it will cease operations and redeem public shares[96]. - The company has a minimum cash requirement at closing for the business combination, increasing the risk of an unsuccessful transaction[95]. - The Business Combination Agreement requires a minimum of $6 million in cash and cash equivalents at closing, with liabilities not exceeding $250,000[196]. - The company may need to seek additional financing if trust account proceeds are insufficient to complete the initial Business Combination[196]. Stockholder Dynamics - The company’s public stockholders may not have the opportunity to vote on the proposed initial business combination, as initial stockholders have agreed to vote in favor regardless of public stockholder sentiment[63]. - Initial stockholders own approximately 28% of the outstanding common stock, which may influence the likelihood of receiving requisite stockholder approval for the business combination[90]. - The company’s initial stockholders control approximately 28% of the common stock, which may influence actions requiring stockholder votes[194]. - Stockholders are restricted from seeking redemption rights for more than 15% of the shares sold in the initial public offering without prior consent, which may limit their influence[229]. Financial Considerations - The company has raised $165 million through a PIPE transaction to support its business combination with Heliogen, Inc., a provider of AI-enabled concentrated solar power[37]. - The net proceeds from the initial public offering and private placement units will provide only $1,675,000 available outside the trust account for working capital requirements[140]. - The company may incur substantial debt to complete the initial business combination, which could negatively impact cash flow and limit funds available for dividends and other corporate purposes[178][180]. - If the company fails to complete its initial business combination, public stockholders may only receive an estimated $10.20 per share upon redemption[112]. - There is a risk that third-party claims could reduce the funds available for initial business combinations and redemptions below $10.20 per share[119]. Management and Operational Risks - The company has a strong management team with experience in sourcing, structuring, acquiring, and selling businesses, which is expected to facilitate successful business combinations[46]. - The company’s management team has a track record of driving growth and profitability, which is a key criterion for evaluating potential business combinations[42]. - The management team has extensive experience in identifying strategic investments globally, but risks inherent in potential business combinations may not be fully assessed[127]. - Key personnel's retention post-business combination is uncertain, which could impact operations and profitability[215]. - The company may not hold a stockholder vote for the initial business combination unless required by law or stock exchange rules, allowing for potential completion without majority public approval[89]. Regulatory and Compliance Issues - The company is exempt from certain SEC rules for blank check companies due to having net tangible assets exceeding $5 million upon IPO completion[78]. - The company is not required to obtain an independent opinion for business combinations with affiliated entities, which may affect the perceived fairness of such transactions[44]. - The company is not required to obtain an independent valuation for business combinations, which may leave stockholders without assurance of fair pricing[131]. - If deemed an investment company under the Investment Company Act, the company may face burdensome compliance requirements that could hinder its ability to complete a business combination[226]. - The company may face regulatory issues if key personnel are not familiar with U.S. securities laws, which could adversely affect operations[177]. Market and Competitive Landscape - The company may face challenges in completing a desirable business combination due to market conditions and the need for third-party financing if redemption requests exceed expectations[67]. - The company may face increased competition for attractive targets as the number of special purpose acquisition companies rises[79]. - The competition for attractive business combination targets has increased, potentially complicating the completion of initial business combinations[109]. - The ability of public stockholders to redeem shares for cash may deter potential business combination targets, complicating the completion of the business combination[92]. Internal Control and Reporting Issues - The company has identified a material weakness in internal controls related to reporting period closing, which could lead to an understatement of liabilities[114]. - As of December 31, 2023, the company's internal controls over financial reporting were deemed ineffective due to identified material weaknesses[114]. - The company has identified material weaknesses in its internal controls over financial reporting, which could adversely affect its ability to report results accurately and timely[141]. - As of December 31, 2023, there is a material weakness related to compliance with the Trust Agreement regarding the use of funds withdrawn from the Trust Account for tax liabilities[142]. Miscellaneous Risks - The company may face challenges in obtaining sufficient liability insurance for directors and officers, which could impact the ability to complete business combinations[107]. - The company may face conflicts of interest due to its officers and directors having obligations to other entities, which could affect the selection of business combination targets[191]. - The underwriter may have conflicts of interest due to financial interests tied to the consummation of a business combination[214]. - The company may seek business combination opportunities in industries outside of its management's areas of expertise, which could pose additional risks[156]. - The company may seek business combination opportunities with early-stage or financially unstable businesses, which could lead to volatile financial performance[130].
ShoulderUp Technology Acquisition (SUAC) - 2023 Q4 - Annual Report