IPO and Trust Account - The company completed its initial public offering on October 29, 2021, raising gross proceeds of $230 million from the sale of 23 million units at $10.00 per unit[21]. - A total of $234.6 million from the IPO proceeds and private warrants sale was placed in a trust account[22]. - As of January 30, 2023, the company had approximately $56.7 million remaining in its trust account after redemptions totaling approximately $181.9 million[24]. - The estimated per-share redemption amount for shareholders is $10.38 as of January 27, 2023, which may be less than the initial $10.20 per share deposited in the Trust Account[55]. - The TKB Sponsor will be liable if claims reduce the Trust Account funds below $10.20 per public share, but this liability does not apply to claims from parties who executed waivers[56]. - If the Trust Account proceeds fall below $10.20 per public share, shareholders may not receive the expected redemption amount[57]. - The company aims to have vendors and service providers waive claims to the Trust Account funds, but there is no guarantee that all will comply[58]. - In the event of bankruptcy, the Trust Account funds may be subject to claims from creditors, potentially reducing the amount returned to shareholders[59]. - Shareholders can only access Trust Account funds under specific conditions, such as failing to complete the initial business combination within the Combination Period[60]. - The estimated redemption price for public shares is approximately $10.38 per share as of January 27, 2023[93]. - If the initial business combination is not completed, public shareholders may only receive their pro rata portion of the funds in the Trust Account, and warrants will expire worthless[98]. Business Combination with Wejo - The proposed business combination with Wejo is expected to close in the second quarter of 2023, subject to shareholder approvals and other customary conditions[28]. - Wejo provides software and technology solutions utilizing high-value datasets, primarily in North America and Europe, targeting various sectors including automotive and transportation[29]. - The business combination agreement includes a floating exchange ratio for TKB Class A Shares, with a maximum price of $3.00 and a minimum price of $0.50 for Wejo shares[32]. - The proposed business combination with Wejo is subject to shareholder approval, and public shareholders will have redemption rights upon completion[48]. - The proposed Business Combination with Wejo does not include a minimum cash condition, but high redemption rates could jeopardize the transaction's success[87]. - If too many public shareholders exercise their redemption rights, TKB may not meet closing conditions for the business combination[84]. - The company intends to complete the proposed Business Combination with Wejo but may pursue multiple targets if the initial combination fails, increasing complexity and costs[130]. - The company has obtained a fairness opinion for the proposed Business Combination with Wejo, but is not required to obtain one for alternate transactions[125]. - If the initial business combination with Wejo is not completed, public shareholders may only receive their pro rata share of the Trust Account funds, and warrants may expire worthless[158]. Shareholder Rights and Approvals - TKB shareholders approved an extension to complete the business combination until June 29, 2023, with 17,533,296 public shares redeemed for approximately $181.9 million[49]. - TKB's Articles restrict public shareholders from seeking redemption rights for more than 15% of shares sold in the initial public offering without prior consent[48]. - TKB's initial shareholders own approximately 51% of the issued and outstanding ordinary shares, allowing them to approve business combinations even without public shareholder support[80]. - Amendments to TKB's Articles require a two-thirds majority vote or unanimous written resolution, potentially facilitating easier changes compared to other SPACs[139]. - TKB's initial shareholders may participate in votes to amend Articles, potentially impacting shareholder rights[140]. - Any amendments to agreements related to the initial public offering can be made without shareholder approval, which may affect investor interests[143]. Financial and Operational Risks - TKB evaluated over 350 potential target businesses, including Wejo, conducting thorough due diligence reviews[41]. - The company faces potential litigation risks due to the identified material weaknesses and the restatement of financial results[76]. - The company is actively working on remediation measures for its internal control weaknesses, but these may be time-consuming and costly[72]. - The management's ability to assess the target business's management may be limited, potentially leading to a post-combination business lacking necessary skills[164]. - The company may incur substantial debt to complete the business combination, which could adversely affect its leverage and financial condition[126]. - The company may face competition from other entities for business combination opportunities, which could limit its ability to complete a deal[99]. - The company may face risks if it completes a business combination with a target that does not meet its general criteria and guidelines, potentially leading to shareholder redemption[124]. - The investigation and negotiation for the business combination will require substantial management time and costs, which may not be recoverable if the deal does not proceed[159]. Regulatory and Compliance Issues - The company qualifies as an "emerging growth company," allowing it to take advantage of certain reporting exemptions[64]. - The company is also classified as a "smaller reporting company," which permits reduced disclosure obligations[67]. - Compliance with Sarbanes-Oxley Act requirements may increase costs and complexity in completing the initial business combination[148]. - The SEC has proposed new rules that could increase costs and time for completing the business combination with Wejo[111]. - Changes in laws or regulations could adversely affect the company's ability to complete the proposed business combination[119]. Securities and Share Structure - The company issued 11,500,000 public warrants and 10,750,000 private placement warrants, each exercisable at $11.50 per share[214]. - The company may redeem outstanding public warrants at $0.01 per warrant if the share price exceeds $18.00 for 20 out of 30 trading days[211]. - The company may issue additional TKB Class A Shares or preference shares to complete an alternate initial business combination, which could dilute existing shareholders[203]. - The potential issuance of additional TKB Class A Shares upon warrant exercise could reduce the value of shares issued in a business combination[215]. - The company’s unit structure includes one-half of one warrant, potentially making the units less valuable compared to other SPACs that include a whole warrant[216]. - If the TKB Class A Shares are not registered under the Securities Act, warrant holders may only exercise their warrants on a cashless basis, resulting in fewer shares received[200]. Management and Key Personnel - TKB's management team has over 100 years of combined operating experience and has completed more than 50 global technology transactions[43]. - Key personnel's efforts are crucial for the success of the business combination, and their loss could negatively impact operations and profitability[160]. - Past performance of the management team is not indicative of future success, and reliance on historical performance may be misplaced[173]. - The management team may not be able to maintain control of the target business post-combination, impacting operational success[166]. Miscellaneous - The company may face legal action if the sponsor does not fulfill indemnification obligations, potentially reducing funds available for public shareholders[107]. - The company may abandon efforts to complete the business combination if deemed an investment company, leading to liquidation[117]. - The market for directors' and officers' liability insurance has become less favorable, potentially complicating the negotiation of the business combination[150]. - The company believes it was a PFIC for the taxable year ended December 31, 2022, and may be classified as a PFIC for the current taxable year[193]. - Conflicts of interest may arise due to the personal and financial interests of directors and officers in identifying and selecting a target business[180].
TKB Critical Technologies 1(USCT) - 2022 Q4 - Annual Report