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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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Title of Each Class:
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Trading
Symbol
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Name of Each Exchange
on Which Registered:
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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Page
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4
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20
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52
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52
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52
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52
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53
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53
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54
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54
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58
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58
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59
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60
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60
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61
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68
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69
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70
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73
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73
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75
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• |
“amended and restated certificate of incorporation” are to the amended and restated certificate of incorporation that the company adopted in connection with the consummation of our initial public offering as further amended pursuant to
the vote of our stockholders at the special meeting on February 28, 2023;
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“DGCL” refers to the Delaware General Corporation Law as the same may be amended from time to time;
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“founder shares” are to shares of Class B common stock initially purchased by our sponsor in a private placement prior to our initial public offering and the shares of Class A common stock that will be issued upon the automatic
conversion of the shares of Class B common stock at the time of our initial business combination;
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“initial public offering units” are to our initial public offering units, consisting of one Class A common stock and one-half of one redeemable warrant;
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“initial stockholders” are to holders of our founder shares prior to our initial public offering;
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“management” or our “management team” are to our executive officers and directors;
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“common stock” are to our Class A common stock and our Class B common stock;
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“private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our initial public offering and upon conversion of working capital loans, if any;
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“public shares” are to our Class A common stock sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market);
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“public stockholders” are to the holders of our public shares, including our sponsor and management team, to the extent our sponsor and/or members of our management team purchase public shares, provided that our sponsor’s and each
member of our management team’s status as a “public stockholder” will only exist with respect to such public shares;
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“sponsor” are to Arrowroot Acquisition LLC, a Delaware limited liability company;
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“trust account” is to the trust account located in the United States in which, following the completion of our initial public offering, an amount of $287,500,000 from the net proceeds of the sale of the units in the initial public
offering and the sale of the private placement warrants was placed; and
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“we,” “us,” “our,” “company,” “our company,” “Company” or “our Company” are to Arrowroot Acquisition Corp., a Delaware Corporation.
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we have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective;
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our ability to select an appropriate target business or businesses;
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our ability to complete our initial business combination, including any potential business combination with the Potential Target (as defined below) ;
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our expectations around the performance of the Potential Target’s business or businesses
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our expectations around the performance of a prospective target business or businesses;
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our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
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our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
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the lack of a market for our public securities;
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the possibility that Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions;
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our potential ability to obtain additional financing to complete our initial business combination;
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our pool of prospective target businesses;
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our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic;
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the ability of our officers and directors to generate a number of potential business combination opportunities;
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our public securities’ potential liquidity and trading;
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the use of proceeds not held in the trust account (as described below) or available to us from interest income on the trust account balance;
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the trust account not being subject to claims of third parties;
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our financial performance; or
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the other risks and uncertainties discussed in “Risk Factors” and elsewhere in this Report.
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Item 1. |
Business
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extensive experience in sourcing, structuring, acquiring, operating, integrating, developing, growing, financing and selling businesses;
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experience managing mergers and acquisitions for technology companies, including portfolio companies of leading venture capital and financial sponsor firms;
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significant experience in both investing in and operating companies across the technology sector, with particular expertise focusing on business-to-business software companies implementing Software-as-a-Service (“SaaS:) business
models, setting and changing strategies, optimizing SaaS metrics and other best-in-class business tactics, and identifying, monitoring and recruiting world-class talent;
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deep relationships with sellers, financing providers and target management teams; and
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experience negotiating transactions favorable to investors.
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Compelling growth prospects. We view growth as an important driver of value and will seek companies whose growth potential can generate meaningful upside.
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Large and growing markets. We will focus on investments in rapidly growing companies in industry segments that we believe demonstrate attractive long-term growth prospects and reasonable overall
size or potential.
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Businesses with attractive unit economics and high operating leverage. We will seek to invest in companies that we believe possess not only established business models and sustainable competitive
advantages, but also inherently attractive unit economics and other relevant SaaS operating metrics.
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Strong management teams. We will spend significant time assessing a company’s leadership and personnel and evaluating what we can do to augment and/or upgrade the team over time if needed.
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Opportunity for operational improvements. We will seek to identify businesses that are capital efficient and would benefit from our ability to drive improvements in the company’s processes,
go-to-market strategy, product or service offering, sales and marketing efforts, geographical presence and/or leadership team.
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Differentiated products or services. We will evaluate metrics such as recurring revenues, product life cycle, cohort consistency, pricing per product or customer, cross-sell success and churn
rates to focus on businesses whose products or services are differentiated or where we see an opportunity to create value by implementing best practices.
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Limited technology risk. We will seek to invest in companies that have established market-tested product or service offerings.
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Appropriate valuations. We will seek to be a disciplined and valuation-centric investor that will invest on terms that we believe provide significant upside potential with limited downside risk.
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination; and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Type of Transaction
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Whether Stockholder
Approval Is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding;
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any of our officers, directors or substantial security holders (as defined by the Nasdaq rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired or otherwise, and the present or
potential issuance of common stock could result in an increase in issued and outstanding common stock or voting power of 1% or more (or 5% or more if the related party involved is classified as such solely because such person is a
substantial security holder); or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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If we hold a stockholder vote to approve our initial business combination, we will, pursuant to our amended and restated certificate of incorporation: conduct the redemptions in conjunction with a proxy solicitation pursuant to
Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination, which contain substantially the same financial and other information about the initial business combination and the redemption rights as is
required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Item 1A. |
Risk Factors
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We have no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
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Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, since we will cease all operations except for the purpose
of liquidating if we are unable to complete an initial business combination by Extension Date;
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Past performance by our management team or their respective affiliates may not be indicative of future performance of an investment in us.
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Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our
initial business combination even though a majority of our public stockholders do not support such a combination.
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If we seek stockholder approval of our initial business combination, our sponsor and members of our management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
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You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a
loss.
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Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
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The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination
with a target.
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The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
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The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to
wait for liquidation in order to redeem your shares.
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The requirement that we consummate an initial business combination by the Extension Date may give potential target businesses, including the Potential Target, leverage over us in negotiating a business combination and may limit the
time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that
would produce value for our stockholders.
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Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak and the status of debt and equity
markets.
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We may effect our initial business combination with a company located outside of the United States.
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We may not be able to consummate an initial business combination, including any potential business combination with the Potential Target, by the Extension Date, in which case we would cease all operations except for the purpose of
winding up and we would redeem our public shares and liquidate.
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If we seek stockholder approval of our initial business combination, our sponsor, initial stockholders, directors, executive officers and their affiliates may elect to purchase shares or public warrants from public stockholders, which
may influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
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If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock are a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the
secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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longer payment cycles;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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corruption;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks, natural disasters and wars; and
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deterioration of political relations with the United States.
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may significantly dilute the equity interest of our investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A common stock on a greater than one-to-one
basis upon conversion of the Class B common stock;
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may subordinate the rights of holders of Class A common stock if preference shares are issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or
removal of our present officers and directors;
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may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants; and
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may not result in adjustment to the exercise price of our warrants.
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver
or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other
general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who
have less debt.
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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Item 1B. |
Unresolved Staff Comments
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Item 2. |
Properties
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Item 3. |
Legal Proceedings
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Item 4. |
Mine Safety Disclosures
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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(a) |
Market Information
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(b) |
Holders
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(c) |
Dividends
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(d) |
Securities Authorized for Issuance Under Equity Compensation Plans
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(e) |
Performance Graph
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(f) |
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings.
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(g) |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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Item 6. |
[Reserved]
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Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk
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Item 8. |
Financial Statements and Supplementary Data
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A. |
Controls and Procedures.
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(1)
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pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,
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(2)
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provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only
in accordance with authorizations of our management and directors, and
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(3)
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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
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Item 9B. |
Other Information
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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Item 10. |
Directors, Executive Officers and Corporate Governance
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Name
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Age
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Position
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Matthew Safaii
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43
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Chief Executive Officer and Chairman of the Board
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Thomas Olivier
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55
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President, Chief Financial Officer and Vice Chairman of the Board
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Dixon Doll
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80
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Director
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Will Semple
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45
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Director
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Peter Kuper
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53
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Director
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• |
the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by us;
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pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and
procedures;
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reviewing and discussing with the independent registered public accounting firm all relationships the auditors have with us in order to evaluate their continued independence;
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setting clear hiring policies for employees or former employees of the independent registered public accounting firm;
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setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
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obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most
recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried
out by the firm and any steps taken to deal with such issues;
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reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
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reviewing with management, the independent registered public account firm and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any
employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards
Board, the SEC or other regulatory authorities.
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation evaluating our Chief Executive Officer’s performance in light of such goals and objectives and
determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
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reviewing and making recommendations to our board of directors with respect to the compensation, and any incentive compensation and equity based plans that are subject to board approval of all of our other officers;
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reviewing our executive compensation policies and plans;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and
determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
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reviewing and approving on an annual basis the compensation of all of our other officers;
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• |
reviewing on an annual basis our executive compensation policies and plans;
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• |
assisting management in complying with our proxy statement and annual report disclosure requirements;
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• |
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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• |
if required, producing a report on executive compensation to be included in our annual proxy statement; and
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• |
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
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• |
the corporation could financially undertake the opportunity;
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• |
the opportunity is within the corporation’s line of business; and
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• |
it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.
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Individual
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Entity
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Entity’s Business
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Affiliation
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|||
Matthew Safaii
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Arrowroot Capital Management, LLC
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Investment Management
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Managing Partner and Founder
|
|||
SnapLogic, Inc.
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Cloud Computing
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Director
|
||||
MedNet Solutions, Inc.
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Healthcare Technology
|
Director
|
||||
Cygilant, Inc.
|
Cybersecurity Software
|
Director
|
||||
Zift Channel Solutions, Inc.
|
Marketing Software
|
Director
|
||||
SponsorHouse, Inc. (d/b/a Hookit)
|
Sponsorship Analytics
|
Director
|
||||
Leadspace Ltd.
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Marketing Software
|
Director
|
||||
BryterCX Holdings, Inc.
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CRM Software
|
Director
|
||||
Hammer Technologies Holdings Pty Limited
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Risk Management Software
|
Director
|
||||
Clickatell Corp
|
IT Services and Consulting
|
Director
|
||||
Engage3, Inc.
|
IT Services and Consulting
|
Director
|
||||
Thomas Olivier
|
Arrowroot Capital Management, LLC
|
Investment Management
|
Managing Director
|
|||
Brain Scientific Inc.
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Medical Device and Software
|
Director
|
||||
Mad Mobile, Inc.
|
Hospitality Technology Solutions
|
Director
|
||||
Dixon Doll
|
Roman DBDR Tech Acquisition Corp.
|
Special Purpose Acquisition Company
|
Senior Director
|
|||
Prime Impact Acquisition I
|
Special Purpose Acquisition Company
|
Director
|
||||
The Papal Foundation, University of San Francisco
|
Philanthropy
|
Director
|
||||
Asian Art Museum
|
Cultural Institution
|
Director
|
||||
Catholic Investment Services
|
Non-Profit Investment Management
|
Director
|
||||
San Francisco Opera Association
|
Cultural Institution
|
Director
|
||||
University of San Francisco Investment Committee
|
Non-Profit Investment Management
|
Chairman of Investment Committee
|
||||
Amadeus Capital
|
Venture Capital
|
Member, Investment Advisory Board
|
||||
Airlinq Inc.
|
Software Solutions
|
Director
|
||||
Playlist Media, Inc.
|
Music
|
Director
|
||||
CHNL Holdings, Inc.
|
Music
|
Director
|
||||
Will Semple
|
eBAY SARL
|
E-Commerce
|
Director and Board Member
|
|||
Cygilant, Inc.
|
Cybersecurity Software
|
Advisor
|
||||
Peter Kuper
|
HypAdvisor Consulting LLC
|
Technology Consulting
|
Managing Partner
|
|||
Actus Digital
|
Cybersecurity Software
|
Chairman
|
||||
jCyte, Inc.
|
Biotechnology
|
Senior Vice President of Finance and Information Technology
|
• |
Our executive officers and directors are not required to, and will not, commit any specified period of time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a
business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors
for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
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• |
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities or clients of the
other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
|
• |
Our initial stockholders and Peter Kuper have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they hold in connection with
the completion of our initial business combination. The other members of our management team have entered into agreements similar to the one entered into by our initial stockholders with respect to any public shares acquired by them in or
after our initial public offering. Additionally, our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial
business combination within the prescribed time frame or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. If
we do not complete our initial business combination within the prescribed time frame, the private placement warrants will expire worthless. Furthermore, our initial stockholders have agreed not to transfer, assign or sell any of their
founder shares until the earlier to occur of: (i) one year after the completion of our initial business combination and (ii) the date following the completion of our initial business combination on which we complete a liquidation, merger,
capital stock exchange or other similar transaction that results in all of our stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of our
Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least
150 days after our initial business combination, the founder shares will be released from the lockup. Subject to certain limited exceptions, the private placement warrants will not be transferable until 30 days following the completion of
our initial business combination. Because each of our executive officers and director nominees will own common stock or warrants directly or indirectly, they may have a conflict of interest in determining whether a particular target
business is an appropriate business with which to effectuate our initial business combination.
|
• |
Our officers and directors may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial business combination.
|
• |
Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition
to any agreement with respect to our initial business combination.
|
Item 11. |
Executive Compensation
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
• |
each person known by us to be the beneficial owner of more than 5% of our issued and outstanding common stock;
|
• |
each of our executive officers and directors that beneficially owns our common stock; and
|
• |
all our executive officers and directors as a group.
|
Class B Common stock
|
Class A Common stock
|
|||||||||||||||||||
Name of Beneficial Owners(1)
|
Number of
Shares
Beneficially
Owned(2)
|
Approximate
Percentage
of Class
|
Number of
Shares
Beneficially
Owned
|
Approximate
Percentage
of Class
|
Approximate
Percentage of
Voting
Control
|
|||||||||||||||
Arrowroot Acquisition LLC (our sponsor) (our sponsor)(2)
|
7,067,500
|
|
98.33
|
%
|
—
|
—
|
19.67
|
%
|
||||||||||||
Matthew Safaii(3)
|
7,067,500
|
|
98.33
|
%
|
—
|
—
|
19.67
|
%
|
||||||||||||
Thomas Olivier(3)
|
7,067,500
|
|
98.33
|
%
|
—
|
—
|
19.67
|
%
|
||||||||||||
Dixon Doll
|
40,000
|
|
*
|
—
|
—
|
*
|
|
|||||||||||||
Will Semple
|
40,000
|
|
*
|
—
|
—
|
*
|
|
|||||||||||||
Peter Kuper
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
All officers and directors as a group (five individuals)
|
7,187,500
|
|
99.44
|
%
|
—
|
—
|
19.78
|
%
|
||||||||||||
Five Percent Holders
|
||||||||||||||||||||
Saba Capital Management, L.P.(4)
|
—
|
1,595,486
|
5.55
|
%
|
4.44
|
%
|
||||||||||||||
HGC Investment Management Inc.(5)
|
—
|
1,683,927
|
|
5.86
|
%
|
4.69
|
%
|
|||||||||||||
Polar Asset Management Partners Inc.(6)
|
1,451,993
|
|
5.05
|
%
|
4.04
|
%
|
* |
Less than one percent.
|
(1) |
Unless otherwise noted, the business address of each of officer and director beneficial stockholders is 4553 Glencoe Ave, Suite 200, Marina Del Rey, CA 90292.
|
(2) |
The shares reported herein are held in the name of our sponsor. Our sponsor is governed by two managers, Matthew Safaii and Thomas Olivier. As such, Matthew Safaii and Thomas Olivier have voting and investment discretion with respect
to the Class B common stock held of record by our sponsor and may be deemed to have shared beneficial ownership of the Class B common stock held directly by our sponsor.
|
(3) |
Does not include any shares indirectly owned by this individual as a result of his ownership interest in our sponsor.
|
(4) |
Based solely on Schedule 13G/A jointly filed with the SEC on February 14, 2023 by Saba Capital Management, L.P., Saba Capital Management GP, LLC and Boaz R. Weinstein (“Saba Capital”). The
address for Saba Capital is 405 Lexington Avenue, 58th Floor, New York, New York 10174.
|
(5) |
Based solely on Schedule 13G filed with the SEC on February 14, 2023 by HGC Investment Management Inc. (“HGC IM”). HGC IM serves as the investment manager to and holds the shares of Class A common stock on behalf of The HGC Fund LP.
The address for HGC IM is 1073 Yonge Street, 2nd Floor, Toronto, Ontario M4W 2L2, Canada.
|
(6) |
Based solely on Schedule 13G filed with the SEC on February 9, 2023 by Polar Asset Management Partners Inc. (“Polar”). HGC IM serves as the investment manager to and holds the shares of Class
A common stock on behalf of Polar Multi-Strategy Master Fund. The address for Polar is 16 York Street, Suite 2900, Toronto, ON, Canada M5J 0E6.
|
Item 13. |
Certain Relationships and Related Transactions, and Director Independence
|
• |
Payment to our sponsor of $20,000 per month for office space, secretarial and administrative services provided to members of our management team;
|
• |
Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination; and
|
• |
Repayment of non-interest bearing loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination.
Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except
for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Our audit committee will review on a quarterly basis all payments that were made to our sponsor,
officers or directors, or our or their affiliates.
|
(a) |
The following documents are filed as part of this Form 10-K:
|
(1) |
Financial Statements:
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Balance Sheets
|
F-3
|
Statements of Operations
|
F-4
|
Statements of Changes in Stockholders’ Deficit
|
F-5
|
Statements of Cash Flows
|
F-6
|
Notes to Financial Statements
|
F-7
|
(2) |
Financial Statement Schedules:
|
(3) |
Exhibits
|
Exhibit No.
|
Description
|
|
Amended and Restated Certificate of Incorporation.(1)
|
||
Amendment to Amended and Restated Certificate of Incorporation(5)
|
||
Bylaws.(2)
|
||
Specimen Unit Certificate.(2)
|
||
Specimen Class A Common Stock Certificate.(2)
|
||
Specimen Warrant Certificate.(2)
|
||
Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.(1)
|
||
Description of Registrant’s Securities
|
||
Letter Agreement among the Registrant, the Sponsor and each of the executive officers and directors of the Registrant.
|
||
Investment Management Trust Agreement between the Sponsor and the Registrant.(1)
|
||
Registration Rights Agreement among the Registrant, the Sponsor and the Holders signatory thereto.(1)
|
||
Private Placement Warrants Purchase Agreement between the Registrant and the Sponsor.(1)
|
||
Indemnity Agreement.(1)
|
||
First Promissory Note issued to the Sponsor, dated December 21, 2020.(2)
|
||
Convertible Promissory Note issued to the Sponsor, dated December 29, 2021.(3)
|
||
Promissory Note issued to the Sponsor, dated February 23, 2023.(4)
|
||
Securities Subscription Agreement between the Registrant and the Sponsor.(2)
|
||
Form of Administrative Services Agreement between the Registrant and the Sponsor.(2)
|
||
Code of Ethics(2)
|
||
Power of Attorney (Included under signatures)
|
||
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley
Act of 2002.
|
||
Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes Oxley Act of 2002.
|
Exhibit No. | Description |
Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
|
||
Certification of the Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
|
||
101.INS*
|
Inline XBRL Instance Document
|
|
101.SCH*
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL*
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF*
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB*
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE*
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104*
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
* |
Filed herewith.
|
** |
Furnished herewith.
|
(1) |
Previously filed as an exhibit to our Current Report on Form 8-K filed on March 5, 2021 and incorporated by reference herein.
|
(2) |
Incorporated by reference to the registrant’s Form S-1, filed with the SEC on February 24, 2021.
|
(3) |
Previously filed as an exhibit to our Current Report on Form 8-K filed on December 30, 2021 and incorporated by reference herein.
|
(4) |
Previously filed as an exhibit to our Current Report on Form 8-K filed on February 23, 2023 and incorporated by reference herein.
|
(5)
|
Previously filed as an exhibit to our Current Report on Form 8-K filed on March 6, 2023 and incorporated by reference herein.
|
Item 16. |
Form 10-K Summary
|
March 31, 2023
|
|
ARROWROOT ACQUISITION CORP.
|
|
/s/ Matthew Safaii
|
|
Name: Matthew Safaii
|
|
Title: Chief Executive Officer
|
Name
|
Position
|
Date
|
||
/s/ Matthew Safaii
|
Chief Executive Officer
|
March 31, 2023
|
||
Matthew Safaii
|
(Principal Executive Officer)
|
|||
/s/ Thomas Olivier
|
President and Chief Financial Officer
|
March 31, 2023
|
||
Thomas Olivier
|
(Principal Financial and Accounting Officer)
|
|||
/s/ Dixon Doll
|
Director
|
March 31, 2023
|
||
Dixon Doll
|
||||
/s/ Will Semple
|
Director
|
March 31, 2023
|
||
Will Semple
|
||||
/s/ Peter Kuper
|
Director
|
March 31, 2023
|
||
Peter Kuper
|
Report of Independent Registered Public Accounting Firm (PCAOB ID Number )
|
F-2
|
|
Financial Statements:
|
||
F-3
|
||
F-4
|
||
F-5
|
||
F-6
|
||
F-7 to F-22
|
|
December 31,
2022
|
December 31,
2021
|
||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash
|
$
|
|
$
|
|
||||
Prepaid expenses
|
|
|
||||||
Total Current Assets
|
|
|
||||||
Cash and investments held in trust account
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
|
$
|
|
||||
Income tax payable
|
|
|
||||||
Convertible promissory note - related party
|
|
|
||||||
Total Current Liabilities
|
|
|
||||||
Deferred underwriting fee payable
|
|
|
||||||
Warrant liabilities
|
|
|
||||||
Total Liabilities
|
|
|
||||||
Commitments and Contingencies
|
||||||||
Class A common stock subject to possible redemption, $
|
|
|
||||||
Stockholders’ Deficit
|
||||||||
Preferred stock, $
|
|
|
||||||
Class A common stock, $
|
|
|
||||||
Class B common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total Stockholders’ Deficit
|
(
|
)
|
(
|
)
|
||||
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
|
$
|
|
$
|
|
|
Year Ended
December 31,
2022
|
Year Ended
December 31,2021
|
||||||
General and administrative expenses
|
$
|
|
$
|
|
||||
Loss from operations
|
(
|
)
|
(
|
)
|
||||
Other income:
|
||||||||
Change in fair value of warrant liabilities
|
|
|
||||||
Interest earned on Marketable securities held in Trust Account
|
|
|
||||||
Total other income
|
|
|
||||||
Income before provision for income taxes
|
||||||||
Provision for income taxes
|
( |
) | ||||||
Net income
|
$
|
|
$
|
|
||||
|
||||||||
Weighted average shares outstanding, Class A common stock
|
|
|
||||||
Basic and diluted net income per share, Class A common stock
|
$
|
|
$
|
|
||||
Basic Weighted average shares outstanding, Class B common stock
|
|
|
||||||
Basic net income per common share, Class B common stock
|
$ |
$
|
||||||
Diluted Weighted average shares outstanding of Class B common stock
|
|
|
||||||
Diluted net income per share, Class B common stock
|
$
|
|
$
|
|
|
Class A Common Stock
|
Class B Common Stock
|
Additional Paid-in | Accumulated | Total Stockholders Equity | |||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
(Deficit)
|
|||||||||||||||||||||
Balance – January 1, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Accretion of Class A common Stock Subject to Redemption
|
—
|
—
|
—
|
—
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Sale of
|
—
|
—
|
—
|
—
|
|
|
|
|||||||||||||||||||||
Net income
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||
Balance – December 31, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||||
Accretion of Class A common Stock Subject to Redemption
|
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||||
Balance – December 31, 2022
|
$ |
$ |
$ |
$ |
( |
) | $ |
( |
) |
|
Year Ended
December 31,
2022
|
Year Ended
December 31,
2021
|
||||||
Cash Flows from Operating Activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Interest earned on marketable securities held in Trust Account
|
(
|
)
|
(
|
)
|
||||
Change in fair value of warrant liabilities
|
(
|
)
|
(
|
)
|
||||
Transaction costs allocable to warrant liabilities
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses
|
|
(
|
)
|
|||||
Accrued expenses
|
(
|
)
|
|
|||||
Income taxes payable
|
||||||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Investment of cash in Trust Account
|
|
(
|
)
|
|||||
Cash withdrawn from Trust Account to pay franchise and income taxes
|
||||||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from sale of Units, net of underwriting discounts paid
|
|
|
||||||
Proceeds from sale of Private Placement Warrants
|
|
|
||||||
Proceeds from promissory note – related party
|
|
|
||||||
Repayment of promissory note – related party
|
|
(
|
)
|
|||||
Proceeds from convertible promissory note - related party
|
|
|
||||||
Payment of offering costs
|
|
(
|
)
|
|||||
Net cash provided by financing activities
|
|
|
||||||
Net Change in Cash
|
(
|
)
|
|
|||||
Cash – Beginning
|
|
|
||||||
Cash – Ending
|
$
|
|
$
|
|
||||
Supplementary cash flow information: |
||||||||
Cash paid for income taxes |
$ | $ | ||||||
Non-cash investing and financing activities:
|
||||||||
Deferred underwriting fee payable
|
$
|
|
$
|
|
Gross proceeds
|
$
|
|
||
Less:
|
||||
Proceeds allocated to Public Warrants
|
(
|
)
|
||
Class A common stock issuance costs
|
(
|
)
|
||
Plus:
|
||||
Accretion of carrying value to redemption value
|
|
|||
Class A common stock subject to possible redemption at December 31, 2021
|
$
|
|
||
Plus:
|
||||
Accretion of carrying value to redemption value
|
||||
Class A common stock subject to possible redemption at December 31, 2022
|
$ |
|
Year Ended
December 31, 2022
|
Year Ended
December 31, 2021
|
||||||||||||||
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||
Basic net income per common stock
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Allocation of net income, as adjusted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Denominator:
|
||||||||||||||||
Basic weighted average shares outstanding
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Basic net income per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Year Ended
December 31, 2022
|
Year Ended
December 31, 2021
|
||||||||||||||
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||
Diluted net income per common stock
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Allocation of net income, as adjusted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Denominator:
|
||||||||||||||||
Diluted weighted average shares outstanding
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Diluted net income per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
• |
in whole and not in part;
|
• |
at a price of $
|
• |
upon not less than
|
• |
if, and only if, the closing price of the common stock equals or exceeds $
|
|
December 31,
2022
|
December 31,
2021
|
||||||
Deferred tax asset
|
||||||||
Net operating loss carryforward
|
$
|
|
$
|
|
||||
Startup/Organization Expenses
|
|
|
||||||
Total deferred tax asset
|
|
|
||||||
Valuation allowance
|
(
|
)
|
(
|
)
|
||||
Deferred tax asset, net of allowance
|
$
|
|
$
|
|
|
|
Year ended
December 31,
2022
|
Year ended
December 31,
2021
|
||||||
Federal
|
||||||||
Current
|
$
|
|
$
|
|
||||
Deferred
|
(
|
)
|
(
|
)
|
||||
|
||||||||
State
|
||||||||
Current
|
|
|
||||||
Deferred
|
|
|
||||||
|
||||||||
Change in valuation allowance
|
|
|
||||||
Income tax provision
|
$
|
|
$
|
|
|
December 31,
2022
|
December 31,
2021
|
||||||
|
||||||||
Statutory federal income tax rate
|
|
%
|
|
%
|
||||
State taxes, net of federal tax benefit
|
|
%
|
|
%
|
||||
Change in fair value of warrant liabilities
|
(
|
)%
|
(
|
)%
|
||||
Transaction costs allocable to warrant liabilities
|
|
%
|
|
%
|
||||
Change in valuation allowance
|
|
%
|
|
%
|
||||
Income tax provision
|
|
%
|
|
%
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume
to provide pricing information on an ongoing basis.
|
•
|
Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or
liabilities in markets that are not active.
|
•
|
Level 3: Unobservable inputs based on our
assessment of the assumptions that market participants would use in pricing the asset or liability.
|
Description
|
Level
|
December 31,
2022
|
December 31,
2021
|
|||||||||
Assets:
|
||||||||||||
Investments held in Trust Account
|
1
|
$
|
|
$ | ||||||||
|
||||||||||||
Liabilities:
|
||||||||||||
Warrant Liabilities – Public Warrants
|
1
|
$
|
|
$ | ||||||||
Warrant Liabilities – Private Placement Warrants
|
3
|
$
|
|
$ |
Input
|
December 31,
2022
|
December 31,
2021
|
||||||
Market price of public shares
|
$
|
|
$
|
|
||||
Risk-free rate
|
|
%
|
|
%
|
||||
Dividend yield
|
|
%
|
|
%
|
||||
Exercise price
|
$
|
|
$
|
|
||||
Volatility
|
|
%
|
|
%
|
||||
Term to expiration (years)
|
|
|
Private
Placement
|
||||
Fair value as of January 1, 2022
|
$
|
|
||
|
(
|
)
|
||
Fair value as of December 31, 2022
|
$
|
|
|
Private
Placement
|
Public
|
Warrant
Liabilities
|
|||||||||
Fair value as of January 1, 2021
|
$
|
|
$
|
|
$
|
|
||||||
Initial measurement on March 4, 2021
|
|
|
|
|||||||||
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Transfers to Level 1
|
|
(
|
)
|
(
|
)
|
|||||||
Fair value as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
• |
“amended and restated certificate of incorporation” are to the amended and restated certificate of incorporation that the company adopted in connection with the consummation of our initial public offering, as
further amended on March 1, 2023;
|
• |
“DGCL” refers to the Delaware General Corporation Law as the same may be amended from time to time;
|
• |
“founder shares” are to shares of Class B common stock initially purchased by our sponsor in a private placement prior to our initial public offering and the shares of Class A common stock that will be issued upon
the automatic conversion of the shares of Class B common stock at the time of our initial business combination;
|
• |
“initial stockholders” are to holders of our founder shares prior to our initial public offering;
|
• |
“management” or our “management team” are to our executive officers and directors;
|
• |
“common stock” are to our Class A common stock and our Class B common stock;
|
• |
“private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our initial public offering and upon conversion of working capital loans, if any;
|
• |
“public shares” are to our Class A common stock sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market);
|
• |
“public stockholders” are to the holders of our public shares, including our sponsor and management team, to the extent our sponsor and/or members of our management team purchase public shares, provided that our
sponsor’s and each member of our management team’s status as a “public stockholder” will only exist with respect to such public shares;
|
• |
“sponsor” are to Arrowroot Acquisition LLC, a Delaware limited liability company;
|
• |
“trust account” is to the trust account located in the United States in which, following the completion of our initial public offering, an amount of $287,500,000 from the net proceeds of the sale of the units in
the initial public offering and the sale of the private placement warrants was placed and as of March 30, 2023, had a balance of approximately $45,229,556; and
|
• |
“we,” “us,” “our,” “company,” “our company,” “Company” or “our Company” are to Arrowroot Acquisition Corp., a Delaware Corporation.
|
• |
28,750,000 shares of Class A common stock underlying units issued as part of our initial public offering; and
|
• |
7,187,500 shares of Class B common stock held by our initial stockholders.
|
• |
4,445,813 shares of Class A common stock underlying units; and
|
• |
7,187,500 shares of Class B common stock held by our initial stockholders.
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
|
• |
if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading
days within a 30-trading day period commencing after the warrants become exercisable and ending three business days before we send to the notice of redemption to the warrant holders.
|
• |
In the event we have not consummated an initial business combination by the July 6, 2023, our board of directors may, without a stockholder vote, elect to extend the period of time to consummate a business
combination on a monthly basis for up to seven times by an additional one month each time after July 6, 2023, by resolution of the board of directors if requested by our sponsor, and upon five days’ advance notice prior to the applicable
deadline date, until February 4, 2024, provided that our sponsor (or one or more of its affiliates or permitted designees) (the “Lender”) will deposit into the trust account the lesser of $160,000 or $0.04 for each then-outstanding share of
common stock included as part of the units sold in our initial public offering (“Offering Share”) for each such monthly extension for an aggregate deposit of up to the lesser of $1,120,000 or $0.28 for each then-outstanding Offering Share
(if all seven additional monthly extensions are exercised), in exchange for a non-interest bearing, unsecured promissory note issued by the us to the Lender. If we completes out initial Business Combination, we will, at the option of the
Lender, repay the amounts loaned under the promissory note or convert a portion or all of the amounts.
|
• |
If we are unable to complete our initial business combination by the Termination Date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than
ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (which
interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
liquidate and dissolve, subject in each case to our obligations under the DGCL to provide for claims of creditors and in all cases subject to the requirements of other applicable law;
|
• |
Prior to our initial business combination, we may not issue additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares
(a) on our initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination by the Termination Date or (y) amend the
foregoing provisions;
|
• |
In the event we enter into an initial business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, we, or a committee of independent directors, will
obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm that such a business combination is fair to our company from a financial point of view;
|
• |
If a stockholder vote on our initial business combination is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem our public shares
pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about
our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act. Whether or not we maintain our registration under the Exchange Act or our listing on Nasdaq, we will provide our public
stockholders with the opportunity to redeem their public shares by one of the two methods listed above;
|
• |
So long as we obtain and maintain a listing for our securities on Nasdaq, Nasdaq rules require that we must not consummate an initial business combination with one or more operating businesses or assets with a fair
market value of at least 80% of the assets held in the trust account (excluding taxes payable on the interest earned on the trust account and excluding the amount of any deferred underwriting discount held in the trust account) at the time of
the agreement to enter into the initial business combination;
|
• |
If our stockholders approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our
initial business combination by the Termination Date, or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, we will provide our public stockholders with the opportunity
to redeem all or a portion of their Class A common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust
account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein (and which will not be reduced by the deferred underwriting commissions we will pay
to the underwriters); provided, however, that any such amendment will be voided, if any stockholders who wish to redeem are unable to redeem due to the fact that our net tangible assets would be less
than $5,000,001; and
|
• |
We will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
|
• |
a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
|
• |
an affiliate of an interested stockholder; or
|
• |
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
|
• |
A “business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
|
• |
our board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
|
• |
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction
commenced, other than statutorily excluded shares of common stock; or
|
• |
on or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative
vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
• |
1% of the total number of shares of Class A common stock then outstanding (44,458,813 Class A common stock as of March 30, 2023); or
|
• |
the average weekly reported trading volume of the Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
• |
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
• |
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
• |
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such
reports and materials), other than Form 8-K reports; and
|
• |
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
|
1. |
I have reviewed this annual report on Form 10-K of Arrowroot Acquisition Corp.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors
and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 31, 2023
|
|
/s/ Matthew Safaii
|
|
Matthew Safaii
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this annual report on Form 10-K of Arrowroot Acquisition Corp.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
Date: March 31, 2023
|
|
/s/ Thomas Olivier
|
|
Thomas Olivier
|
|
President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
1. |
The Company’s Annual Report on Form 10-K for the period ended December 31, 2022, to which this Certification is attached as Exhibit 32.1 (the “Annual Report”) fully complies with the requirements of
Section 13(a) or Section 15(d) of the Exchange Act, and
|
2. |
The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Matthew Safaii
|
|
Matthew Safaii
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
The Company’s Annual Report on Form 10-K for the period ended December 31, 2022, to which this Certification is attached as Exhibit 32.2 (the “Annual Report”) fully complies with the requirements of
Section 13(a) or Section 15(d) of the Exchange Act, and
|
2. |
The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Thomas Olivier | |
Thomas Olivier
|
|
President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) |
Common Stock [Member]
Class A Common Stock [Member]
|
Common Stock [Member]
Class B Common Stock [Member]
|
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
Total |
---|---|---|---|---|---|
Beginning balance at Dec. 31, 2020 | $ 0 | $ 719 | $ 29,281 | $ (1,724) | $ 28,276 |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 7,187,500 | |||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Accretion of class A common stock subject to redemption amount | (689,281) | (28,024,661) | (28,713,942) | ||
Sale of 8,250,000 Private Placement Warrants | 660,000 | 0 | 660,000 | ||
Net income | $ 0 | $ 0 | 0 | 4,844,863 | 4,844,863 |
Ending balance at Dec. 31, 2021 | $ 0 | $ 719 | 0 | (23,181,522) | (23,180,803) |
Ending balance (in shares) at Dec. 31, 2021 | 0 | 7,187,500 | |||
Increase (Decrease) in Stockholders' Deficit [Roll Forward] | |||||
Accretion of class A common stock subject to redemption amount | 0 | (2,817,507) | (2,817,507) | ||
Net income | $ 0 | $ 0 | 0 | 13,521,299 | 13,521,299 |
Ending balance at Dec. 31, 2022 | $ 0 | $ 719 | $ 0 | $ (12,477,730) | $ (12,477,011) |
Ending balance (in shares) at Dec. 31, 2022 | 0 | 7,187,500 |
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Parenthetical) - shares |
12 Months Ended | |
---|---|---|
Mar. 04, 2021 |
Dec. 31, 2021 |
|
Warrants Issued [Abstract] | ||
Warrants issued (in shares) | 22,625,000 | |
Private Placement Warrants [Member] | ||
Warrants Issued [Abstract] | ||
Warrants issued (in shares) | 8,250,000 |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS [Abstract] | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS |
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Arrowroot Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on November 5, 2020. The Company was formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage
and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of December 31, 2022, the Company had not commenced any operations. All activity through December 31, 2022 relates to the Company’s formation,
the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business
Combination, at the earliest. The Company generates non-operating income in the form of interest income from the marketable securities held in the Trust Account (as defined above).
The registration statement for the Company’s Initial Public Offering was declared effective on March 1, 2021. On March 4, 2021, the Company
consummated the Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the Class A common stock included in the
Units sold, the “Public Shares”), which includes the full exercise by the underwriter of its over-allotment option in the amount of 3,750,000
Units, at $10.00 per Unit, generating gross proceeds of $287,500,000.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 8,250,000 warrants (the “Private Placement Warrants”) at a price of $1.00
per Private Placement Warrant in a private placement to Arrowroot Acquisition LLC (the “Sponsor”), generating gross proceeds of $8,250,000.
Transaction costs amounted to $16,392,714,
consisting of $5,750,000 in cash underwriting fees, net of reimbursements, $10,062,500 of deferred underwriting fees and $580,214 of other
offering costs.
Following the closing of the Initial Public Offering on March 4, 2021, an amount of $287,500,000 ($10.00 per Unit) from the net proceeds of the sale
of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), located in the United States and has been invested only in U.S. government securities, within the
meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund
selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust
Account, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the
sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business
Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or
assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding any deferred underwriting
fees and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to
register as an investment company under the Investment Company Act.
The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion
of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will
seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account
(initially $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no
redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the
Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its
Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC
prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination,
the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to
redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
On
February 28, 2023, the Company held a special meeting of stockholders (the “Extension Meeting”) to vote to extend the date (“Termination Date”) by which it must either (a) consummate and initial business combination, or (b) (i) cease all
operations except for the purpose of winding up if the Company fails to complete such initial business combination and (ii) redeem all of the shares of the Company’s common stock, included as part of the initial public offering units, from March
4, 2023 (the “Original Termination Date”) to July 6, 2023 (the “Charter Extension Date”) and to allow the Company, without another stockholder vote, to elect to extend the Termination Date to consummate an initial business combination on a
monthly basis for up to seven times by an additional one month each time after the Charter Extension Date, by resolution of the Company’s board of directors if requested by the sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until February 4, 2024 (each, an “Additional Charter Extension Date”) or a total of up to eleven months after the Original Termination Date, unless the closing of an initial business combination shall have occurred prior thereto (the
“Extension”, such extension deadline, the “Extension Date”, and such proposal, the “Extension Proposal”). The Extension proposal was approved by the stockholders.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to
the tender offer rules, the Certificate of Incorporation provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the
completion of a Business Combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination by the Extension Date and (c) not to propose an amendment to the Certificate of
Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or
pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. However, if the Sponsor acquires Public Shares in or after the
Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period.
The Company has until the Extension Date to complete a Business Combination (the “Combination Period”). If the Company has not completed a
Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if
the Company fails to complete a Business Combination within the Combination Period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by
a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser
of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.00 per public Share due to reductions in the value of the trust assets, less taxes payable,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply to any claims under the Company’s
indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be
unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to
claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute
agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity and Going Concern
On
December 29, 2021, the Company issued an unsecured convertible promissory note (the “Second Promissory Note”) with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $1,500,000. Upon issuance, $750,000
was drawn down on the note with an additional $200,000 drawn down on March 17, 2022. On April 21, 2022, the Company drew down the
remaining $550,000 pursuant to the terms of the Convertible Promissory Note. Following this draw down, the full $1,500,000 available under the Convertible Promissory Note was outstanding. There are no remaining funds available under the Second Promissory Note for future drawdowns. As of December 31, 2022 and 2021, $1,500,000 and $750,000 were drawn down on this Second Promissory Note,
respectively.
The Second Promissory Note is subject to the Sponsor’s approval and does not bear interest. The principal balance of the note will be payable on the earliest to occur of (i) the date on which the Company consummates its initial
business combination or (ii) the date that the winding up of the Company is effective (such date, the “Maturity Date”). In the event the Company consummates its initial business combination, the Sponsor has the option on the Maturity Date to
convert all or any portion of the principal outstanding under the Second Promissory Note into that number of warrants (“Working Capital Warrants”) equal to the portion of the principal amount of the Second Promissory Note being converted
divided by $1.00, rounded up to the nearest whole number. The terms of the Working Capital Warrants, if any, would be identical to
the terms of the private placement warrants issued by the Company at the time of its initial public offering, as described in the prospectus for the initial public offering dated March 1, 2021 and filed with the SEC, including the transfer
restrictions applicable thereto. The Promissory Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Second Promissory Note and all other sums payable
with regard to the Second Promissory Note becoming immediately due and payable.
As of December 31, 2022, the Company had $145,980
of cash held outside its trust account for use as working capital, $290,737,917 in securities held in the Trust Account to be used for
a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $2,687,921.
As of December 31, 2022, $3,945,497 of deposit in the Trust Account represented interest income, which is available to pay the
Company’s tax obligations. As of December 31, 2022, the Company withdrew an amount of $731,214 to pay income and franchise taxes. In
order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company working capital loans,
as defined below.
Management
expects to incur significant costs in pursuit of its acquisition plans. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of the Company’s officers and
directors or their affiliates may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business Combination, it would repay such loaned amounts. The Company will be using these funds for paying existing
accounts payable, identifying and evaluating prospective initial business combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire,
and structuring, negotiating and consummating the business combination.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity
needs, obtain approval for an extension of the deadline or complete a Business Combination by the Extension Date, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory
liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to
liquidate after the Extension Date. The Company intends to complete a Business Combination before the mandatory liquidation date or obtain approval for an extension.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new
or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out
is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more
significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the
actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The
Company did not have any cash equivalents as December 31, 2022 and 2021.
Marketable Securities Held in Trust Account
The
Company’s portfolio of investments held in Trust Account is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change in fair value of these investments are included in interest income from investments held in Trust Account in the accompanying statements of operations. The estimated
fair values of investments held in the Trust Account are determined using available market information.
Offering Costs
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly
related to the Initial Public Offering. Offering costs associated with warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A common stock issued were initially charged to
temporary equity and then accreted to Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. Offering costs amounted to $16,392,714, of which $760,022 was allocated to the warrant
liabilities and charged to the statements of operations.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in
Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at redemption value.
Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ deficit. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal
the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock are
affected by charges against additional paid in capital and accumulated deficit.
At December 31, 2022 and 2021, the Class A common stock subject to redemption reflected in the balance sheets are reconciled in the following
table:
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific
terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant
issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and
each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriter of their over-allotment option in the amount of 3,750,000 Units, at a price of $10.00
per Unit. Each Unit consists of one share of Class A common stock and
of one redeemable warrant (“Public Warrant”). The Public Warrants for periods where no observable traded price was available were valued using a Monte Carlo simulation. The
Private Placement Warrants are valued using a modified Black Scholes Option Pricing Model. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of
the Public Warrants as of each relevant date (see Note 10).Second Promissory Note
The Company accounts for its Second
Promissory Note under ASC 815, “Derivatives and Hedging” (“ASC 815”). Under 815-15-25, the election can be made at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, “Financial
Instruments” (“ASC 825”). The Company has made such election for its Second Promissory Note. Using the fair value option, the Second Promissory Note is required to be recorded at its initial fair value on the date of issuance, and each
balance sheet date thereafter. Differences between the face value of the Second Promissory Note and fair value at issuance are recognized as either an expense in the statements of operations (if issued at a premium) or as a capital
contribution (if issued at a discount). Any material changes in the estimated fair value of the Second Promissory Note are recognized as non-cash gains or losses in the statements of operations.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement’s carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related
to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021. The Company is currently not aware of any issues under review that
could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net Income (Loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The company has two classes of
common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from income (loss) per common share as the redemption value approximates fair value.
The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 22,625,000 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the
occurrence of future events and the inclusion of such warrants would be anti-dilutive. As of December 31, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into
common stock and then share in the earnings of the Company. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented.
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
Concentration of Credit Risk
The Company has significant cash balances at financial institutions which throughout the year regularly exceed the
federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
Fair Value of Financial Instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature, other than the
warrant liabilities (see Note 10).
Recent Accounting Standards
In August 2020, the FASB issued
Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain
financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to
equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends
the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December
15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position,
results of operations or cash flows.
Management does not believe that any
recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
|
INITIAL PUBLIC OFFERING |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
INITIAL PUBLIC OFFERING [Abstract] | |
INITIAL PUBLIC OFFERING |
NOTE 3. INITIAL PUBLIC
OFFERING
Pursuant
to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriter of their
over-allotment option in the amount of 3,750,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A
common stock and
Public Warrant. Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50
per share, subject to adjustment (see Note 8). |
PRIVATE PLACEMENT |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
PRIVATE PLACEMENT [Abstract] | |
PRIVATE PLACEMENT |
NOTE 4. PRIVATE
PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 8,250,000 Private Placement Warrants, at a
price of $1.00 per warrant, or $8,250,000
in the aggregate. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of
$11.50 per share, subject to adjustment (see Note 9). A portion of the proceeds from the Private Placement Warrants were added to the
proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.
|
RELATED PARTY TRANSACTIONS |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS |
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In November 2020, the Sponsor purchased 5,750,000
shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $30,000. Subsequently, in December 2020
the Company effectuated a
stock split, pursuant to which an additional 1,437,500 shares of Class B common stock were issued, resulting in an aggregate of 7,187,500
Founder Shares issued and outstanding. The Founder Shares included an aggregate of up to 937,500 Founder Shares subject to forfeiture
to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. In January 2021, the Sponsor transferred 40,000 founder shares to each of three Director nominees,
none of which are subject to forfeiture in the event that the underwriter’s over-allotment option was not exercised in full. As a result of the underwriter’s election to fully exercise their over-allotment option March 4, 2021, no Founder Shares are currently subject to forfeiture. The transfer of the Founders Shares to the Company’s director nominees is in the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with
equity-classified awards is measured at fair value upon the grant date. The Founder Shares were effectively transferred subject to a performance condition (i.e., the occurrence of a Business Combination). Compensation expense related to the
Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance. Stock-based compensation would be recognized at the date a Business Combination is
considered probable (i.e., upon consummation of a Business Combination) in an amount equal to the number of Founders Shares times the grant date fair value per share (unless subsequently modified).
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of (A)
one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale
price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a
Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Administrative Support Agreement
The Company entered into an agreement, commencing on March 4, 2021, through the earlier of the Company’s consummation of a Business Combination
and its liquidation, to pay the Sponsor a total of $20,000 per month for office space, secretarial, and administrative support
services. For the years ended December 31, 2022 and 2021, the Company incurred and paid $240,000 and $200,000 in fees for these services, respectively. There were no amounts outstanding in fees for these services at December 31, 2022 and 2021.
Promissory Notes — Related Parties
On December 21, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could
borrow up to an aggregate principal amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of (i)
July 31, 2021 or (ii) the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $149,992
was repaid at the closing of the Initial Public Offering on March 4, 2021. No future borrowings are permitted.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any,
have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.
On December 29, 2021, the Company issued its Second Promissory Note with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $1,500,000. The note was issued in connection with advances the Sponsor may make in the future, to the Company for working capital expenses. Upon issuance, $750,000 was drawn down on the note with an additional $200,000
drawn down on March 17, 2022. On April 21, 2022, the Company drew down the remaining $550,000 pursuant to the terms of the Second
Promissory Note. Following this draw down, the full $1,500,000 available under the Second Promissory Note was outstanding. There are
no remaining funds available under the Second Promissory Note for future drawdowns. Management has determined the fair value of the
Second Promissory Note is more accurately recorded at par since the conversion price is significantly higher than the value of the warrants. No arm’s-length transaction by a note holder would result in a conversion with this fact pattern, thus
it is a more accurate depiction with recording at par. As such no fair value change was booked to the statements of operations. As of December 31, 2022 and 2021, $1,500,000 and $750,000 were drawn down on this Second Promissory Note,
respectively.
|
COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
NOTE 6. COMMITMENTS AND
CONTINGENCIES
Risks and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these financial statements. Although a number of vaccines for COVID-19 have been developed and are in the process of being deployed in certain countries, including the
United States, the timing for widespread vaccination is uncertain, and these vaccines may be less effective against new mutated strains of the virus. The impact of this coronavirus continues to evolve and is affecting the economies of many
nations, individual companies and markets in general and may continue to last for an extended period of time. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with the
country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world
economy is not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic
corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are
repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the
fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has
been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any
redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise
tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or
otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued
within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics
of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Registration Rights
Pursuant
to a registration rights agreement entered into on March 4, 2021, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon
the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement
to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to
registration statements filed subsequent to the completion of a Business Combination. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering our securities.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The
underwriter is entitled to a deferred fee of $0.35 per Unit, or $10,062,500 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
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STOCKHOLDERS' DEFICIT |
12 Months Ended |
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Dec. 31, 2022 | |
STOCKHOLDERS' DEFICIT [Abstract] | |
STOCKHOLDERS' DEFICIT |
NOTE 7. STOCKHOLDERS’ DEFICIT
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of
December 31, 2022 and 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At December 31, 2022 and 2021, there were 28,750,000
shares of Class A common stock issued and outstanding, which are subject to possible redemption and presented as temporary equity.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 7,187,500
shares of common stock issued and outstanding.
Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our
stockholders except as otherwise required by law.
The shares of Class B common stock will automatically convert into Class A common stock upon the consummation of a Business Combination, or
earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A
common stock or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on
an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion, including the
total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the
consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business
Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
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WARRANT LIABILITIES |
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Dec. 31, 2022 | |||||||||||||
WARRANT LIABILITIES [Abstract] | |||||||||||||
WARRANT LIABILITIES |
NOTE 8. WARRANT LIABILITIES
As of December 31, 2022 and 2021, there were 14,375,000
Public Warrants outstanding. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The Public Warrants will become exercisable on the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering and will expire five years after
the completion of our initial Business Combination or earlier upon redemption or the Company’s liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject
to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable
upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities
Act, of the Class A common stock issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus
relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by
the sixtieth (60th) business day after the closing of a Business Combination, warrant holders may, until such time as there is an
effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another
exemption. Notwithstanding the above, if our Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elect, it
will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available.
Once the warrants become exercisable, the Company may call the warrants for redemption for cash:
If and when the warrants become redeemable by the Company for cash, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws.
If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes
to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances
including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the
funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect
to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in
connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share
of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any
Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination on the date of the consummation of such
initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20
trading day period starting on the trading day after the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price and the $18.00
per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the
Market Value and the Newly Issued Price.
As of December 31, 2022 and 2021, there were 8,250,000
Private Placement Warrants outstanding. Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable
upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion
of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial
purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by
such holders on the same basis as the Public Warrants.
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INCOME TAXES |
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INCOME TAXES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
NOTE 9. INCOME TAXES
The
Company did not have any significant deferred tax assets or liabilities as of December 31, 2022 and 2021.
The Company’s net
deferred tax assets are as follows:
The income tax provision consists of the following:
As
of December 31, 2022 and 2021, the Company had $0 and $175,916 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively.
In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the
deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts
become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management
believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the years ended December 31, 2022 and 2021, the change in the valuation
allowance was $244,686 and $645,774,
respectively.
A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:
The
Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities.
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FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
NOTE 10. FAIR VALUE
MEASUREMENTS
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent
sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable
inputs and unobservable inputs used in order to value the assets and liabilities:
At December 31, 2022, assets held in the Trust
Account were comprised of $279,107,161 in U.S. Treasury Bills and U.S. Treasury Notes and $11,338,047 in money market funds which are invested primarily in U.S. Treasury Securities and $292,710 in cash. At December 31, 2021, assets held in the Trust Account were comprised of $287,523,555
in money market funds which are invested primarily in U.S. Treasury Securities and $79 in cash. During the year ended December 31,
2022, the Company withdrew an amount of $731,214 in interest income from the Trust Account to pay franchise and income taxes.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022 and 2021 and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
The
Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis,
with changes in fair value presented within change in fair value of warrant liabilities in the statements of operations.
The Private Placement Warrants are valued using a Modified Black Scholes Option Pricing Model,
which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock.
The expected volatility as of the initial public offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was
implied from the Company’s own Public Warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the public warrants for periods where no observable traded price was available, using the same expected
volatility as was used in measuring the fair value of the Private Placement Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the Public Warrants was used as the fair value of the Public
Warrants as of each relevant date. The measurement of the Public Warrants after the detachment of the Public Warrants from the Units is classified as Level 1 due to the use of an observable market quote in an active market.
The key inputs into the Modified Black
Scholes model for the Level 3 Warrants were as follows:
The
following tables present the changes in the fair value of Level 3 warrant liabilities:
Transfers
to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair
value measurement year ended December 31, 2021 was $11,500,000. There were no transfers from a Level 3 measurement to a Level 2 during the year ended December 31, 2022.
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SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2022 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS |
NOTE 11. SUBSEQUENT
EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On February 28, 2023, the Company held a special meeting of stockholders (the “Extension Meeting”) to vote to extend the date (“Termination
Date”) by which it must either (a) consummate and initial business combination, or (b) (i) cease all operations except for the purpose of winding up if the Company fails to complete such initial business combination and (ii) redeem all of the
shares of the Company’s common stock, included as part of the initial public offering units, from March 4, 2023 (the “Original Termination Date”) to July 6, 2023 (the “Charter Extension Date”) and to allow the Company, without another
stockholder vote, to elect to extend the Termination Date to consummate an initial business combination on a monthly basis for up to seven
times by an additional one month each time after the Charter Extension Date, by resolution of the Company’s board of directors if
requested by the sponsor, and upon five days’ advance notice prior to the applicable Termination Date, until February 4, 2024 (each,
an “Additional Charter Extension Date”) or a total of up to eleven months after the Original Termination Date, unless the closing of
an initial business combination shall have occurred prior thereto (the “Extension”, such extension deadline, the “Extension Date”, and such proposal, the “Extension Proposal”). The Extension proposal was approved by the stockholders.
On February 23, 2023 and on March 6, 2023, the Company issued an unsecured promissory note in the principal amount of up to $500,000 and $1,760,000,
respectively (together the “Notes”) to the Sponsor. The Notes do not bear interest and mature upon closing of the Company’s Business Combination. In the event that Arrowroot does not consummate a Business Combination, the Note will be repaid
only from funds held outside of the Trust Account or will be forfeited, eliminated or otherwise forgiven.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation |
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission.
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Use of Estimates |
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more
significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as more current information becomes available and accordingly, the
actual results could differ significantly from those estimates.
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Cash and Cash Equivalents |
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The
Company did not have any cash equivalents as December 31, 2022 and 2021.
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Marketable Securities Held in Trust Account |
Marketable Securities Held in Trust Account
The
Company’s portfolio of investments held in Trust Account is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change in fair value of these investments are included in interest income from investments held in Trust Account in the accompanying statements of operations. The estimated
fair values of investments held in the Trust Account are determined using available market information.
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Offering Costs |
Offering Costs
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly
related to the Initial Public Offering. Offering costs associated with warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the Class A common stock issued were initially charged to
temporary equity and then accreted to Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. Offering costs amounted to $16,392,714, of which $760,022 was allocated to the warrant
liabilities and charged to the statements of operations.
|
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Class A Common Stock Subject to Possible Redemption |
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in
Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at redemption value.
Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ deficit. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal
the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock are
affected by charges against additional paid in capital and accumulated deficit.
At December 31, 2022 and 2021, the Class A common stock subject to redemption reflected in the balance sheets are reconciled in the following
table:
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Warrant Liabilities |
Warrant Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific
terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant
issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and
each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Pursuant to the Initial Public Offering, the Company sold 28,750,000 Units, including a full exercise by the underwriter of their over-allotment option in the amount of 3,750,000 Units, at a price of $10.00
per Unit. Each Unit consists of one share of Class A common stock and
of one redeemable warrant (“Public Warrant”). The Public Warrants for periods where no observable traded price was available were valued using a Monte Carlo simulation. The
Private Placement Warrants are valued using a modified Black Scholes Option Pricing Model. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of
the Public Warrants as of each relevant date (see Note 10). |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Second Promissory Note |
Second Promissory Note
The Company accounts for its Second
Promissory Note under ASC 815, “Derivatives and Hedging” (“ASC 815”). Under 815-15-25, the election can be made at the inception of a financial instrument to account for the instrument under the fair value option under ASC 825, “Financial
Instruments” (“ASC 825”). The Company has made such election for its Second Promissory Note. Using the fair value option, the Second Promissory Note is required to be recorded at its initial fair value on the date of issuance, and each
balance sheet date thereafter. Differences between the face value of the Second Promissory Note and fair value at issuance are recognized as either an expense in the statements of operations (if issued at a premium) or as a capital
contribution (if issued at a discount). Any material changes in the estimated fair value of the Second Promissory Note are recognized as non-cash gains or losses in the statements of operations.
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Income Taxes |
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement’s carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related
to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021. The Company is currently not aware of any issues under review that
could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
|
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Net Income (Loss) per Common Share |
Net Income (Loss) per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The company has two classes of
common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Net income (loss) per common stock is computed by dividing net income (loss) by
the weighted average number of common stock outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from income (loss) per common share as the redemption value approximates fair value.
The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 22,625,000 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the
occurrence of future events and the inclusion of such warrants would be anti-dilutive. As of December 31, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into
common stock and then share in the earnings of the Company. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented.
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
|
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Concentration of Credit Risk |
Concentration of Credit Risk
The Company has significant cash balances at financial institutions which throughout the year regularly exceed the
federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
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Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature, other than the
warrant liabilities (see Note 10).
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Recent Accounting Standards |
Recent Accounting Standards
In August 2020, the FASB issued
Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain
financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to
equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends
the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December
15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position,
results of operations or cash flows.
Management does not believe that any
recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock Subject to Possible Redemption |
At December 31, 2022 and 2021, the Class A common stock subject to redemption reflected in the balance sheets are reconciled in the following
table:
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Calculation of Basic and Diluted Net Income (Loss) per Common Share |
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
|
INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Deferred Tax Assets |
The Company’s net
deferred tax assets are as follows:
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Income Tax Provision |
The income tax provision consists of the following:
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Reconciliation of Federal Income Tax Rate |
A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:
|
FAIR VALUE MEASUREMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on Recurring Basis |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022 and 2021 and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
|
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Key Inputs into Modified Black Scholes Model for Level 3 Warrants |
The key inputs into the Modified Black
Scholes model for the Level 3 Warrants were as follows:
|
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Change in Fair Value of Warrant Liabilities |
The
following tables present the changes in the fair value of Level 3 warrant liabilities:
|
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS, Liquidity and Capital Resources (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Apr. 21, 2022 |
Mar. 17, 2022 |
Dec. 29, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Liquidity and Capital Resources [Abstract] | |||||
Amount drawn | $ 0 | $ 149,992 | |||
Cash | 145,980 | 262,671 | |||
Securities held in Trust Account | 290,737,917 | 287,523,634 | |||
Working capital deficit | (2,687,921) | ||||
Amount in Trust Account representing interest income | 3,945,497 | ||||
Cash withdrawn from Trust Account to pay franchise and income taxes | $ 731,214 | 0 | |||
Second Promissory Note [Member] | |||||
Liquidity and Capital Resources [Abstract] | |||||
Conversion price (in dollars per share) | $ 1 | ||||
Sponsor [Member] | Second Promissory Note [Member] | |||||
Liquidity and Capital Resources [Abstract] | |||||
Unsecured promissory note amount | $ 1,500,000 | ||||
Amount drawn | $ 550,000 | $ 200,000 | 750,000 | ||
Amount outstanding | $ 1,500,000 | $ 750,000 | |||
Remaining balance available | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cash and Cash Equivalents (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Offering Costs (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Mar. 04, 2021 |
|
Offering Costs [Abstract] | |||
Offering Costs | $ 16,392,714 | ||
Transaction costs allocable to warrant liabilities | $ 0 | $ 760,022 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Warrant Liabilities (Details) - $ / shares |
Mar. 04, 2021 |
Dec. 31, 2022 |
---|---|---|
Initial Public Offering [Member] | Public Shares [Member] | ||
Warrant Liabilities [Abstract] | ||
Units issued (in shares) | 28,750,000 | |
Share price (in dollars per share) | $ 10 | |
Initial Public Offering [Member] | Public Warrants [Member] | ||
Warrant Liabilities [Abstract] | ||
Number of securities called by each unit (in shares) | 0.5 | 0.5 |
Initial Public Offering [Member] | Class A Common Stock [Member] | ||
Warrant Liabilities [Abstract] | ||
Number of securities called by each unit (in shares) | 1 | 1 |
Over-Allotment Option [Member] | Public Shares [Member] | ||
Warrant Liabilities [Abstract] | ||
Units issued (in shares) | 3,750,000 | |
Share price (in dollars per share) | $ 10 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Income Taxes (Details) - USD ($) |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Income Taxes [Abstract] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Accrued interest and penalties | $ 0 | $ 0 |
PRIVATE PLACEMENT (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 04, 2021 |
Dec. 31, 2021 |
|
Private Placement Warrants [Abstract] | ||
Warrants issued (in shares) | 22,625,000 | |
Private Placement Warrants [Member] | ||
Private Placement Warrants [Abstract] | ||
Warrants issued (in shares) | 8,250,000 | |
Private Placement [Member] | Private Placement Warrants [Member] | ||
Private Placement Warrants [Abstract] | ||
Warrants issued (in shares) | 8,250,000 | |
Share price (in dollars per share) | $ 1 | |
Proceeds from issuance of warrants | $ 8,250,000 | |
Exercise price of warrant (in dollars per share) | $ 11.5 | |
Private Placement [Member] | Class A Common Stock [Member] | Private Placement Warrants [Member] | ||
Private Placement Warrants [Abstract] | ||
Number of shares issued upon exercise of warrant (in shares) | 1 |
RELATED PARTY TRANSACTIONS, Administrative Services Agreement (Details) - Administrative Support Agreement [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 04, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Administrative Support Agreement [Abstract] | |||
Amounts outstanding | $ 0 | $ 0 | |
Sponsor [Member] | |||
Administrative Support Agreement [Abstract] | |||
Monthly fees | $ 20,000 | ||
Fees paid | $ 240,000 | $ 200,000 |
RELATED PARTY TRANSACTIONS, Promissory Note (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Mar. 04, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 21, 2020 |
|
Promissory Notes - Related Parties [Abstract] | ||||
Repayment to related party | $ 0 | $ 149,992 | ||
Sponsor [Member] | Promissory Note [Member] | ||||
Promissory Notes - Related Parties [Abstract] | ||||
Aggregate principal amount of note | $ 1,500,000 | $ 750,000 | ||
Repayment to related party | $ 149,992 | |||
Sponsor [Member] | Promissory Note [Member] | Maximum [Member] | ||||
Promissory Notes - Related Parties [Abstract] | ||||
Aggregate principal amount of note | $ 300,000 |
RELATED PARTY TRANSACTIONS, Related Party Loans (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Apr. 21, 2022 |
Mar. 17, 2022 |
Dec. 29, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Related Party Loans [Abstract] | |||||
Amount drawn | $ 0 | $ 149,992 | |||
Second Promissory Note [Member] | |||||
Related Party Loans [Abstract] | |||||
Conversion price (in dollars per share) | $ 1 | ||||
Sponsor, Affiliate of Sponsor, or Certain Company Officers and Directors [Member] | Working Capital Loans [Member] | |||||
Related Party Loans [Abstract] | |||||
Loans that can be converted into Warrants at lenders' discretion | $ 1,500,000 | ||||
Conversion price (in dollars per share) | $ 1 | ||||
Sponsor [Member] | Second Promissory Note [Member] | |||||
Related Party Loans [Abstract] | |||||
Unsecured promissory note amount | $ 1,500,000 | ||||
Amount drawn | $ 550,000 | $ 200,000 | 750,000 | ||
Remaining balance available | $ 0 | $ 0 | |||
Amount outstanding | $ 1,500,000 | $ 750,000 |
COMMITMENTS AND CONTINGENCIES (Details) |
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Mar. 04, 2021
USD ($)
Demand
$ / shares
|
---|---|---|---|
Underwriting Agreement [Abstract] | |||
Deferred underwriting fees per unit (in dollars per share) | $ / shares | $ 0.35 | ||
Deferred underwriting fees | $ | $ 10,062,500 | $ 10,062,500 | $ 10,062,500 |
Maximum [Member] | |||
Registration Rights [Abstract] | |||
Number of demands eligible security holder can make | Demand | 3 |
INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Deferred tax asset [Abstract] | ||
Net operating loss carryforward | $ 0 | $ 37,304 |
Startup/Organization Expenses | 890,822 | 608,832 |
Total deferred tax asset | 890,822 | 646,136 |
Valuation allowance | (890,822) | (646,136) |
Deferred tax asset, net of allowance | 0 | 0 |
Federal [Abstract] | ||
Current | 750,410 | 0 |
Deferred | (244,686) | (645,774) |
State [Abstract] | ||
Current | 0 | 0 |
Deferred | 0 | 0 |
Change in valuation allowance | 244,686 | 645,774 |
Income tax provision | 750,410 | 0 |
Federal and state net operating loss carryovers | $ 0 | $ 175,916 |
Reconciliation of Federal Income Tax Rate [Abstract] | ||
Statutory federal income tax rate | 21.00% | 21.00% |
State taxes, net of federal tax benefit | 0.00% | 0.00% |
Change in fair value of warrant liabilities | (17.50%) | (37.60%) |
Transaction costs allocable to warrant liabilities | 0.00% | 3.30% |
Change in valuation allowance | 1.70% | 13.30% |
Income tax provision | 5.20% | 0.00% |
FAIR VALUE MEASUREMENTS, Key Inputs Into Binomial Lattice Model (Details) |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Input [Abstract] | ||
Term | 5 years | |
Warrant [Member] | Market Price of Public Shares [Member] | ||
Input [Abstract] | ||
Measurement input | 10.04 | 9.7 |
Warrant [Member] | Risk-free Rate [Member] | ||
Input [Abstract] | ||
Measurement input | 0.0394 | 0.013 |
Warrant [Member] | Dividend Yield [Member] | ||
Input [Abstract] | ||
Measurement input | 0 | 0 |
Warrant [Member] | Exercise Price [Member] | ||
Input [Abstract] | ||
Measurement input | 11.5 | 11.5 |
Warrant [Member] | Volatility [Member] | ||
Input [Abstract] | ||
Measurement input | 0 | 0.095 |
Warrant [Member] | Term to Expiration [Member] | ||
Input [Abstract] | ||
Term | 5 months 1 day | 5 years |
SUBSEQUENT EVENTS (Details) - Subsequent Events [Member] |
Feb. 28, 2023
Extension
|
Mar. 06, 2023
USD ($)
|
Feb. 23, 2023
USD ($)
|
---|---|---|---|
Subsequent Event [Abstract] | |||
Period of time for an extension to consummate Business Combination | 1 month | ||
Advance notice period to consummate Business Combination | 5 days | ||
Maximum [Member] | |||
Subsequent Event [Abstract] | |||
Number of times to extend period to consummate Business Combination | Extension | 7 | ||
Additional charter extension period | 11 months | ||
Promissory Note [Member] | |||
Subsequent Event [Abstract] | |||
Unsecured promissory note amount | $ | $ 1,760,000 | $ 500,000 |
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