ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Class A ordinary share, $0.0001 par value, and one-third of one warrant |
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Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
Auditor PCAOB Number: |
Auditor Name: |
Auditor Location: |
1 | ||||
PART I |
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Item 1. |
3 | |||
Item 1A. |
23 | |||
Item 1B. |
63 | |||
Item 2. |
63 | |||
Item 3. |
64 | |||
Item 4. |
64 | |||
PART II |
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Item 5. |
65 | |||
Item 6. |
66 | |||
Item 7. |
66 | |||
Item 7A. |
70 | |||
Item 8. |
70 | |||
Item 9. |
70 | |||
Item 9A. |
70 | |||
Item 9B. |
71 | |||
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 71 | ||
PART III |
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Item 10. |
72 | |||
Item 11. |
78 | |||
Item 12. |
79 | |||
Item 13. |
82 | |||
Item 14. |
84 | |||
PART IV |
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Item 15. |
85 | |||
Item 16. |
86 | |||
• | our ability to select an appropriate target business or businesses; |
• | our ability to complete our initial business combination; |
• | our expectations around the performance of a prospective target business or businesses; |
• | our expectations and forecasts around the performance and trends of markets and industries; |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
• | our directors and officers allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; |
• | our potential ability to obtain additional financing to complete our initial business combination; |
• | our pool of prospective target businesses and the energy and mining industries; |
• | our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases); |
• | the ability of our directors and officers to generate a number of potential business combination opportunities; |
• | our public securities’ potential liquidity and trading; |
• | the lack of a market for our securities; |
• | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
• | the trust account not being subject to claims of third parties; |
• | our financial performance following our IPO; and |
• | the other risks and uncertainties discussed under the heading “Risk Factors” and elsewhere in this report. |
• | “we,” “us,” “our” or our “company” are to ESM Acquisition Corporation, a Cayman Islands exempted company; |
• | “Affiliated Joint Acquisition” are to an acquisition opportunity pursued jointly with one or more entities affiliated with EMG or VBR and/or one or more investors in funds managed by EMG; |
• | “amended and restated memorandum and articles of association” are to our amended and restated memorandum and articles of association; |
• | “Companies Act” are to the Companies Act (As Revised) of the Cayman Islands as the same may be amended from time to time; |
• | “EMG” are to The Energy & Minerals Group; |
• | “Excess Shares” are to more than an aggregate of 15% of the shares sold in the IPO held by a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act); |
• | “Extension Period” are to any extended time that we have to consummate a business combination beyond 24 months from the date of our IPO as a result of a shareholder vote to amend our amended and restated memorandum and articles of association; |
• | “founder shares” are to our Class B ordinary shares initially purchased by our sponsor in a private placement prior to our IPO and our Class A ordinary shares that will be issued upon conversion thereof as provided therein; |
• | “initial shareholders” are to our sponsor and any other holders of our founder shares prior to our IPO; |
• | “IPO” refers to our initial public offering of units, which initially closed on March 21, 2021; |
• | “letter agreement” refer to the letter agreement, the form of which is filed as an exhibit to our IPO registration statement; |
• | “Market Value” means the volume weighted average trading price of our Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial business combination; |
• | “Newly Issued Price” the price determined in good faith by our board of directors at which we issue additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination. |
• | “ordinary shares” are to our Class A ordinary shares and our Class B ordinary shares; |
• | “private placement warrants” are to the warrants issued to our sponsor in a private placement simultaneously with the closing of our IPO; |
• | “public shareholders” are to the holders of our public shares, including our sponsor, directors and officers to the extent our sponsor, directors or officers purchase public shares, provided their status as a “public shareholder” shall only exist with respect to such public shares; |
• | “public shares” are to our Class A ordinary shares sold as part of the units in our IPO (whether they are purchased in our IPO or thereafter in the open market); |
• | “Reference Value” means the last reported sale price of our Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders; |
• | “specified future issuance” are to an issuance of a class of equity or equity-linked securities to specified purchasers, which may include affiliates of EMG and/or one or more investors in funds or separate accounts managed by EMG, that we may determine to make in connection with financing our initial business combination, to the extent permitted under applicable regulatory and contractual requirements related to those funds and accounts; |
• | “sponsor” are to ESM Sponsor, LP, a Cayman Islands exempted limited partnership, and an affiliate of our founder; |
• | “VBR” are to Vision Blue Resources, Ltd.; and |
• | “warrants” are to our redeemable warrants sold as part of the units in our IPO (whether they are purchased in our IPO or thereafter in the open market). |
Item 1. |
Business |
• | Copper, which is a key input in solar thermal technologies and is expected to play a key role in reducing energy consumption and CO 2 emissions in a number of industrial processes. |
• | Vanadium, which is the basis of the vanadium redox large-scale storage battery. |
• | Aluminum, cobalt, lithium, manganese and nickel, which are used in the cathode and graphite which is the core component of the anode of EV batteries. |
• | Platinum group metals (platinum, palladium and rhodium), which are key inputs into certain hydrogen fuel cell technologies. |
• | Rare earth metals, which are of critical importance to the production of magnets in electric vehicles and wind turbines. |
• | Gallium, germanium, indium and tellurium, which are key components in solar panels. |
1 |
Figures shown are the expected demand from energy technologies by 2050 as a percentage of 2018 production. |
• | Vehicle lightweighting, which may increase demand for aluminum, particularly “green” aluminum made using renewable energy, as well as demand for high grade steel, which is produced, in part, with specialty metals such as vanadium. |
• | “Carbon friendly” steel production, which may rely increasingly on higher grade inputs, such as high-grade iron ore, as well as the use of “green” hydrogen technologies in place of coke (which is derived from metallurgical coal). |
• | will offer an attractive, risk-adjusted return on investment for our shareholders; |
• | exhibit value that has not been fully understood by the marketplace; |
• | operate in industries in which our leadership team has technical, strategic and operational expertise to impart significant value; |
• | are positioned to take advantage of paradigm shifts created by the global transition towards a low carbon economy; |
• | are positioned to experience growth in cash flow post-acquisition; |
• | are prepared to be public companies and will benefit from having a public currency in order to enhance their ability to pursue accretive acquisitions, high-return capital projects, and/or strengthen their balance sheet; and |
• | are business-friendly jurisdictions with clear regulatory and fiscal regimes. |
• | solely dependent upon the performance of a single business, property or asset; or |
• | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
• | we issue (other than in a public offering for cash) ordinary shares that will either (a) be equal to or in excess of 20% of the number of Class A ordinary shares then issued and outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding; |
• | any of our directors, officers or substantial stockholders (as defined by NYSE rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of ordinary shares could result in an increase in outstanding ordinary shares or voting power of 5% or more; or |
• | the issuance or potential issuance of ordinary shares will result in our undergoing a change of control. |
• | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and |
• | 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. |
• | 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 |
• | file proxy materials with the SEC. |
• | prior to the consummation of our initial business combination, we shall either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public shareholders may seek to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction, into their pro rata share of the aggregate amount then on deposit in the trust account, calculated as of two business days prior to the completion of our initial business combination, including interest (which interest shall be net of taxes payable), or (2) provide our public shareholders with the opportunity to tender their public shares to us by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, calculated as of two business days prior to the completion of our initial business combination, including interest (which interest shall be net of taxes payable), in each case subject to the limitations described herein; |
• | in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 following such redemptions; |
• | if we seek shareholder approval, we will complete our initial business combination only if we receive an ordinary resolution under Cayman Islands law, which requires the affirmative vote of holders of a majority of ordinary shares who attend and vote at a general meeting of the company; |
• | if our initial business combination is not consummated within 24 months from the closing of our IPO or during any Extension Period, then our existence will terminate and we will distribute all amounts in the trust account; and |
• | prior to our initial business combination, we may not issue additional ordinary shares that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote as a class with our public shares on any initial business combination. |
Item 1A. |
Risk Factors |
• | We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
• | 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.” |
• | Our public shareholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination. |
• | Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek shareholder approval of such business combination. |
• | 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 COVID-19 outbreak and other events and the status of debt and equity markets. |
• | If a shareholder 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. |
• | You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares and/or warrants, potentially at a loss. |
• | The ability of our public shareholders 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. |
• | The NYSE 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. |
• | If the funds not being held in the trust account are insufficient to allow us to operate for at least the 24 months following the closing of our IPO or during any Extension Period, we may be unable to complete our initial business combination. |
• | If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per share. |
• | Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders. |
• | The securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share. |
• | We may not hold an annual general meeting until after the consummation of our initial business combination. Our public shareholders will not have the right to elect or remove directors prior to the consummation of our initial business combination. |
• | We have not yet registered the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless. |
• | Because we are not limited to a particular industry, sector or geographic area or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations. |
• | Past performance by our management team, EMG, VBR and their respective affiliates, including investments and transactions in which they have participated and businesses with which they have been associated, may not be indicative of future performance of an investment in the company. |
• | Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines. |
• | We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm regarding fairness. Consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view. |
• | We are dependent upon our directors and officers and their departure could adversely affect our ability to operate. |
• | Certain of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
• | Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business. |
• | Our initial shareholders will control the election of our board of directors until consummation of our initial business combination and will hold a substantial interest in us. As a result, they will appoint all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring shareholder vote, potentially in a manner that you do not support. |
• | We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worth less. |
• | Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited. |
• | restrictions on the nature of our investments; and |
• | restrictions on the issuance of securities; |
• | registration as an investment company with the SEC; |
• | adoption of a specific form of corporate structure; and |
• | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to. |
• | costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of overseas markets; |
• | rules and regulations regarding currency redemption; |
• | complex corporate withholding taxes on individuals; |
• | laws governing the manner in which future business combinations may be effected; |
• | exchange listing and/or delisting requirements; |
• | tariffs and trade barriers; |
• | regulations related to customs and import/export matters; |
• | export limits of raw materials and related in-country value-added processing requirements; |
• | local or regional economic policies and market conditions; |
• | unexpected changes in regulatory requirements; |
• | challenges in managing and staffing international operations; |
• | changes in local regulations as part of a response to the COVID-19 outbreak; |
• | longer payment cycles; |
• | tax consequences, such as tax law changes, including termination or reduction of tax and other incentives that the applicable government provides to domestic companies, and variations in tax laws as compared to the United States; |
• | currency fluctuations and exchange controls, including devaluations and other exchange rate movements; |
• | rates of inflation, price instability and interest rate fluctuations; |
• | liquidity of domestic capital and lending markets; |
• | challenges in collecting accounts receivable; |
• | cultural and language differences; |
• | underdeveloped or unpredictable legal or regulatory systems; |
• | corruption; |
• | protection of intellectual property; |
• | employment regulations; |
• | environmental regulations; |
• | regulations concerning indigenous people/traditional landowners; |
• | changes of governmental royalty regimes; |
• | energy shortages; |
• | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other forms of social instability; |
• | regime changes and political upheaval; |
• | deterioration of political relations with the United States; |
• | obligatory military service by personnel; and |
• | government appropriation of assets. |
• | a limited availability of market quotations for our securities; |
• | reduced liquidity for our securities; |
• | a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
(i) | we issue additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per ordinary share, |
(ii) | the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the completion of our initial business combination (net of redemptions), and |
(iii) | the Market Value is below $9.20 per share, |
• | may significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one |
• | may subordinate the rights of holders of ordinary shares if preference shares are issued with rights senior to those afforded our ordinary shares; |
• | could cause a change of control if a substantial number of our ordinary shares is issued, which could result in the resignation or removal of our then current directors and officers; |
• | 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; |
• | may adversely affect prevailing market prices for our units, ordinary shares and/or warrants; and |
• | may not result in adjustment to the exercise price of our warrants. |
• | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• | 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; |
• | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
• | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
• | our inability to pay dividends on our ordinary shares; |
• | using a substantial portion of our cash flow to pay principal and/or interest on our debt, which will reduce the funds available for dividends on our ordinary shares, expenses, capital expenditures, acquisitions and other general corporate purposes; |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
• | 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. |
• | the markets we may serve may be subject to general economic conditions and cyclical demand, which could lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance; |
• | fluctuations in customer demand; |
• | the cyclical nature of the underlying markets may cause fluctuations in the market price of the goods or commodities being sold; |
• | competition and consolidation of the specific sector of the industry within which the target business operates; |
• | volatility in costs for strategic raw material and energy commodities or disruption in the supply of these commodities could adversely affect our financial results; |
• | supplier stability, factory or operational transitions and capacity constraints; |
• | inability to obtain necessary insurance coverage for the target business’ operations; |
• | inability to obtain the necessary bonding coverage for the target business’ operations; |
• | additional expenses and delays due to technical problems, labor problems (including union disruptions) or other interruptions at our manufacturing or operational facilities after our initial business combination; |
• | work-related accidents that may expose us to liability claims; |
• | our manufacturing processes and products not complying with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, the demand for our products declining and potential liability claims; |
• | litigation and other proceedings, including that we may be liable for damages based on product liability claims, and we may also be exposed to potential indemnity claims from customers for losses due to our work or if our employees are injured performing services; |
• | warranty claims related to our products, and resulting reputational damage and incurrence of significant costs; |
• | our products and manufacturing processes being subject to technological change; |
• | disruption or failure of networks, systems or technology as a result of computer viruses, “cyber-attacks,” misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events; and |
• | the failure of our customers to pay the amounts owed to us in a timely manner. |
• | solely dependent upon the performance of a single business, property or asset; or |
• | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
Item 1B. |
Unresolved Staff Comments. |
Item 2. |
Properties. |
Item 3. |
Legal Proceedings. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. |
Item 6. |
Selected Financial Data. |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | may significantly dilute the equity interest of investors in our IPO, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one |
• | may subordinate the rights of holders of ordinary shares if preference shares are issued with rights senior to those afforded our ordinary shares; |
• | could cause a change of control if a substantial number of our ordinary shares is issued, which could result in the resignation or removal of our present directors and officers; |
• | 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; |
• | may adversely affect prevailing market prices for our units, ordinary shares and/or warrants; and |
• | may not result in adjustment to the exercise price of our warrants. |
• | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• | 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; |
• | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
• | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
• | our inability to pay dividends on our ordinary shares; |
• | 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 ordinary shares, expenses, capital expenditures, acquisitions and other general corporate purposes; |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
• | 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. |
For the period from January 13, 2021 (inception) through December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Basic net income per ordinary share: |
||||||||
Numerator: |
||||||||
Allocation of net income |
$ | 3,857,705 | $ | 1,150,619 | ||||
Denominator: |
||||||||
Basic weighted average ordinary shares outstanding |
25,562,370 | 7,624,361 | ||||||
|
|
|
|
|||||
Basic net income per ordinary share |
$ | 0.15 | $ | 0.15 | ||||
|
|
|
|
For the period from January 13, 2021 (inception) through December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Diluted net income per ordinary share: |
||||||||
Numerator: |
||||||||
Allocation of net income |
$ | 3,852,000 | $ | 1,156,324 | ||||
Denominator: |
||||||||
Diluted weighted average ordinary shares outstanding |
25,562,370 | 7,673,516 | ||||||
|
|
|
|
|||||
Diluted net income per ordinary share |
$ | 0.15 | $ | 0.15 | ||||
|
|
|
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
Item 8. |
Financial Statements and Supplementary Data |
Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A. |
Controls and Procedures. |
Item 9B. |
Other Information. |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Item 10. |
Directors, Executive Officers and Corporate Governance. |
Name |
Age |
Title | ||||
John T. Raymond |
51 | Chairman of the board of directors | ||||
John G. Calvert |
57 | Vice Chairman of the board of directors | ||||
Sir Michael Davis |
63 | Chief Executive Officer and Director | ||||
Thras Moraitis |
59 | Chief Investment Officer | ||||
Jeffrey A. Ball |
47 | Chief Financial Officer | ||||
John Carr |
66 | Director Nominee | ||||
Michael Gamson |
64 | Director Nominee | ||||
Joseph Norville |
62 | Director Nominee | ||||
Brett A. Olsher |
61 | Director Nominee |
• | assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors; |
• | the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us; |
• | pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
• | reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence; |
• | setting clear hiring policies for employees or former employees of the independent auditors; |
• | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
• | obtaining and reviewing a report, at least annually, from the independent auditors describing (1) the independent auditor’s internal quality-control procedures and (2) 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; |
• | meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; |
• | 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 |
• | reviewing with management, the independent auditors, 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. |
• | 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; |
• | 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; |
• | reviewing our executive compensation policies and plans; |
• | implementing and administering our incentive compensation equity-based remuneration plans; |
• | assisting management in complying with our proxy statement and annual report disclosure requirements; |
• | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
• | producing a report on executive compensation to be included in our annual proxy statement; and |
• | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
• | identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board of directors, and recommending to the board of directors candidates for nomination for appointment at the annual general meeting or to fill vacancies on the board of directors; |
• | developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines; |
• | coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and |
• | reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. |
Item 11. |
Executive Compensation. |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. |
• | each person known by us to be the beneficial owner of more than 5% of our issued and outstanding ordinary shares; |
• | each of our directors, officers and director nominees; and |
• | all our directors, officers and director nominees as a group. |
Name and Address of Beneficial Owner (1) |
Number of Class A Ordinary Shares Beneficially Owned |
Approximate Percentage of Class |
Number of Class B Ordinary Shares Beneficially Owned |
Approximate Percentage of Class |
Approximate Percentage of Ordinary Shares |
|||||||||||||||
5% or Greater Shareholders: |
||||||||||||||||||||
ESM Sponsor, LP (2)(3) |
7,573,516 | 19.8 | % | 7,573,516 | 98.7 | % | 19.8 | % | ||||||||||||
Sculptor Capital, LP (4) |
1,839,770 | 6.0 | % | — | — | 6.0 | % | |||||||||||||
Millennium Group Management LLC ( 5 ) |
1,766,098 | 5.8 | % | — | — | 5.8 | % | |||||||||||||
Directors and Officers |
||||||||||||||||||||
John T. Raymond |
7,573,516 | 19.7 | % | 7,573,516 | 98.7 | % | 19.7 | % | ||||||||||||
Sir Michael Davis |
7,573,516 | 19.7 | % | 7,573,516 | 98.7 | % | 19.7 | % | ||||||||||||
John G. Calvert |
— | — | — | — | — | |||||||||||||||
Jeffrey A. Ball |
— | — | — | — | — | |||||||||||||||
John Carr |
25,000 | * | 25,000 | * | * | |||||||||||||||
Michael Gamson |
25,000 | * | 25,000 | * | * | |||||||||||||||
Joseph Norville |
25,000 | * | 25,000 | * | * | |||||||||||||||
Brett A. Olsher |
25,000 | * | 25,000 | * | * | |||||||||||||||
All directors, officers and director nominees as a group (eight individuals) |
7,673,516 | 20.0 | % | 7,673,516 | 100 | % | 20.0 | % |
* | Less than one percent. |
(1) | Unless otherwise noted, the business address of each of the following entities or individuals is c/o ESM Acquisition Corporation, 2229 San Felipe, Suite 1300, Houston, TX 77019. |
(2) | Interests shown consist solely of founder shares, classified as Class B ordinary shares. Such ordinary shares will convert into Class A ordinary shares on a one-for-one |
(3) | ESM Sponsor, LP, our sponsor, is the record holder of the Class B ordinary shares reported herein. The general partner of our sponsor is wholly-owned by EMG Fund V ESM Holdings, LP (“ESM Holdings”) and controlled by John T. Raymond as its sole manager. The limited partners of our sponsor are ESM Holdings, EMG ESM Limited Partner, LP (“ESM LP”) and VBR. Under the terms of our sponsor’s organizational documents, the limited partners have certain voting and investment control over our sponsor. John T. Raymond is the sole manager of ESM Holdings and is Chief Executive Officer of EMG Fund V, LLC, the general partner of EMG Fund V GP, LP, the general partner of ESM Holdings, and Chief Executive Officer of EMG ESM Limited Partner GP, LLC, the general partner of ESM LP. Sir Michael Davis is Chairman and Chief Executive Officer of VBR. As a result of the foregoing, each of John T. Raymond and Sir Michael Davis may be deemed to beneficially own shares held by our sponsor. Each of ESM Holdings, ESM LP and VBR disclaims beneficial ownership of the securities held by our sponsor. |
(4) | Based on a Schedule 13G filed on February 14, 2022, Sculptor Capital LP (“Sculptor”) is the principal investment manager to a number of private funds and discretionary accounts (collectively, the “Accounts”). Sculptor Capital II LP (“Sculptor-II”) is wholly owned by Sculptor, also serves as the investment manager to certain of the Accounts. The Ordinary Shares shown are held in the Accounts managed by Sculptor and Sculptor-II. Sculptor Capital Holding Corporation (“SCHC”) serves as the general partner of Sculptor. Sculptor Capital Holding II LLC (“SCHC-II”) is wholly owned by Sculptor and serves as the general partner of Sculptor-II. Sculptor Capital Management, Inc. (“SCU”) is a holding company that is the sole shareholder of SCHC and the ultimate parent company of Sculptor and Sculptor-II. Sculptor is the investment adviser to Sculptor Master Fund, Ltd. (“SCMF”). Sculptor Special Funding, LP (“NRMD”) is wholly owned by SCMF. Sculptor is the investment adviser to Sculptor Credit Opportunities Master Fund, Ltd. (“SCCO”). Sculptor-II is the investment adviser to Sculptor SC II LP (“NJGC”). Sculptor is the investment adviser to Sculptor Enhanced Master Fund, Ltd. (“SCEN”). Sculptor and Sculptor-II serve as the principal investment managers to the Accounts and thus may be deemed to be the beneficial owner of the Ordinary Shares of the Issuer held in the Accounts managed by Sculptor and Sculptor-II. SCHC-II serves as the sole general partner of Sculptor-II and is wholly owned by Sculptor. SCHC serves as the sole general partner of Sculptor. As such, SCHC may be deemed to control Sculptor and, therefore, may be deemed to be the beneficial owner of the Ordinary Shares. SCU is the sole shareholder of SCHC, and may be deemed to be the beneficial owner of the Ordinary Shares. The address of the principal business office of Sculptor, Sculptor-II, SCHC, SCHC-II, and SCU is 9 West 57 Street, 39 Floor, New York, NY 10019. The address of the principal business office of SCMF, NRMD, SCEN, and SCCO is c/o State Street (Cayman) Trust, Limited, 1 Nexus Way—Suite #5203, PO Box 896, Helicona Courtyard, Camana Bay, Grand Cayman, KY1-1103, Cayman. The address of the principal business office of NJGC is c/o The Corporation Trust Company 1209 Orange Street, Wilmington DE 19801. |
(5) | Based on a Schedule 13G filed on February 8, 2022, The reporting persons beneficially owned an aggregate of 1,766,098 Class A Ordinary Shares. Specifically, Integrated Core Strategies (US) LLC beneficially owns 538,718 shares, ICS Opportunities II LLC beneficially owns 27,380 shares, ICS Opportunities, Ltd. owns 1,200,000 shares, Millennium International Management LP owns 1,227,380 shares, Millennium Management LLC owns 1,766,098 shares, Millennium Group Management LLC owns 1,766,098 shares and Israel A. Englander owns 1,766,098 shares. The securities disclosed herein as potentially beneficially owned by Millennium Management LLC, Millennium Group Management LLC and Mr. Englander are held by entities subject to voting control and investment discretion by Millennium Management LLC and/or other investment managers that may be controlled by Millennium Group Management LLC (the managing member of Millennium Management LLC) and Mr. Englander (the sole voting trustee of the managing member of Millennium Group Management LLC). The foregoing should not be construed in and of itself as an admission by Millennium Management LLC, Millennium Group Management LLC or Mr. Englander as to beneficial ownership of the securities held by such entities. The address of the principal business office of the foregoing persons is c/o Millennium Management LLC, 399 Park Avenue , New York, New York 10022. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence. |
• | Repayment of an aggregate of up to $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses; |
• | Payment to affiliates of our sponsor of a total of $10,000 per month for office space, utilities, secretarial, administrative and support services; |
• | Reimbursement for any out-of-pocket |
• | Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our directors and officers to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 per warrant at the option of the lender. |
Item 14. |
Principal Accountant Fees and Services. |
Item 15. |
Exhibits, Financial Statement Schedules. |
(a) | The following documents are filed as part of this annual report on Form 10-K: |
1. | Financial Statements: See “Index to Financial Statements” at page F-1. |
(b) | Financial Statement Schedules. All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable. |
(c) | Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this annual report on Form 10-K. |
* | Filed herewith |
** | Furnished herewith |
Item 16. |
Form 10–K Summary. |
ESM ACQUISITION CORPORATION | ||
By: | /s/ Sir Michael Davis | |
Name: Sir Michael Davis | ||
Title: Chief Executive Officer |
Name |
Position |
Date | ||
/s/ Sir Michael Davis Sir Michael Davis |
Chief Executive Officer and Director (Principal Executive Officer) |
April 4, 2022 | ||
/s/ Jeffrey A. Ball Jeffrey A. Ball |
Chief Financial Officer (Principal Financial and Accounting Officer) |
April 4, 2022 | ||
/s/ John T. Raymond John T. Raymond |
Chairman of the Board of Directors | April 4, 2022 | ||
/s/ John G. Calvert John G. Calvert |
Vice Chairman of the Board of Directors | April 4, 2022 | ||
/s/ John Carr John Carr |
Director | April 4, 2022 | ||
/s/ Michael Gamson Michael Gamson |
Director | April 4, 2022 | ||
/s/ Joseph Norville Joseph Norville |
Director | April 4, 2022 | ||
/s/ Brett A. Olsher Brett A Olsher |
Director | April 4, 2022 |
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688) |
F-2 |
|||
Financial Statements: |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 to F-20 |
Assets |
||||
Current assets: |
||||
Cash |
$ | |||
Prepaid expenses |
||||
|
|
|||
Total current assets |
||||
Investments held in Trust Account |
||||
|
|
|||
Total Assets |
$ |
|||
|
|
|||
Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit |
||||
Current liabilities: |
||||
Accounts payable |
$ | |||
Accrued expenses |
||||
|
|
|||
Total current liabilities |
||||
Derivative warrant liabilities |
||||
Deferred underwriting commissions |
||||
|
|
|||
Total liabilities |
||||
Commitments and Contingencies |
||||
Class A ordinary shares subject to possible redemption; $ |
||||
Shareholders’ Deficit |
||||
Preference shares, $ |
||||
Class A ordinary shares, $ ) |
||||
Class B ordinary shares, $ |
||||
Additional paid-in capital |
||||
Accumulated deficit |
( |
) | ||
|
|
|||
Total shareholders’ deficit |
( |
) | ||
|
|
|||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit |
$ |
|||
|
|
General and administrative expenses |
$ | |||
General and administrative expenses—related party |
||||
|
|
|||
Loss from operations |
( |
) | ||
Other income (expenses) |
||||
Change in fair value of derivative warrant liabilities |
||||
Offering costs—derivative warrant liabilities |
( |
) | ||
Income from investments held in Trust Account |
||||
|
|
|||
Net income |
$ | |||
|
|
|||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted |
||||
|
|
|||
Basic and diluted net income per share, Class A ordinary shares |
$ | |||
|
|
|||
Weighted average shares outstanding of Class B ordinary shares, basic |
||||
|
|
|||
Basic net income per share, Class B ordinary shares |
$ | |||
|
|
|||
Weighted average shares outstanding of Class B ordinary shares, diluted |
||||
|
|
|||
Diluted net income per share, Class B ordinary shares |
$ | |||
|
|
Ordinary Shares |
Additional |
Total |
||||||||||||||||||||||||||
Class A |
Class B |
Paid-in |
Accumulated |
Shareholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
||||||||||||||||||||||
Balance—January 13, 2021 (inception) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor |
— | — | — | |||||||||||||||||||||||||
Excess cash received over the fair value of the private placement warrants |
— | — | — | — | — | |||||||||||||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Forfeiture of Class B ordinary shares |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance—December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities: |
||||
Net income |
$ | |||
Adjustments to reconcile net income to net cash used in operating activities: |
||||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Offering costs—derivative warrant liabilities |
||||
General and administrative expenses paid by related party in exchange for issuance of Class B ordinary shares |
||||
Income from investments held in Trust Account |
( |
) | ||
Changes in operating assets and liabilities: |
||||
Prepaid expenses |
( |
) | ||
Accounts payable |
||||
Accrued expenses |
||||
|
|
|||
Net cash used in operating activities |
( |
) | ||
|
|
|||
Cash Flows from Investing Activities: |
||||
Cash deposited in Trust Account |
( |
) | ||
|
|
|||
Net cash used in investing activities |
( |
) | ||
|
|
|||
Cash Flows from Financing Activities: |
||||
Repayment of note payable to related party |
( |
) | ||
Proceeds received from initial public offering, gross |
||||
Proceeds received from private placement |
||||
Offering costs paid |
( |
) | ||
|
|
|||
Net cash provided by financing activities |
||||
|
|
|||
Net change in cash |
||||
Cash—beginning of the period |
||||
|
|
|||
Cash—end of the period |
$ |
|||
|
|
|||
Supplemental disclosure of noncash financing activities: |
||||
Offering costs included in accrued expenses |
$ | |||
Offering costs paid by Sponsor under promissory note |
$ | |||
Prepaid expenses paid by Sponsor under promissory note |
$ | |||
Deferred underwriting commissions |
$ | |||
Remeasurement of Class A ordinary shares subject to possible redemption |
$ |
• | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
For the period from January 13, 2021 (inception) through December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Basic net income per ordinary share: |
||||||||
Numerator: |
||||||||
Allocation of net income |
$ | $ | |
|||||
Denominator: |
||||||||
Basic weighted average ordinary shares outstanding |
||||||||
|
|
|
|
|||||
Basic net income per ordinary share |
$ | $ | ||||||
|
|
|
|
For the period from January 13, 2021 (inception) through December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Diluted net income per ordinary share: |
||||||||
Numerator: |
||||||||
Allocation of net income |
$ | $ | |
|||||
Denominator: |
||||||||
Diluted weighted average ordinary shares outstanding |
||||||||
|
|
|
|
|||||
Diluted net income per ordinary share |
$ | $ | ||||||
|
|
|
|
Gross proceeds from the Initial Public Offering |
$ | |
||
Less: |
||||
Fair value of Public Warrants at issuance |
( |
) | ||
Offering costs allocated to Class A ordinary shares subject to possible redemption |
( |
) | ||
Plus: |
||||
Remeasurement on Class A ordinary shares subject to possible redemption |
||||
Class A ordinary shares subject to possible redemption |
$ | |||
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of written notice of redemption; and |
• | if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ |
• | if the closing price of the Class A ordinary shares for any a day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $ |
Description |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||
Assets: |
||||||||||||
Investments held in Trust Account—U.S. Treasury securities |
$ | |
$ | — | $ | — | ||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities—Public warrants |
$ | $ | — | $ | — | |||||||
Derivative warrant liabilities—Private placement warrants |
$ | — | $ | |
$ | — |
Initial Fair Value |
Over-Allotment |
|||||||
Exercise price |
$ | $ | ||||||
Share price |
$ | $ | ||||||
Volatility |
% | % | ||||||
Term |
||||||||
Risk-free rate |
% | % |
Level 3—Derivative warrant liabilities at January 13, 2021 (inception) |
$ | |||
Issuance of Public Warrants |
||||
Issuance of Private Placement Warrants |
||||
Change in fair value of derivative warrant liabilities |
( |
) | ||
Issuance of Public Warrants—over-allotment |
||||
Issuance of Private Placement Warrants—over-allotment |
||||
Transfer of Public Warrants to Level 1 |
( |
) | ||
Transfer of Private Placement Warrants to Level 2 |
( |
) | ||
|
|
|||
Level 3—Derivative warrant liabilities at December 31, 2021 |
$ | |||
|
|