UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______.
Commission
file number:
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Office) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As
of June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market
value of the registrant’s units held by non-affiliates was approximately $
As of March 29, 2024, shares of Class A common stock, $0.0001 per share par value, and shares of Class B common stock, $0.0001 par value, were issued and outstanding, respectively.
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS; SUMMARY OF RISK FACTORS
This Annual Report contains statements that constitute forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Some of the statements in this Annual Report constitute forward-looking statements because they relate to future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Annual Report may include, for example, statements about:
| ● | our ability to select an appropriate target business or businesses; |
| ● | our ability to complete our initial business combination; |
| ● | our expectations around the performance of the prospective target business or businesses; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
| ● | 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; |
| ● | our potential ability to obtain additional financing to complete our initial business combination; |
| ● | our pool of prospective target businesses; |
| ● | the ability of our officers and directors to generate a number of potential acquisition opportunities; |
| ● | our public securities’ potential liquidity and trading; |
| ● | our disclosure controls and procedures and internal control over financial reporting and any material weaknesses of the foregoing; |
| ● | 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; or |
| ● | our financial performance. |
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The forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the section of this Annual Report entitled “Risk Factors”. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,” “targets” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this Annual Report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I - Item 1A. Risk Factors” in this Annual Report.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Annual Report should not be regarded as a representation by us that our plans and objectives will be achieved.
We have based the forward-looking statements included in this Annual Report on information available to us on the date of this Annual Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Annual Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the Securities and Exchange Commission (the “SEC”), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Summary of Risk Factors
An investment in our securities involves a high degree of risk. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to:
● Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, 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 initial stockholders and members of our management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
● Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
● 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.
● 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.
● 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.
● The requirement that we complete an initial business combination within the period to consummate the initial business combination may give potential target businesses 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 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.
● We may not be able to complete an initial business combination within the period to consummate the initial business combination, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.15 per unit, or less than such amount in certain circumstances.
● If we seek stockholder approval of our initial business combination, our initial stockholders, directors, executive officers, advisors and their respective affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
● 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.
● You will not be entitled to protections normally afforded to investors of many other blank check companies.
● Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.
● The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
● Our management may not be able to maintain control of a target business after our initial business combination. Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
● We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
● Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
● 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.
● Our sponsor paid an aggregate of $25,000, or approximately $0.012 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of the shares of our Class A common stock.
● Since our sponsor paid only approximately $0.012 per share for the founder shares, our officers and directors could potentially make a substantial profit even if we acquire a target business that subsequently declines in value.
● We are a recently 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.
● Past performance by our sponsor and our management team including their affiliates and including the businesses referred to herein, may not be indicative of future performance of an investment in us or in the future performance of any business that we may acquire.
● Our sponsor, DUET Partners LLC, is controlled by non-U.S. person and has substantial ties to non-U.S. persons in Malaysia. As much, we may not be able to complete an initial business combination with a U.S. target company since such initial business combination may be subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States, and ultimately prohibited.
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PART I
ITEM 1. BUSINESS
In this Annual Report on Form 10-K (the “Form 10-K”), references to the “Company” and to “we,” “us, “and “our” refer to DUET Acquisition Corp.
Overview
We are a blank check company incorporated in September 2021 as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination. To date, our efforts have been limited to organizational activities, activities related to our initial public offering, and the pursuit of our initial business combination.
If the Business Combination (as defined below) is not consummated, we may pursue an initial business combination opportunity in any business, industry, sector or geographical location, though we intend to focus on industries that complement our management team’s background and to capitalize on the ability of our management team to identify and acquire a business focusing on sectors where our management team has extensive experience. There is no restriction on the geographic location of targets we can pursue; however, we expressly disclaim any intent to and will not consummate a business combination with a target business located in China or Hong Kong. Sectors we plan on exploring include, but are not limited to, middle market “enabling technology” companies.
As of December 31, 2023, we had not commenced operations other than our activities related to our formation, initial public offering, and the pursuit of our initial business combination.
The Company’s sponsor is DUET Partners LLC, a Delaware limited liability company (the “Sponsor”). Our management team is led by our Co-Chief Executive Officers, Yeoh Oon Lai and Dharmendra Magasvaran.
Mr. Yeoh has been serving as Co-Chief Executive Officer of DUET Acquisition Corp. since November 2021. Prior to this, Mr. Yeoh has served in multiple C Level roles in consumer retail and entertainment with a stellar track record in commercial leadership and extensive multi-category, multi-format, and channel experience. He brings over two decades of deep strategic and operational experience in the consumer industry to the Company’s management team. Mr. Yeoh was the Chief Executive Officer of TGV Cinemas from September 2017 to August 2020 (a leading cinema chain under the Usaha Tegas Group owned by Ananda Krishnan). During his tenure, for the fiscal years of 2018 and 2019, TGV Cinemas attained its highest levels of revenue and profitability in its twenty-five-year history, whilst accelerating a transformative digital and technology strategy. Mr. Yeoh served as Chief Executive Officer of FJ Benjamin (M) (a specialty retail group in Southeast Asia) from November 2012 to April 2017, overseeing a portfolio of notable brands across the fashion to luxury spectrum (Guess, Superdry, Gap, Banana Republic, La Senza, Celine, Loewe, Marc Jacobs, and Bell & Ross). During this period, as the SEA Superdry head, he spearheaded the successful multi-market launch of Superdry in three Southeast Asia territories-Malaysia, Singapore and Indonesia. From February 2010 to November 2012, Mr. Yeoh was the Country Head of Esprit de Corp (M), a global apparel brand with a long history in Asia. His tenure resulted in three years of record profitability for the local subsidiary. As the Country Head and Managing Director of Fossil Time (M) from November 2006 to February 2010, Mr. Yeoh led the pioneering team which built the Fossil retail business locally and was recognized as the best operating subsidiary in Asia in 2009 within the Fossil Asia Group. Mr. Yeoh earned a BBA in Finance from the University of Texas at Austin and was also an ASEAN scholar during his early education in Singapore.
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Mr. Magasvaran has been serving as Co-Chief Executive Officer of DUET Acquisition Corp. since November 2021. Previously, Mr. Magasvaran had been serving as a partner for Deloitte Digital South East Asia (SEA) and a Digital Leader within the Deloitte Consulting SEA firm from September 2017 until July 2021. Given his strong consulting pedigree and 22-year tenure in the consulting & digital business, he was, and is still, a digital coach to senior business leaders helping them create value from digital and data disruption. He has helped grow the digital practice to a triple-digit sized team with a direct multi-million dollar revenue at highly profitable margins. The team’s transformation offerings span across digital value chain, covering digital strategy, customer experience, content, commerce, marketing services and digital delivery. He architects and implements ground-breaking digital solutions for clients. Recent client successes include helping a banking client digitally transform their wholesale banking capability, an oil & gas major to leverage sales and servicing to drive further top line growth and synergies across their business, a new digital proposition for a global multinational bank with a unique and differentiated route to market, driving transformation for corporate banking b2b service efficiency, helping a healthcare provider embark on a digital transformation journey, helping a bank design, build and launch a new digital business offering across two markets, helping an industrial products client extend its market reach leveraging digital marketing and commerce capabilities to enhance partner experience, lower cost to serve to ensure economical scaling of reach and providing 1:1 partner marketing opportunities to drive further partner intimacy. Mr. Magasvaran is a digital thought leader driving the latest thinking across “Digital Transformation,” “Marketing as a Service,” and “Omnichannel Commerce.” Mr. Magasvaran served in various roles with Accenture from November 1999 until April 2017. In his final role with Accenture, he was the managing director for Accenture Interactive SEA from December 2012 until April 2017, helping drive similar capability, practice and business builds in the region. He made managing director in Accenture in 2012, after an accelerated 12-year career at Accenture. At Accenture, client successes included helping a telco redefine customer experience through a digital reinvention of the telco store, helping one of the largest coffee retailers “think and go” digital, digital salesforce enablement of a life sciences company, rejuvenating an airlines digital sales and servicing ecosystem and launch of Asia’s first internet television proposition. Mr. Magasvaran graduated from Imperial College, London in 1999 with a BEng 1st Class Honours degree in Information Systems Engineering.
Initial Public Offering
The registration statement for the Company’s Initial Public Offering was declared effective on January 19, 2022. On January 24, 2022, the Company consummated its Initial Public Offering of 8,625,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $86,250,000 (the “Initial Public Offering”). The Company granted the underwriter a 45-day option to purchase up to an additional 1,125,000 Units at the Initial Public Offering price to cover over-allotments, if any.
Simultaneously with the consummation of the closing of the Offering, the Company consummated the private placement of an aggregate of 390,000 units (the “Placement Units”) to the Sponsor at a price of $10.00 per Placement Unit, generating total gross proceeds of $3,900,000 (the “Private Placement”).
Subsequently, on January 24, 2022, the underwriters exercised the over-allotment option in full, and the closing of the issuance and sale of the additional Units occurred (the “Over-allotment Option Units”). The total aggregate issuance by the Company of 1,125,000 units at a price of $10.00 per unit resulted in total gross proceeds of $11,250,000. On January 24, 2022, simultaneously with the sale of the Over-allotment Option Units, the Company consummated the private sale of an additional 33,750 Placement Units, generating gross proceeds of $337,500. The Placement Units were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
A total of $87,543,750 comprised of the proceeds from the Offering and the proceeds of private placements that closed on January 24, 2022, net of the underwriting commissions, discounts, and offering expenses, was deposited in a trust account established for the benefit of the Company’s public stockholders.
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Termination of Prior Merger Agreement
As previously disclosed, on July 25, 2022, we entered into a definitive Business Combination Agreement and Plan of Merger (the “AnyTech Merger Agreement”) with Millymont Limited, a private limited company incorporated in Ireland (“Holdco”), Duet Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdco, J. Streicher Technical Services, LLC, a Delaware limited liability company, Anteco Systems, S.L., trading as AnyTech365, a company incorporated in Spain and registered at the Commercial Registry of Malaga under reference MA-122108, Miguel Ángel Casales Ruiz and Thomas Marco Balsloev, as the sellers’ representatives, and Lee Keat Hin, as the Company’s representative.
On April 6, 2023, the Company provided the other parties with written notice of the termination of the AnyTech Merger Agreement pursuant to Section 11.1 thereof (the “Termination”). No party will be required to pay another party a termination fee as a result of the Termination. The termination of the AnyTech Merger Agreement also terminates and makes void certain ancillary agreements entered into in connection.
Proposed Business Combination
As previously disclosed, we entered into a binding letter of intent with Fenix 360 Pte. Ltd., a Singapore private company limited by shares (the “Target”), on July 6, 2023, pursuant to which we agreed to acquire all of the outstanding equity interests of the Target. On November 28, 2023, we and the Target entered into a definitive Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”).
Domestication
Pursuant to and upon the closing (the “Closing”) of the transactions contemplated in the Business Combination Agreement (collectively, the “Business Combination”), we will transfer by way of continuation from the State of Delaware to the Cayman Islands and domesticate (the “Domestication”) as a Cayman Islands exempted company limited by shares in accordance with Section 390 of the Delaware General Corporation Law, as amended, and Part XII of the Cayman Islands Companies Act, as amended (the “Cayman Companies Act”).
In connection with the Domestication, (a) each share of our Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one ordinary share of us (the “DUET Ordinary Shares”), (b) each share of our Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one DUET Ordinary Share, (c) each warrant of the Company that is outstanding immediately prior to the Domestication shall, from and after the Domestication, represent the right to purchase one DUET Ordinary Share at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the Warrant Agreement, dated January 19, 2022 by and between us and Continental Stock Transfer & Trust Company, and (d) our governing documents shall be amended and restated in the form of the amended and restated memorandum and articles of association to be mutually agreed between the parties to the Business Combination Agreement (the “DUET A&R Charter”), and, as so amended and restated, the DUET A&R Charter will be the memorandum and articles of association of the Company until thereafter amended in accordance with the terms thereof and the Cayman Companies Act.
Business Combination
Pursuant to the Business Combination Agreement, as consideration for the Business Combination, the shareholders of the Target (each, a “Target Shareholder” and, together, the “Target Shareholders”) are entitled to receive an aggregate of 61,000,000 DUET Ordinary Shares, valued at $10.00 per share for an aggregate value equal to $610,000,000. Each Target Shareholder will be entitled to receive, in accordance with terms of the Business Combination Agreement, one DUET Ordinary Share for each share of the Target (the “Target Ordinary Shares”) held by such Target Shareholder (the “Exchange Consideration”). As of the Effective Time (as defined in the Business Combination Agreement), each Target Shareholder, upon receiving the Exchange Consideration, shall cease to have any other rights in and to the Target.
Upon the terms and subject to the conditions of the Business Combination Agreement, at or prior to the Closing, each Target Shareholder will deliver to Continental Stock Transfer & Trust Company (the “Exchange Agent”) a share exchange agreement in the form mutually agreed to between the Parties that has been duly executed by that Target Shareholder, surrender any original certificates for the Target Ordinary Shares held by such Target Shareholder, and deliver such other documents reasonably requested by the Company. In exchange, the Company will issue and cause the Exchange Agent to deliver to each Target Shareholder the amount of DUET Ordinary Shares due to such Target Shareholder pursuant to the Business Combination Agreement.
Our Business Strategy
In the event the Business Combination is not consummated, while we may pursue an alternative business combination target in any industry or geographic location, we intend to focus our search on industries that complement our management team’s background and to capitalize on the ability of our management team to identify and acquire a business, focusing on middle market “enabling technology” companies. Our objective is to focus on middle market and emerging growth businesses operating with a total enterprise value from $200 million to $2 billion, which may be located throughout the world.
We believe that acquiring a leading high-growth technology company or assets in middle market “enabling technology” companies will provide a platform to fund consolidation and fuel growth for our company. There is no restriction in the geographic location of targets we can pursue, although we would ideally intend to prioritize the Asia-Pacific region as the geographical focus; however, we expressly disclaim any intent to and will not consummate a business combination with a target business located in China or Hong Kong.
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In the event the Business Combination is not consummated, we believe that there is a large pool of quality initial business combination targets looking for exit opportunities with an increasing number of private equity (or PE) and venture capital (or VC) activities in those certain regions, which provides us opportunities given what we believe are the limited exit options for mid-market companies in the region. Also, we believe that the technology and tech enabled industries represent a particularly attractive deal sourcing environment that will allow us to leverage our team’s skill sets and experience to identify an initial business combination which can potentially serve as a strong platform for future add-on acquisitions.
In the event the Business Combination is not consummated, we will pursue an alternative business combination target, identifying either a company with an ability to make the “technology leap” as the pathway to sustained growth and/ or related “change maker” enabling technology companies with a significant Asia-Pacific presence or compelling Asia-Pacific potential.
The intersection of middle market companies and technology complements the expertise of our management team. In the event the Business Combination is not consummated, we will seek enterprises that offer a differentiated value proposition that delivers greater meaning and relevance to the modern customer. These enterprises will likely possess unique digital and technology propositions thereby creating a strong barrier to entry. Combined with a large addressable market, the pathway for sustainable growth and profitability is ripe for the taking.
Our Acquisition Criteria
Consistent with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
| ● | Target Size: Consistent with our investment thesis as described above, we plan to target businesses with total enterprise values ranging from $200 million to $2 billion in the technology industry, specifically middle market “enabling technology” companies. |
| ● | Businesses with Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of both existing and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in increased operating leverage. |
| ● | Businesses with Potential for Strong Free Cash Flow Generation. We will seek to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash flow. We intend to focus on one or more businesses that have predictable revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value. |
| ● | Strong Management. We will seek companies with strong management teams already in place. We will spend significant time assessing a company’s leadership and human fabric, and maximizing its efficiency over time. |
| ● | Benefit from Being a Public Company. We intend to acquire one or more businesses that will benefit from being publicly-traded and can effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company. |
| ● | Appropriate Valuations and Upside Potential. We intend to apply rigorous, criteria-based, disciplined, and valuation-centric metrics. We intend to acquire a target on terms that we believe provide significant upside potential while seeking to limit risk to our investors. |
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These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that from time to time our management may deem relevant.
Initial Business Combination Period
We initially had up to 24 months from the closing of the Initial Public Offering to consummate an initial business combination (as subsequently extended, the “Combination Period”). However, if we anticipate that we may not be able to consummate our initial business combination within the Combination Period, we may, by resolution of our board of directors if requested by our Sponsor, extend the period of time we will have to consummate an initial business combination by an additional 3 months, subject to our Sponsor purchasing additional Private Placement Units in connection with such extension. Our stockholders will not be entitled to vote on or redeem their shares in connection with any such extension. Pursuant to the terms of our amended and restated certificate of incorporation, in order to extend the period of time to consummate an initial business combination in such a manner, our Sponsor, upon no less than five days’ advance notice prior to the applicable deadline, must purchase an additional 86,250 Private Placement Units at $10.00 per unit and deposit the proceeds of such purchase into the Trust Account on or prior to the date of the applicable deadline. Our Sponsor is not obligated to extend the time for us to complete our initial business combination. This structure is unlike the structure of similar blank check companies, which generally are only permitted to extend the time period to complete an initial business combination in connection with an amendment to their certificate of incorporation.
In addition to our Sponsor’s ability to extend our deadline to consummate an initial business combination by three months by purchasing additional Private Placement Units as described above, we may also hold a stockholder vote at any time to amend our amended and restated certificate of incorporation to modify the amount of time we will have to consummate an initial business combination (as well as to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within the time periods described herein or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity). As described herein, our Sponsor, executive officers and directors have agreed that they will not propose any such amendment unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any such amendment 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 (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein.
On April 19, 2023, the Company held a special meeting of its stockholders (the “First Extension Special Meeting”) at which the stockholders of the Company approved a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A Common Stock included as part of the units sold in the Offering from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $175,000 or (y) $0.055 per share for each public share that was not redeemed in connection with the First Extension Special Meeting for each such one-month extension, unless the closing of the Company’s initial business combination shall have occurred, in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with.
On December 5, 2023, we filed a definitive proxy statement with the SEC in connection with the solicitation of proxies for a Special Meeting of Stockholders, which was held on December 18, 2023 (the “Second Extension Special Meeting”). At the Second Extension Special Meeting, our stockholders were asked to vote on a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company has to consummate a business combination from January 24, 2024 to January 24, 2025, subject to twelve one-month extensions. Our public stockholders were given the opportunity to redeem their public shares in connection with such proposal. Upon approval of such proposal, the Sponsor, or its affiliates or permitted designees, were required to deposit into the Trust Account the lesser of (x) $40,000 or (y) $0.04 per share for each public share that was not redeemed in connection with the Second Extension Special Meeting for each such one-month extension.
Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
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The structure of the Business Combination is described above under “Proposed Business Combination.” As in the Business Combination, we anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. If the Business Combination is not consummated, we may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the prior owners of the target business, the target management team or stockholders or for other reasons, but we will only complete such 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 sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock, shares or other equity interests of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as our initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us.
Our Business Combination Process
If the Business Combination is not consummated, in evaluating prospective business combinations, we will conduct a thorough due diligence review process that encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We also seek to utilize the expertise of our management team in analyzing companies and evaluating operating projections, financial projections and determining the appropriate return expectations given the risk profile of the target business.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event the Business Combination is not consummated and we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of view. We are not required to obtain an opinion in any other context.
Certain of our officers and directors presently have, and any of them in the future may have, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
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Our Management Team
Members of our management team are not obligated to devote any specific number of hours to our matters, but they devote as much of their time as they, in the exercise of their respective business judgement, deem necessary to our affairs until we have completed our initial business combination. The amount of time our officers devote in any time period varies based on the stage of the initial business combination process we are in. We do not have an employment agreement with any member of our management team.
In the event the Business Combination is not consummated, we believe our management team’s operating and transaction experience and relationships with companies will provide us with a substantial number of potential business combination targets; provided, however, there is no guarantee that a business combination target will be found or that a business combination will be consummated. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships in the data center and technology industries. This network has grown through the activities of our management team having served as directors or officers for numerous publicly-listed and privately-owned companies and experience with acquisitions, divestitures and corporate strategy and implementation.
Status as a Public Company
In the event the Business Combination is not consummated, we believe our structure will make us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination with us. Following an initial business combination, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A Common Stock (or shares of a new holding company) or for a combination of our shares of Class A Common Stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed initial business combination is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business combination, negatively.
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We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to 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 our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following January 24, 2027, the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals or exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
Financial Position
With funds available for an initial business combination in the amount of $11.39 million after payment of $2,587,500 of deferred underwriting fee and payment of an aggregate redemption amount of approximately $74.52 million as of December 31, 2023, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
The structure of the Business Combination is described above under “Proposed Business Combination.” As described above, we intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private placement units, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter into or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
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If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A Common Stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. In addition, we are targeting businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the private placement units, and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Sources of Target Businesses
In the event the Business Combination is not consummated, we anticipate that target business candidates are brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses are also brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read the prospectus of our initial public offering and know what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates, also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.
In addition, in the event the Business Combination is not consummated, we expect to receive a number of deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and our sponsor and their affiliates. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, in the event the Business Combination is not consummated, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). None of our sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated initial business combination except as set forth herein. We pay our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating, and completing an initial business combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.
If any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
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Selection of a Target Business and Structuring of our Initial Business Combination
Nasdaq rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination, as was the case with the Business Combination. The fair market value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act, as is the case with the Business Combination. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of Nasdaq’s 80% fair market value test. There is no basis for our investors to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In the event the Business Combination is not consummated, in evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information that will be made available to us.
In the event the Business Combination is not consummated, the time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. In addition, we are focusing our search for an initial business combination in a single industry. By completing our initial business combination with only a single entity, our lack of diversification may:
| ● | 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 |
| ● | cause us to depend on the marketing and sale of a single product or limited number of products or services. |
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Limited Ability to Evaluate the Target’s Management Team
Although we closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial Business Combination
The Business Combination requires the approval of our stockholders under the Business Combination Agreement and Nasdaq rules. However, in the event the Business Combination is not consummated, in connection with any alternative proposed business combination, we may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
| Whether | ||
| Stockholder | ||
| Approval is | ||
| Type of Transaction | Required | |
| Purchase of assets | No | |
| Purchase of stock of target not involving a merger with the company | No | |
| Merger of target into a subsidiary of the company | No | |
| Merger of the company with a target | Yes |
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In the event the Business Combination is not consummated, under Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
| ● | 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; |
| ● | any of our directors, officers or substantial stockholders (as defined by Nasdaq 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 common stock could result in an increase in outstanding common shares or voting power of 5% or more; or |
| ● | the issuance or potential issuance of common stock will result in our undergoing a change of control. |
Permitted Purchases of our Securities
In connection with the Business Combination, or if the Business Combination is not consummated, and we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of any such purchases of shares could be to (i) vote such shares in favor of the Business Combination or an alternative business combination, in the event Business Combination is not consummated, and thereby increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A Common Stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors or their affiliates will only purchase public shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
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Any purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Common Stock upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. As of December 31, 2023, the amount in the trust account was approximately $10.89 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of Conducting Redemptions
In connection with the Business Combination, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A Common Stock upon the completion of the Business Combination in connection with a stockholder meeting called to approve the Business Combination. In the event the Business Combination is not consummated, in connection with an alternative proposed initial business combination, we will provide our public stockholders with the opportunity to redeem all or a portion of their Class A Common Stock upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial business combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with such rules.
If stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal reasons, 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 |
| ● | file proxy materials with the SEC. |
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The Business Combination requires the approval of our stockholders under the Business Combination Agreement and Nasdaq rules. We will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the Business Combination. If the Business Combination is not consummated, and we seek stockholder approval of an alternative initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
The Business Combination requires the approval of our stockholders under the Business Combination Agreement and Nasdaq rules and we will complete the Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. If the Business Combination is not consummated and we seek stockholder approval in connection with a proposed alternative initial business combination, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and private placement shares and any public shares purchased during or after our initial public offering (including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
If the Business Combination is not consummated and if in connection with an alternative initial business combination a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | 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. |
If the Business Combination is not consummated and upon the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A Common Stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
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Our amended and restated certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, and all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion of Our Initial Business Combination if We Seek Stockholder Approval
Notwithstanding the foregoing, in connection with the stockholder approval of the Business Combination, or if the Business Combination is not consummated and we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides 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 Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed initial business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with Redemption Rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent up to two business days prior to the vote on the proposal to approve the initial business combination, or to deliver their shares to the transfer agent electronically using the DWAC System, at the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two days prior to the vote on the initial business combination to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
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The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion of the initial business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date of the stockholder meeting. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If the Business Combination or an alternative initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If the Business Combination is not consummated, we may continue to try to complete an initial business combination with a different target by January 24, 2025, unless we extend the period of time to consummate a business combination beyond such date.
Redemption of Public Shares and Liquidation if no Initial Business Combination
Our amended and restated certificate of incorporation, as amended, provides that we will have until January 24, 2025, subject to twelve one-month extensions as described in our amended and restated certificate of incorporation, as amended, to complete our initial business combination. If we are unable to complete our initial business combination by January 24, 2025, and our amended and restated certificate of incorporation is not further amended to extend this date, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not 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 and not previously released to us to pay our 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), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our 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 our warrants, which will expire worthless if we fail to complete our initial business combination by January 24, 2025.
Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to complete our initial business combination by January 24, 2025. However, if our sponsor, officers or directors acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination by January 24, 2025.
As discussed above, on April 19, 2023, the stockholders of the Company approved the proposal (the “Extension Amendment Proposal”) to amend the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A Common Stock included as part of the units sold in the Offering from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $175,000 or (y) $0.055 per share for each public share that was not redeemed in connection with the Special Meeting for each such one-month extension, unless the closing of the Company’s initial business combination shall have occurred, in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with.
As discussed above, on December 5, 2023, we filed a definitive proxy statement with the SEC in connection with the solicitation of proxies for the Special Meeting held on December 18, 2023, at which our stockholders were asked to vote on the Extension Amendment Proposal. Pursuant to the Extension Amendment Proposal, which was approved, the date by which the Company has to consummate a business combination has been extended from January 24, 2024 to January 24, 2025, subject to twelve one-month extensions.
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We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $87,134 held outside the trust account as of December 31, 2023, although we cannot assure you that there will be sufficient funds for such purpose.
We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of our initial public offering and the sale of the private placement units, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.15. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.15. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we have sought and will continue to seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. Adeptus, our independent registered public accounting firm, and the underwriters of our initial public offering, have not executed agreements with us waiving such claims to the monies held in the trust account.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.15 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 $10.15 per 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 the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
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In the event that the proceeds in the trust account are reduced below (i) $10.15 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.15 per public share.
We seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor is also not liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. We have access to the amounts held outside the trust account ($87,134 as of December 31, 2023) with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by January 24, 2025 may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by January 24, 2025 is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination by January 24, 2025, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not 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 and not previously released to us to pay our 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), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following January 24, 2025 and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
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Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we have sought and will continue to seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.15 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.15 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not complete our initial business combination by January 24, 2025 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination by January 24, 2025, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
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Competition
In the event the Business Combination is not consummated, in identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary, in the exercise of their respective business judgement, to our affairs until we have completed our initial business combination. The amount of time our officers devote in any time period varies based on the stage of the initial business combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination. We do not have an employment agreement with any member of our management team.
Periodic Reporting and Financial Information
We have registered our units, Class A Common Stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2023 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, we will be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
We have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
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In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following January 24, 2027, the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A Common Stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by nonaffiliates exceeds $700 million as of the end of that year’s second fiscal quarter.
Corporate Information
Our executive offices are located at V03-11-02, Designer Office. V03, Lingkaran SV, Sunway Velocity, Kuala Lumpur, 55100, and our telephone number is +60-3-9201-1087.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to include risk factors in this Report. However, below is a partial list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:
● Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
● If we seek stockholder approval of our initial business combination, our initial stockholders and members of our management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
● Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
● 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.
● 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.
● The requirement that we complete an initial business combination within the period to consummate the initial business combination may give potential target businesses 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 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.
● We may not be able to complete an initial business combination within the period to consummate the initial business combination, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.15 per unit, or less than such amount in certain circumstances.
● If we seek stockholder approval of our initial business combination, our initial stockholders, directors, executive officers, advisors and their respective affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
● 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.
● You will not be entitled to protections normally afforded to investors of many other blank check companies.
● Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.
● The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
● Our management may not be able to maintain control of a target business after our initial business combination. Upon the loss of control of a target business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
● We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
● Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
● 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.
● Our sponsor paid an aggregate of $25,000, or approximately $0.012 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of the shares of our Class A common stock.
● Since our sponsor paid only approximately $0.012 per share for the founder shares, our officers and directors could potentially make a substantial profit even if we acquire a target business that subsequently declines in value.
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● We are a recently 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.
● Past performance by our sponsor and our management team including their affiliates and including the businesses referred to herein, may not be indicative of future performance of an investment in us or in the future performance of any business that we may acquire.
● Our sponsor, DUET Partners LLC, is controlled by non-U.S. person and has substantial ties to non-U.S. persons in Malaysia. As such, we may not be able to complete an initial business combination with a U.S. target company since such initial business combination may be subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States, and ultimately prohibited.
For the complete list of risks relating to our operations, see the section titled “Risk Factors” contained in our Registration Statement.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Not applicable.
Item 2. Properties
Our executive offices are located at V03-11-02, Designer Office. V03, Lingkaran SV, Sunway Velocity, Kuala Lumpur, 55100, and our telephone number is +60-3-9201-1087. We have agreed to pay DUET Partners LLC, a total of $10,000 per month for office space, utilities and secretarial and administrative support and the use of this office location is included in such $10,000 monthly payment. As of December 31, 2023, $45,000 has been paid and $75,000 had accrued in connection therewith. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. We consider our current office space adequate for our current operations.
Item 3. Legal Proceedings
From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows.
Item 4. Mine Safety Disclosures
Not Applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Our units, public shares and public warrants are each traded on the Nasdaq Global Market under the symbols “DUETU,” “DUET,” and “DUETW,” respectively. Our units commenced public trading on January 19, 2022, and our public shares and public warrants commenced separate public trading on March 14, 2022. Our Class B common stock is not listed on any exchange.
As of March 20, 2024, there were four holders of record of shares of our common stock and one holder of record of our public warrants. A substantially greater number of holders of common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. As a result, we are unable to estimate the total number of stockholders represented by the record holders of our common stock.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Securities Authorized for Issuance Under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Use of Proceeds from the Initial Public Offering
As previously reported, on January 24, 2022, DUET Acquisition Corp. (the “Company”) completed its initial public offering (the “Offering”) of 8,625,000 units (“Units”). Each Unit consisting of one Class A common stock and one redeemable warrant (“Public Warrant”). Each Public Warrant will entitle the holder to purchase one common stock at an exercise price of $11.50 per whole share, subject to adjustment, pursuant to the Company’s registration statement on Form S-1 (File No. 333-261494). The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $86,250,000.
Subsequently, on January 24, 2022, the underwriters exercised the over-allotment option in full and the closing of the issuance and sale of the additional Units occurred (the “Overallotment Option Units”). The total aggregate issuance by the Company of 1,125,000 units at a price of $10.00 per unit resulted in total gross proceeds of $11,250,000. On January 24, 2022, simultaneously with the sale of the Overallotment Option Units, the Company consummated the private sale of an additional 33,750 Placement Units, generating gross proceeds of $337,500. The Placement Units were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.
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On March 9, 2022, the holders of the Units elected to separately trade the shares of Class A Common Stock and the Warrants comprising the Units commencing on March 14, 2022. Those Units not separated will continue to trade on The Nasdaq Capital Market under the symbol “DUETU,” and the Class A Common Stock and Warrants that are separated will trade on The Nasdaq Capital Market under the symbols “DUET” and “DUETW,” respectively. Holders of Units will need to instruct their brokers to contact Continental Stock Transfer & Trust Company, the Company’s transfer agent, to separate their Units into shares of Class A Common Stock and Warrants.
No payments for our expenses were made in the offering described above directly or indirectly to (i) any of our directors, officers or their associates, (ii) any person(s) owning 10% or more of any class of our equity securities or (iii) any of our affiliates, except in connection with the repayment of outstanding loans and pursuant to the administrative support agreement disclosed herein which we entered into with our sponsor. There has been no material change in the planned use of proceeds from our offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) related to the Initial Public Offering.
Item 6. Selected Financial Data
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “us,” “our” or “we” refer to DUET Acquisition Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to:
| ● | our ability to complete our initial business combination; | |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; | |
| ● | 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, as a result of which they would then receive expense reimbursements; | |
| ● | our ability to implement business plans, forecasts, and other expectations regarding the target business after the completion of our initial business combination; | |
| ● | the ability of our officers and directors to generate a number of potential acquisition opportunities; | |
| ● | our pool of prospective target businesses; | |
| ● | our public securities’ potential liquidity and trading; | |
| ● | the lack of a market for our securities; | |
| ● | our continued liquidity and our ability to continue as a going concern; | |
| ● | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or | |
| ● | our financial performance. |
All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
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Overview
The Company is a blank check company formed under the laws of the State of Delaware on September 20, 2021 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company intends to effectuate its initial business combination using cash from the proceeds of its initial public offering (the “Initial Public Offering”) and the private placement consummated in connection therewith (the “Private Placement”), the proceeds of the sale of our securities in connection with our initial business combination, our shares, debt or a combination of cash, stock and debt.
The issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
| ● | may significantly dilute the equity interest of 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; | |
| ● | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; | |
| ● | could cause a change in control if a substantial number of shares of our common stock is 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; | |
| ● | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and | |
| ● | may adversely affect prevailing market prices for our Class A Common Stock and/or warrants. |
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
| ● | 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 security is payable on demand; | |
| ● | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; | |
| ● | our inability to pay dividends on our common stock; | |
| ● | 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 common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund 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; | |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and | |
| ● | other purposes and other disadvantages compared to our competitors who have less debt. |
We expect to continue to incur significant costs in the pursuit of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
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Termination of the Merger Agreement
As previously disclosed, on July 25, 2022, the Company entered into a definitive Business Combination Agreement and Plan of Merger (the “Merger Agreement”) with Millymont Limited, a private limited company incorporated in Ireland (“Holdco”), Duet Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdco, J. Streicher Technical Services, LLC, a Delaware limited liability company, Anteco Systems, S.L., trading as AnyTech365, a company incorporated in Spain and registered at the Commercial Registry of Malaga under reference MA-122108, Miguel Ángel Casales Ruiz and Thomas Marco Balsloev, as the sellers’ representatives, and Lee Keat Hin, as the Company’s representative.
On April 6, 2023, the Company provided the other parties with written notice of the termination of the Merger Agreement pursuant to Section 11.1 thereof (the “Termination”). No party will be required to pay another party a termination fee as a result of the Termination.
The termination of the Merger Agreement also terminates and makes void the Support Agreement, the Non-Competition and Non-Solicitation Agreement, and the Lock-up Agreement (each as defined in the Merger Agreement), each of which were executed concurrently with the Merger Agreement.
Business Combination Period
At a special meeting of the Company’s stockholders held on April 19, 2023, the stockholders of the Company approved the First Amendment to the Amended and Restated Certificate of Incorporation of the Company, giving the Company the right to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses, (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A Common Stock included as part of the units sold in the Initial Public Offering (the “Business Combination Period”) from April 24, 2023 up to nine (9) one-month extensions to January 24, 2024. In connection with approval of the First Amendment to the Amended and Restated Certificate of Incorporation of the Company, DUET Partners LLC (the “Sponsor”) caused $175,000 to be deposited in the Trust Account. On October 13, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from October 24, 2023 to November 24, 2023 (the “Monthly Extension”). The Monthly Extension is the seventh of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended.
On December 18, 2023, the Company held a virtual special meeting of its stockholders (the “Special Meeting”). At the Special Meeting, The Stockholders approved the Charter Amendment at the Special Meeting, changing (A) the structure and cost of the Company’s right to extend the Deadline Date (the “Extension Amendment Proposal”), and (B) the right of the holders of the Company’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock” or “Founder Shares”) to convert such shares of Class B Common Stock into shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”) on a one-to-one basis at the election of such holders (the “Founder Share Amendment Proposal”); and (C) the right of the directors of the Company to take any action required to be taken at a meeting of the board of directors (the “Board”) or at a meeting of a committee thereof without holding such a meeting if a consent in writing, setting forth the actions to be taken, is signed by a majority of the Board or a majority of the members of any committee, as the case may be (the “Action by Written Consent Amendment Proposal” and, together with the Founder Share Amendment Proposal, the “Additional Charter Amendment Proposals”).
In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of 3,760,678 shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $10.95 per share, for an aggregate of approximately $41.2 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $14.1 million before the Extension Payment.
The Charter Amendment allows the Company to extend through January 24, 2025 (or until the business combination is consummated, if earlier) the Deadline Date, provided that (i) by the 24th calendar day of each of such thirteen months unless the Company’s initial business combination has been consummated earlier and in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of the business combination, DUET Partners, LLC, the Company’s sponsor, or its affiliates or permitted designees deposits into the Trust Account the lesser of (x) $40,000 or (y) $0.04 per share for each public share that was not redeemed in connection with the Special Meeting, and (ii) the procedures relating to any such Extension, as set forth in the Trust Agreement, as amended by the Trust Amendment, shall have been complied with.
On December 19, 2023, the Company deposited two payments in an aggregate of $80,000 (the “Extension Payment”) into the Trust Account, which enables the Company to extend the period of time it has to consummate its initial business combination by two months from December 24, 2023 to February 24, 2024. On February 16, 2024, the Company caused to be deposited $40,000 into the Company’s trust account, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from February 24, 2024 to March 24, 2024. On March 19, 2024, the Company caused to be deposited $40,000 into the Company’s trust account, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from March 24, 2024 to April 24, 2024. The foregoing extensions are permitted under the Company’s governing documents.
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Business Combination Agreement
As previously disclosed, the Company entered into a binding letter of intent with Fenix 360 Pte. Ltd., a Singapore private company limited by shares (the “Target”), on July 6, 2023, pursuant to which DUET agreed to acquire all of the outstanding equity interests of the Target. On November 28, 2023, DUET and the Target entered into a definitive Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”). DUET and the Target are sometimes referred to this Annual Report on Form 10-K, individually, as a “Party” and, collectively, as the “Parties.”
Domestication
Pursuant to and upon the closing (the “Closing”) of the transactions contemplated in the Business Combination Agreement (collectively, the “Business Combination”), the Company will transfer by way of continuation from the State of Delaware to the Cayman Islands and domesticate (the “Domestication”) as a Cayman Islands exempted company limited by shares in accordance with Section 390 of the Delaware General Corporation Law, as amended, and Part XII of the Cayman Islands Companies Act, as amended (the “Cayman Companies Act”).
In connection with the Domestication, (a) each share of DUET’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one ordinary share of DUET (the “DUET Ordinary Shares”), (b) each share of DUET’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one DUET Ordinary Share, (c) each warrant of DUET that is outstanding immediately prior to the Domestication shall, from and after the Domestication, represent the right to purchase one DUET Ordinary Share at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the Warrant Agreement, dated January 19, 2022 by and between DUET and Continental Stock Transfer & Trust Company, and (d) the governing documents of DUET shall be amended and restated in the form of the amended and restated memorandum and articles of association of DUET in a form to be mutually agreed between the Parties (the “DUET A&R Charter”), and, as so amended and restated, the DUET A&R Charter will be the memorandum and articles of association of DUET until thereafter amended in accordance with the terms thereof and the Cayman Companies Act.
Business Combination
Pursuant to the Business Combination Agreement, as consideration for the Business Combination, the shareholders of the Target (each, a “Target Shareholder” and, together, the “Target Shareholders”) are entitled to receive an aggregate of 61,000,000 DUET Ordinary Shares, valued at $10.00 per share for an aggregate value equal to $610,000,000. Each Target Shareholder will be entitled to receive, in accordance with terms of the Business Combination Agreement, one DUET Ordinary Share for each share of the Target (the “Target Ordinary Shares”) held by such Target Shareholder (the “Exchange Consideration”). As of the Effective Time (as defined in the Business Combination Agreement), each Target Shareholder, upon receiving the Exchange Consideration, shall cease to have any other rights in and to the Target.
Upon the terms and subject to the conditions of the Business Combination Agreement, at or prior to the Closing, each Target Shareholder will deliver to Continental Stock Transfer & Trust Company (the “Exchange Agent”) a share exchange agreement in the form mutually agreed to between the Parties (a “Share Exchange Agreement”) that has been duly executed by that Target Shareholder, surrender any original certificates for the Target Ordinary Shares held by such Target Shareholder, and deliver such other documents reasonably requested by DUET. In exchange, DUET will issue and cause the Exchange Agent to deliver to each Target Shareholder the amount of DUET Ordinary Shares due to such Target Shareholder pursuant to the Business Combination Agreement.
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Representations and Warranties; Covenants
Pursuant to the Business Combination Agreement, the Parties made customary representations and warranties for transactions of this type. The Business Combination Agreement includes certain covenants that are customary for transactions of this type, including obligations of the Parties to use reasonable best efforts to operate their respective businesses in the ordinary course and to refrain from taking certain specified actions without the prior written consent of the applicable party, in each case, subject to certain exceptions and qualifications. The Parties have agreed not to solicit, negotiate, or enter into a competing transaction. Additionally, the Target has agreed to certain other covenants, including to (a) deliver the PCAOB Financials (as defined in the Business Combination Agreement) to DUET no later than December 11, 2023, or such other date as may be agreed upon by the parties, (b) conclude investigations, examinations and diligence with respect to certain agreed-upon items by December 12, 2023 (the “Due Diligence Period”), and (c) onboard certain employees of one of the Target’s primary software developers. The covenants in the Business Combination Agreement generally will not survive the Closing, subject to certain exceptions, including certain covenants and agreements that by their terms are to be performed in whole or in part after the Closing.
Reserve Against Certain Liabilities
Certain of the Target Shareholders (the “Legacy Shareholders”) are to deposit with the Escrow Agent at Closing their pro rata portion of an aggregate of 4,500,000 DUET Ordinary Shares otherwise issuable to the Legacy Shareholders as Exchange Consideration (the “Escrow Shares”). The Escrow Shares are subject to a quarterly release following the Closing and are reserved to cover losses arising out of or in connection with the Target’s rescission plan for tokens that were issued by management of the Target, any pending or threatened legal proceedings required to be disclosed by the Target, and any other matters mutually agreed upon by the Parties (collectively, the “Covered Matters”). To the extent the Target incurs losses based on an action against the Target or its affiliates by any third party with respect to the Covered Matters, the Legacy Shareholders consent to and agree to reasonably and promptly allow the post-Closing company to redeem an aggregate number of Escrow Shares with a value equal to the amount of such loss incurred by the post-Closing company therefrom, with the value of the Escrow Shares to be determined using the 5-Day VWAP of the DUET Ordinary Shares.
Conditions to Obligations of Both Parties at Closing
The obligations of the Parties to consummate the Business Combination are subject to the satisfaction of the following conditions, any one or more of which may be waived by in writing by either or both of the Parties: (a) DUET stockholder approval of the Business Combination has been obtained; (b) all of the Target Shareholders have submitted a Share Exchange Agreement and have exchanged all of the Target Ordinary Shares for the DUET Ordinary Shares in accordance with the terms of the Business Combination Agreement no later than the date of the DUET Stockholders’ Meeting (defined below); (c) the Proxy/Registration Statement (as defined below) shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”), and no stop order suspending the effectiveness of the Proxy/Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the U.S. Securities and Exchange Commission (the “SEC”) and not withdrawn; (d) the Nasdaq Stock Market LLC (“Nasdaq”) shall have completed its review of the “Listing of Additional Shares Notification Form” filed by DUET with Nasdaq with respect to the DUET Ordinary Shares to be issued in connection with the Business Combination; (e) no Exchange Objection (as defined in the Business Combination Agreement) shall have been raised, or any such Exchange Objection which has been raised shall have been addressed; (f) no federal, state, provincial, municipal, local or foreign government, governmental authority, taxing, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal (“Governmental Authority”) shall have enacted, issued, promulgated, enforced or entered any statute, law, ordinance, rule, order, or regulation (“Law”) that is then in effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits consummation of the Business Combination, other than any such restraint that is immaterial, or for which the relevant Governmental Authority does not have jurisdiction over either of the parties hereto with respect to the Business Combination; and (g) all Closing deliverables required under the Business Combination Agreement have been provided.
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Conditions to Obligations of DUET at Closing
Pursuant to the Business Combination Agreement, the obligations of DUET to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by DUET: (a)(i) the representations and warranties of the Target regarding the capitalization of the Target are true and correct in all respects of the date of the Closing except with respect to such representations and warranties speaking to an earlier date, which shall be true and correct at and as of such date, subject to changes made to the Business Combination Agreement, (ii) the Target’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of the Target shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions, and (iii) each of the representations and warranties of the Target other than the Target’s Fundamental Representations shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions; (b) each of the covenants of the Target to be performed as of or prior to the Closing shall have been performed in all material respects; (c) there shall not have occurred a Company Material Adverse Effect (as defined in the Business Combination Agreement); (d) each of the Restrictive Covenant Agreements (as defined in the Business Combination Agreement) with each of the Key Executives (as defined in the Business Combination Agreement) shall be in full force and effect at Closing; (e) the Target’s unaudited consolidated statement of financial positions and consolidated statements of comprehensive income, changes in equity and cash flows of the Target and its Subsidiaries as of and for the nine-month period ended September 30, 2023, which comply with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant shall have been provided; and (f) all closing deliveries required by the Business Combination Agreement shall have been delivered.
Conditions to Obligations of the Target at Closing
The obligation of the Target to consummate is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Target: (a) subject to certain qualifications and exceptions in each: (i) the representations and warranties of DUET regarding the capitalization of DUET shall be true and correct as of the Closing, (ii) DUET’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of DUET shall be materially true and correct as of date of the Closing, subject to certain exceptions, and (iii) each of the representations and warranties of DUET contained in the Business Combination Agreement other than those regarding organization, due authorization, absence of changes, capitalization, and brokers’ fees shall be true and correct as of Closing; (b) the Class A Common Stock shall remain listed on the Nasdaq Global Market; and (c) each of the covenants of DUET to be performed as of or prior to the Closing shall have materially been performed.
Termination
The Business Combination Agreement may be terminated and the transactions therein may be abandoned: (a) by DUET pursuant to a failure of the Target to deliver timely the PCAOB Financials, or comply with the requests of DUET during the Due Diligence Period; (b) by DUET if the Proxy/Registration Statement is not declared effective or such effectiveness is materially delayed due to any action or omission by the Target; (c) by the Target if DUET is de-listed from the Nasdaq Global Market for any reason other than a breach by the Target or Legacy Shareholders of obligations to the Business Combination Agreement; (d) by mutual written consent of all Parties; (e) by DUET or the Target if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or order that is then in effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits their consummation; (f) by DUET if (i) there is a breach of any representation, warranty, covenant or agreement on the part of the Target, such that the conditions obligating DUET to close would not be satisfied, subject to a 30 day cure period for the Target, or (ii) the Closing has not occurred on or before the date on which the DUET charter expires and the Parties agree it shall not be extended (the “Agreement End Date”), unless DUET is in material breach of the Business Combination Agreement; (g) by DUET if the original certificates for the Target duly endorsed for transfer to DUET have not been submitted for exchange along with duly executed Share Exchange Agreements from the Target Shareholders by the date of the DUET Stockholders’ Meeting; (h) by the Target by written notice to DUET if (i) there is any breach of any representation, warranty, covenant or agreement on the part DUET set forth in the Business Combination Agreement, such that the conditions obligating the Target to close would not be satisfied at Closing, subject to a 30 day cure period for DUET upon notice, or (ii) the Closing has not occurred on or before the Agreement End Date, unless the Target is in material breach of the Business Combination Agreement; or (i) if the resolution of outstanding accrued underwriting fees payable to EF Hutton, division of Benchmark Investments LLC, are not resolved, in a manner satisfactory to both DUET and the Target before the Closing. In the event the Business Combination Agreement is terminated pursuant to (a), (b) or (f) above, the Target shall pay DUET $3,500,000 within 10 days of such termination.
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The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by the full text of the Business Combination Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
Convertible Note Purchase Agreement
On July 6, 2023, DUET Partners LLC (the “Sponsor”) and Fenix entered into a convertible note purchase agreement (the “Note Purchase Agreement”), pursuant to which Fenix agreed to loan $200,000 to the Sponsor at the signing of the Letter of Intent and an additional $800,000 at the signing of the Definitive Agreement. In addition, in order to finance any further extensions in connection with the Proposed Business Combination, Fenix shall at its discretion, loan funds as may be required up to another $500,000. The Sponsor will sell and issue to Fenix one or more unsecured, non-interest-bearing notes in connection with the aforementioned loans, with an aggregate principal amount of up to $1,500,000 (the “Fenix Notes”).
The Note Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party thereto. The representations and warranties contained therein were made only for the purposes of the Note Purchase Agreement, and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain limitations set forth therein.
The Fenix Notes are due and payable by the Sponsor upon the closing of the Proposed Business Combination between the Company and Fenix (the “Maturity Date”). The Fenix Notes are convertible into common stocks of the Company pursuant to terms that will be set forth in the Definitive Agreement. The Fenix Notes will be cancelled and the principal amount of the loans disbursed by the Sponsor to the Company (as described below in the section titled “Promissory Note”) shall be forgiven, and the balance of the principal amount of the Fenix Notes not disbursed by the Sponsor to the Company will be returned to Fenix (i) in the event that a Definitive Agreement is not signed by July 31, 2023 (or such later date that may be mutually agreed between the parties), (ii) if a Definitive Agreement is entered into and then subsequently terminated by the Company, or (iii) if the PCAOB audited financial statements of Fenix have not been delivered by the date mutually agreed between the parties and stipulated in the Business Combination Agreement.
The issuance of the Fenix Notes will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The foregoing descriptions of the Note Purchase Agreement and the Fenix Notes are summaries only and are qualified in their entirety by the full text of the Note Purchase Agreement and the form of the Fenix Notes which is attached to the Note Purchase Agreement, a copy of which is attached as Exhibit 10.2 hereto and is incorporated herein by reference.
Promissory Note
On July 6, 2023, the Company issued a promissory note (the “Promissory Note”) in the principal amount of $1,500,000 to the Sponsor. The Promissory Note was issued to provide the Company with additional working capital, and the funds provided in accordance therewith will not be deposited into the Company’s trust account. The Company issued the Promissory Note in consideration for a loan from the Sponsor to fund the Company’s extension costs and working capital requirements. The Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial business combination is consummated and (ii) the liquidation of the Company on or before July 23, 2023 (subject to the extension of the period in which the Company must complete its initial business combination pursuant to the Company’s governing documents, or such later liquidation date as may be approved by the Company’s stockholders). At the election of the Sponsor, the unpaid principal amount of the Promissory Note may be converted into units of the Company (the “Conversion Units”) and the total Conversion Units so issued shall be equal to: (x) the portion of the principal amount of the Promissory Note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Conversion Units.
The issuance of the Promissory Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The foregoing description is a summary only and is qualified in its entirety by the full text of the Promissory Note, a copy of which is attached as Exhibit 10.3 hereto and is incorporated herein by reference.
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Critical Accounting Policies
We have established accounting policies which conform to generally accepted accounting principles (“GAAP”) in the U.S. Preparing financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Following is a discussion of the estimates and assumptions used in setting accounting policies that we consider critical in the presentation of our financial statements. Many estimates and assumptions involved in the application of GAAP may have a material impact on our financial condition or operating performance, or on the comparability of such information to amounts reported for other periods, because of the subjectivity and judgment required to account for highly uncertain items or the susceptibility of such items to change. These estimates and assumptions affect the reported amounts covered by this report. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied or different amounts would have been recorded, thus resulting in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements. Additionally, other companies may use different estimates and assumptions that may impact the comparability of our financial condition and results of operations to those companies.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires 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 period.
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. Accordingly, the actual results could differ significantly from those estimates.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature 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) are classified as temporary equity. At all other times, shares are classified as stockholders’ equity. 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, and is therefore classified as temporary equity on the balance sheet.
Net income (loss) per share
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares are reduced for the effect of the Class B Common Stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters. Diluted income (loss) per share is calculated by taking into account any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. If none, diluted income (loss) per share is the same as basic income (loss) per share for the periods presented. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value as of the period presented.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to December 31, 2023, were organizational activities, those necessary to prepare for the Initial Public Offering, identifying a target company for a business combination, and activities related to the Merger Agreement and the Termination. We do not expect to generate any operating revenues until after the completion of our business combination. We expect to generate non-operating income in the form of interest income on cash and marketable securities held after the Initial Public Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
For the year ended December 31, 2023, we had a net income of $222,771, which consisted of formation and operating costs of $2,570,024, franchise tax cost of $190,000, income tax provision of $153,561 and interest earned on investments held of $3,136,356.
For the year ended December 31, 2022, we had a net loss of $469,563, which consists of interest earned on investments held of $1,048,411, offset with formation and operating costs of $1,097,191, and franchise tax expense of $191,682 and income tax provision of $229,101.
Going Concern, Liquidity and Capital Resources
On February 18, 2022, we consummated our Initial Public Offering of 8,625,000 Units at a price of $10.00 per Unit, generating gross proceeds of $86,250,000. Simultaneously with the consummation of the Initial Public Offering, we completed the private placement of an aggregate of 390,000 units to our sponsor at a purchase price of $10.00 per private placement unit, generating total gross proceeds of $3,900,000.
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For the year ended December 31, 2023, cash used in operating activities was $692,432. For the year ended December 31, 2022, cash used in operating activities was $892,669.
As of December 31, 2023 and 2022, we had investments of $13,979,449 and $88,592,161 held in the Trust Account, respectively. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes. For the year ended December 31, 2023 and 2022, we withdrew $679,346 and nil, respectively, from interest earned on the Trust Account to pay income tax and franchise tax. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2023 and 2022, we had cash of $87,134 and $27,066 held outside of the Trust Account, respectively. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial business combination.
In order to fund working capital deficiencies or finance transaction costs in connection with our initial business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units identical to the units issued in the Private Placement, at a price of $10.00 per unit at the option of the lender.
We currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management plans to address this uncertainty during the period leading up to the business combination, however this cannot be guaranteed.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee up to $10,000 for office space, utilities and secretarial and administrative support services. We began incurring these fees on January 25, 2022, and will continue to incur these fees monthly until the earlier of the completion of our initial business combination and our liquidation.
The underwriters are entitled to a deferred fee of $2,587,500 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Following the consummation of the Initial Public Offering, the net proceeds of the Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we do not believe that there will be an associated material exposure to interest rate risk.
Item 8. Financial Statements and Supplementary Data
This information appears following Item 15 of this Report and is included herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Co-Chief Executive Officers and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officers and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the year ended December 31, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our principal executive officers and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Controls over Financial Reporting
During the most recently completed fiscal year ended December 31, 2023, there was no changes in our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Directors and Executive Officers
Our current directors and executive officers are as follows:
| Name | Age | Position | ||
| Larry Gan Nyap Liou | 70 | Chairman of the Board of Directors | ||
| Yeoh Oon Lai | 55 | Co-Chief Executive Officer | ||
| Dharmendra Magasvaran | 48 | Co-Chief Executive Officer | ||
| Lee Keat Hin | 66 | Chief Financial Officer | ||
| Lim Tian Huat | 69 | Director | ||
| Peter Chia Chon Hian | 72 | Director | ||
| Hendrik “Erik” Stoel | 55 | Director |
Larry Gan Nyap Liou, Chairman of the Board of Directors
Over the last 20 years, Mr. Gan has been an active and strategic investor in eCommerce and digital enterprises. He advocates disruptive business models, mentors start-ups, and operates an extensive business network of entrepreneurs, incubators, consulting professionals, and investment funds. He has led several public offerings and listings on international exchanges. In parallel, he has dedicated his time to corporate governance serving on the Minority Shareholders Watchdog Committee from July 2005 to July 2020 and has assumed Board roles in several public listed companies in Malaysia and abroad.
In the Technology, Media and Online Classifieds space, he served as Chairman of the Boards of Redtone International Berhad from June 2006 to October 2009, Diversified Gateway Solutions Berhad from June 2012 to August 2013, Cuscapi Berhad from June 2006 to March 2018, Catcha Digital (pka Rev Asia) Berhad from Nov 2010 to Feb 2023, and as a Director on the Boards of Prestariang Berhad from November 2010 to June 2013, iProperty Ltd (Australia) from July 2007 to October 2009, and Flexiroam Ltd (Australia) from November 2015 to September 2019, and 8Common Ltd (Aust) from March 2014 to March 2022.
During that time, he had a short stint as the Group CEO and Managing Director of Omesti Berhad from August 2013 to December 2015, helping to transform an old traditional IT services and hardware distribution company into an eCommerce enterprise with industry specific technology solutions.
In the Financial Services sector, Mr. Gan had served as Independent Director on the Boards of Ambank Group from June 2006 to December 2014, Hong Leong Insurance from March 2011 to March 2012, and Maybank Investment Bank Berhad from July 2015 to July 2016. He stepped down from the Board of Maybank Investment Bank Berhad to pursue several Fintech ventures.
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In the Real Estate and Leisure Sector, Mr. Gan was a long-standing Director at Tanjong PLC UK for 11 years from May 2005 to December 2016 and a Senior Independent Director at Tropicana Corporation Berhad from August 2013 to April 2018.
From December 1978 to December 2004, Mr. Gan had been with Accenture (then Arthur Andersen and later Andersen Consulting), retiring from Accenture in 2004. Over a career span of 26 years, he has consulted on strategic projects for government and multinational corporations and has invested and worked with technologies around the world. Mr. Gan served as a member of the Accenture Global Management Council from September 1997 to May 2004, Managing Partner for Accenture Asia from September 1996 to September 1999, and Managing Partner of Accenture Technology Ventures Asia Pacific from September 1999 to September 2003. Whilst at Accenture, Mr. Gan also served on several external industry organizations, national consultative bodies, advisory boards of universities, and professional associations. He was Chairman of the Association of Computer Industry Malaysia (PIKOM) from January 1989 to December 1991 and Director of MIMOS Berhad (National Technology Research) from April 1997 to July 2008. He is presently Chairman of the Board of Cloudaron Berhad, a position he has held since July 2017, Fatfish Group Ltd, a position he has held since September 2014, and Abelco Investment Group Ltd, a position he has held since January 2020. He is also a Director on the Board of Eversendai Corporation Berhad and JP Morgan (Malaysia) Securities Sdn Bhd. An ardent supporter of the Arts, Education and Sports, Mr. Gan was a National Fencer and President of the Malaysian Fencing Federation from January 1993 to December 2005. He was also the Trustee of the Yayasan Tuanku Nur Zahirah (Queen’s Foundation) from September 2008 to April 2012 and served on the Board of Governors - St Joseph International School Kuala Lumpur from January 2016 to April 2021 and from Feb 2022 to Oct 2023. He is now on the Council of the Badminton Association of Malaysia, a position he has held since March 2020.
He is a frequent speaker at business seminars and forums and an active contributor of opinions and essays to news dailies and business publications. For over two years, he ran a leadership column in The Edge, a prominent Malaysian business weekly. He has been featured on various leading local and international TV programmes such as Asian Business News, Bloomberg News, Money Matters and Astro In Person.
Mr. Gan has his early education in Malacca and pursued a professional accounting degree with the Association of Chartered Accountants UK. He is a Certified Chartered Accountant (United Kingdom and Malaya).
Yeoh Oon Lai, Co-Chief Executive Officer
Mr. Yeoh has been serving as Co-Chief Executive Officer of DUET Acquisition Corp. since November 2021. Prior to this, Mr. Yeoh has served in multiple C Level roles in consumer retail and entertainment with a stellar track record in commercial leadership and extensive multi-category, multi-format, and channel experience. He brings over two decades of deep strategic and operational experience in the consumer industry to the Company’s management team. Mr. Yeoh served as the COO for Uniqlo Malaysia from March 2022 to Feb 2023 and is currently the Chief Development Officer at Wing Tai and Senior Executive Advisor to Uniqlo.
Mr. Yeoh was the Chief Executive Officer of TGV Cinemas from September 2017 to August 2020 (a leading cinema chain under the Usaha Tegas Group owned by Ananda Krishnan). During his tenure, for the fiscal years of 2018 and 2019, TGV Cinemas attained its highest levels of revenue and profitability in its twenty-five-year history, whilst accelerating a transformative digital and technology strategy. Mr. Yeoh served as Chief Executive Officer of FJ Benjamin (M) (a specialty retail group in Southeast Asia) from November 2012 to April 2017, overseeing a portfolio of notable brands across the fashion to luxury spectrum (Guess, Superdry, Gap, Banana Republic, La Senza, Celine, Loewe, Marc Jacobs, and Bell & Ross). During this period, as the SEA Superdry head, he spearheaded the successful multi-market launch of Superdry in three Southeast Asia territories-Malaysia, Singapore and Indonesia. From February 2010 to November 2012, Mr. Yeoh was the Country Head of Esprit de Corp (M), a global apparel brand with a long history in Asia. His tenure resulted in three years of record profitability for the local subsidiary. As the Country Head and Managing Director of Fossil Time (M) from November 2006 to February 2010, Mr. Yeoh led the pioneering team which built the Fossil retail business locally and was recognized as the best operating subsidiary in Asia in 2009 within the Fossil Asia Group.
Mr. Yeoh earned a BBA in Finance from the University of Texas at Austin and was also an ASEAN scholar during his early education in Singapore.
Dharmendra Magasvaran, Co-Chief Executive Officer
Mr. Magasvaran has been serving as Co-Chief Executive Officer of DUET Acquisition Corp. since November 2021. Previously, Mr. Magasvaran had been serving as a partner for Deloitte Digital South East Asia (SEA) and a Digital Leader within the Deloitte Consulting SEA firm from September 2017 until July 2021. Given his strong consulting pedigree and 22-year tenure in the consulting & digital business, he was, and is still, a digital coach to senior business leaders helping them create value from digital and data disruption. He has helped grow the digital practice to a triple-digit sized team with a direct multi-million dollar revenue at highly profitable margins. The team’s transformation offerings span across digital value chain, covering digital strategy, customer experience, content, commerce, marketing services and digital delivery. He architects and implements ground-breaking digital solutions for clients. Recent client successes include helping a banking client digitally transform their wholesale banking capability, an oil & gas major to leverage sales and servicing to drive further top line growth and synergies across their business, a new digital proposition for a global multinational bank with a unique and differentiated route to market, driving transformation for corporate banking b2b service efficiency, helping a healthcare provider embark on a digital transformation journey, helping a bank design, build and launch a new digital business offering across two markets, helping an industrial products client extend its market reach leveraging digital marketing and commerce capabilities to enhance partner experience, lower cost to serve to ensure economical scaling of reach and providing 1:1 partner marketing opportunities to drive further partner intimacy. Mr. Magasvaran is a digital thought leader driving the latest thinking across “Digital Transformation,” “Marketing as a Service,” and “Omnichannel Commerce.”
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Mr. Magasvaran served in various roles with Accenture from November 1999 until April 2017. In his final role with Accenture, he was the managing director for Accenture Interactive SEA from December 2012 until April 2017, helping drive similar capability, practice and business builds in the region. He made managing director in Accenture in 2012, after an accelerated 12-year career at Accenture. At Accenture, client successes included helping a telco redefine customer experience through a digital reinvention of the telco store, helping one of the largest coffee retailers “think and go” digital, digital salesforce enablement of a life sciences company, rejuvenating an airlines digital sales and servicing ecosystem and launch of Asia’s first internet television proposition.
Mr. Magasvaran graduated from Imperial College, London in 1999 with a BEng 1st Class Honours degree in Information Systems Engineering.
Lee Keat Hin, Chief Financial Officer
Mr. Lee has been serving as Chief Financial Officer of DUET Acquisition Corp. since November 2021. Mr. Lee also serves as the Principal Consultant cum Director for Proactive Consultancy Sdn Bhd, a private M&A boutique consulting firm he founded in 1995. Proactive specializes in mergers and acquisitions and corporate finance and is known for providing strategic M&A consulting services to turnaround ailing listed companies.
Mr. Lee was involved in advising the takeover of a large retail chain of hypermarkets in Malaysia in 2023. Mr. Lee was formerly the Project Director to Hualang Renewable Energy Sdn Bhd, a private company overseeing the acquisition of targeted businesses in renewable energy from 2019 to 2022. Mr. Lee is presently a director of privately held Kos Communications Sdn Bhd and Wiramar Resources Sdn Bhd.
From March 2010 to November 2018, Proactive was appointed as consultant to Ho Hup Construction Company Bhd to turn around the public listed company. In November 2014, after exemplary turnaround results were achieved, Mr. Lee was appointed as Director of Corporate Services in Ho Hup to oversee the acquisition of new assets and the raising of M&A funding.
From July 2014 to August 2017, Proactive was appointed as consultant to Straits Inter Logistics Bhd, which was formerly Raya Industries Berhad, an ailing listed company that aimed to dispose its assets and diversify into the oil trading and bunkering business. From February 2012 to February 2014, Proactive was appointed as advisor to Agromate Holdings Group, the largest Malaysian fertilizer manufacturing group to facilitate a merger exercise with a Japanese conglomerate. From 2011 to 2014, Proactive was appointed as consultant to Formis Group Bhd (now Omesti Bhd), a publicly listed information technology group to provide corporate advisory and M&A services. From April 2005 to November 2011, Mr. Lee was appointed as an independent, non-executive director in publicly listed DVM Technologies Berhad (now known as Key Alliance Group Berhad).
Prior to 2005, Mr. Lee and Proactive were appointed as consultant in various merger and acquisition projects including LSK Corporation Berhad, Tai Wah Garments Berhad, Pan Pacific Asia Berhad and Cygal Holdings Berhad.
Mr. Lee graduated with a first class honours a Bachelors degree in Accountancy from the University of Malaya and is a Chartered Accountant.
Lim Tian Huat, Director
Mr. Lim was appointed to our Board in January 2022. Mr. Lim currently serves as Managing Director/Chief Executive Officer of A Advisory Sdn. Bhd. since January 2010.
Mr. Lim also served as Managing Partner of Lim Tian Huat & Co from 2010 to 2014 and resumed such role in June 2021. He is the Managing Partner of Rodgers Reidy & Co. Malaysia and the Managing Director/Chief Executive Officer of Rodgers Reidy (Asia) Sdn Bhd, positions he has held since 2014.
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Mr. Lim is the Managing Director/Chief Executive Officer of Rodgers Reidy Singapore Pte Ltd and Andersen Tax Singapore Pte Ltd, positions he has held since 2017.
Mr. Lim was a Partner of Ernst & Young Malaysia from 2002 to 2009, in charge of Corporate Restructuring and Insolvency.
Mr. Lim joined Arthur Andersen Singapore in 1979. He was in Audit practice from 1979 to 1985. He then returned to Malaysia to specialize in Corporate Finance, Restructuring and Insolvency. He became a Partner in 1990 and led the Global Corporate Finance practice, including Corporate Restructuring and Insolvency. He was a member of Corporate Restructuring Global Council from 1993 to 1995.
Mr. Lim Tian Huat has served as a Senior Independent Non-Executive Director of Anglo-Eastern Plantation PLC (quoted on the London Stock Exchange) since May 2015, Senior Independent Non-Executive Director of MajuPerak Holding Berhad (quoted in Bursa Malaysia) since August 2020, and Independent Non-Executive Director of Pacific & Orient Insurance Co. Berhad since January 2020.
Mr. Lim is a Fellow of the Association of Chartered Certified Accountants, United Kingdom; a Member of Malaysian Institute of Accountants and Malaysia Institute of Certified Public Accountants.
Mr. Lim is the Founding President of Insolvency Practitioners’ Association of Malaysia.
Mr. Lim earned a BA in Economics (Honours), Manchester Metropolitan University, United Kingdom.
Peter Chia Chon Hian, Director
Mr. Chia was appointed to our Board in January 2022. Mr. Chia is a partner in Myo Restobar, a Chinese restaurant he co-founded in August 2017. He is currently working with co-founders on a project to transform Asian commercial property and Green commercial assets into marketable securities, and to provide alternative financing for owners, while creating new investment opportunities. The project has attracted strategic partners who will apply their expertise to each build a pillar of the business.
Mr. Chia was engaged as a consultant with SGX from April 2008 to June 2016. During this time, Mr. Chia was a board member of Philippine Dealing & Exchange Corp (PDEX), Philippine Depository & Trust Corp (PDTC), and Philippine Securities Settlement Corp (PSSC), representing SGX. Prior to this, Mr. Chia had led the SGX investment in Philippine Dealing System Holdings Corp, holding company of PDEX, PDTC and PSSC.
From December 1999 to March 2008, Mr. Chia was employed as Executive Vice President and Head, Securities Clearing and Depository, EVP and Head, Strategy and Business Development, and as an Adviser. In 2000, he was a member of the management team leading SGX through its own initial public offering, transforming from a utility into a commercial entity. SGX was among the pioneer exchanges in listing itself. He led the development of the SGX securities lending and borrowing business, opening up opportunities for more than one million Central Depository (CDP) account holders to unlock and earn lending income on their holdings, while providing new opportunities for arbitrage, covered short selling and increased liquidity. He was a board member of CDP from 1999 to 2003.
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In 1999, he was a member of the management team working on the merger of Stock Exchange of Singapore (SES) and Singapore International Monetary Exchange (SIMEX) to form SGX. While statistically, more mergers fail than succeed, this was one merger which went on to achieve new highs. He was Senior Manager, CDP, from February 1999 to December 1999. Prior to that, he was Public Affairs Manager in SES, from December 1987 to February 1999. Mr. Chia graduated from the University of Singapore in 1977 with a Bachelor of Accountancy.
Hendrik “Erik” Stoel, Director
Mr. Stoel was appointed to our Board in January 2022. Mr. Stoel has been serving as the Chief Executive Officer of Dragonfly Leadership consultants since April 2021. As such he advises on business growth strategies, business transformation and senior leadership development. From April 2016 to April 2021, Mr. Stoel served as the Chief Executive Officer of British American Tobacco Malaysia Bhd, a company listed at the Malaysian stock exchange. Mr. Stoel had full responsibility for the P&L, corporate & commercial strategy and was a member of the board, the audit committee, and the risk committee. In his role he managed government, media and investor relationships. From September 2012 to March 2016, he was initially the Sales and Marketing Director for British American Tobacco Korea transitioning into the Area Director for North Asia (Korea, Hong Kong & Taiwan). In this role he had full responsibility for P&L, Corporate & Commercial Strategy and his job involved active stakeholder engagement. He was a member of the Asia Pacific Leadership Team. From 1995 to 2012, Mr. Stoel worked for British American Tobacco in a multitude of countries, mainly in Sales and Marketing Director roles in Asia and Middle East. In these roles he was predominantly assigned to design turnaround growth strategies with supporting organisational transformation & supply chain revisions. Mr. Stoel earned a bachelor’s degree in marketing & finance at the Hanzehogeschool in Groningen, the Netherlands and obtained a Master’s Degree (MBA) at the University of Northumbria, United Kingdom.
Number and Terms of Office of Officers and Directors
We have four directors. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors, consisting of Peter Chia Chon Hian and Hendrik “Erik” Stoel will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Lim Tian Huat, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Larry Gan Nyap Liou, will expire at the third annual meeting of stockholders.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of: a Chairman of the Board, Co-Chief Executive Officers, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.
Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that all of our directors, other than Mr. Gan, are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
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Executive Officer and Director Compensation
None of our officers has received any cash compensation for services rendered to us. Commencing on the date of our final prospectus for our Initial Public Offering filed with the SEC, we have paid DUET Partners LLC, our sponsor, a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. No compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors, prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. 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. Any such payments prior to an initial business combination will be made using funds held outside the trust account. Other than quarterly audit committee review of such payments, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with identifying and consummating an initial business combination.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed initial business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our officers and directors that provide for benefits upon termination of employment.
Committees of the Board of Directors
Our board of directors has two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of independent directors.
Audit Committee
We established an audit committee of the board of directors. Messrs. Lim, Chia, and Stoel serve as members of our audit committee, and Mr. Lim chairs the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Messrs. Messrs. Lim, Chia, and Stoel meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee is financially literate and our board of directors has determined that Mr. Lim qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
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We adopted an audit committee charter, which details the principal functions of the audit committee, including:
| ● | the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; |
| ● | pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
| ● | setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
| ● | 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 registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (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 and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; |
| ● | 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 registered public accounting 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. |
Compensation Committee
We established a compensation committee of the board of directors. Messrs. Lim, Chia, and Stoel serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Each of Messrs. Lim, Chia, and Stoel are independent, and Mr. Chia chairs the compensation committee.
We adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
| ● | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Co-Chief Executive Officers’ compensation, if any is paid by us, evaluating our Co-Chief Executive Officers’ performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Co-Chief Executive Officers based on such evaluation; |
| ● | reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers; |
| ● | reviewing on an annual basis 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; |
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| ● | if required, 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. |
Notwithstanding the foregoing, as indicated above, other than the payment to DUET Partners LLC, our sponsor, of $10,000 per month, for up to 18 months, for the office space, utilities, and secretarial and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity that has one or more executive officers serving on our board of directors.
Corporate Governance and Nominating Committee
We do not have a standing nominating committee though we intend to form a corporate governance and nominating committee as and when required to do so by law or Nasdaq rules. In accordance with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. Our independent directors will participate in the consideration and recommendation of director nominees. In accordance with Rule 5605 of the Nasdaq rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in place.
The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Code of Ethics
We adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit and compensation committee charters as exhibits to our final prospectus for our Initial Public Offering filed with the SEC. You will be able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
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Item 11. Executive Compensation
None of our executive officers or directors have received any cash compensation for services rendered to us. We may pay consulting, finder or success fees to our initial stockholders, officers, directors or their affiliates for assisting us in consummating our initial business combination. In addition, our initial stockholders, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us.
After our initial business combination, members of our management team who remain with us may be paid consulting, management, or other fees from the combined company with any and all amounts being fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials furnished to our shareholders. The amount of such compensation may not be known at the time of a shareholder meeting held to consider an initial business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.
Since our formation, we have not granted any stock options or stock appreciation rights or any other awards under long-term incentive plans to any of our executive officers or directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The following table sets forth information regarding the beneficial ownership of our common stock as December 31, 2023.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all of our common stock beneficially owned by them.
On October 18, 2021, our sponsor paid an aggregate of $25,000, or approximately $0.012 per share, in exchange for the issuance of 2,156,250 shares of founder shares. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The per unit price of the founder shares was determined by dividing the amount contributed to the company by the number of founder shares issued.
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned(2) | Approximate Percentage of Outstanding Common Stock | ||||||
| DUET Partners LLC(1)(2) | 2,437,500 | 63.6 | % | |||||
| Larry Gan Nyap Liou | - | - | ||||||
| Yeoh Oon Lai(1) | 2,437,500 | 63.6 | % | |||||
| Dharmendra Magasvaran(1) | 2,437,500 | 63.6 | % | |||||
| Lee Keat Hin | - | - | ||||||
| Lim Tian Huat | - | - | ||||||
| Peter Chia Chon Hian | - | - | ||||||
| Hendrik “Erik” Stoel | - | - | ||||||
| All executive officers and directors as a group (7 individuals) | 2,437,500 | 63.6 | % | |||||
| (1) | DUET Partners LLC, our sponsor, is the record holder of the securities reported herein. Messrs. Lai and Magasvaran, our Co-Chief Executive Officers, are the managers and members of our sponsor. By virtue of this relationship, Messrs. Lai and Magasvaran may be deemed to share beneficial ownership of the securities held of record by our sponsor. Messrs. Lai and Magasvaran disclaim any such beneficial ownership except to the extent of their pecuniary interest. The business address of each of these entities and individuals is V03-11-02, Designer Office. V03, Lingkaran SV, Sunway Velocity, Kuala Lumpur, 55100. |
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| (2) | Interests shown consist solely of founder shares, classified as shares of Class B common stock, and placement shares after this offering. Founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment. |
Holders of our public shares will not have the right to appoint any directors to our board of directors prior to our initial business combination. Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all other matters requiring approval by our stockholders, including amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions including our initial business combination.
The holders of the founder shares have agreed (a) to vote any founder shares owned by it in favor of any proposed business combination and (b) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination. Our sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Founder Shares
On October 17, 2021, the Sponsor purchased 2,156,250 founder shares for an aggregate purchase price of $25,000. The Founder Shares include an aggregate of up to 281,250 shares subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding shares of common stocks after the Initial Public Offering.
The initial stockholders have agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees as disclosed herein) until, with respect to any of the Class B common stock, the earlier of (i) six months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for share subdivisions, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, or earlier, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property.
Promissory Note – Related Party
On October 1, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000, to be used for payment of costs related to the Initial Public Offering. The note is non-interest bearing and payable on the earlier of (i) December 31, 2022 or (ii) the consummation of the Initial Public Offering. As of December 31, 2023 and 2022, the Company had borrowed nil and $190,478 under the promissory note with the Sponsor which was repaid on January 21, 2022.
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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into units at a price of $10.00 per unit. Such units would be identical to the Private Placement Units. 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.
On July 6, 2023, the Company issued a promissory note (the “Promissory Note”) in the principal amount of $1,500,000 to DUET Partners LLC (the “Sponsor”). The Promissory Note was issued to provide the Company with additional working capital, and the funds provided in accordance therewith will not be deposited into the Company’s Trust Account. The Company issued the Promissory Note in consideration for a loan from the Sponsor to fund the Company’s extension costs and working capital requirements. The Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial business combination is consummated and (ii) the liquidation of the Company on or before July 23, 2023 (subject to the extension of the period in which the Company must complete its initial business combination pursuant to the Company’s governing documents, or such later liquidation date as may be approved by the Company’s stockholders). At the election of the Sponsor, the unpaid principal amount of the Promissory Note may be converted into units of the Company (the “Conversion Units”) and the total Conversion Units so issued shall be equal to: (x) the portion of the principal amount of the Promissory Note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Conversion Units. As of December 31, 2023 and 2022, there was $1,242,500 and $100,000 outstanding under the Working Capital Loans, respectively.
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As described in Note 5 to the financial statements, on April 19, 2023, the Stockholders of the Company approved the Extension Amendment and the Trust Amendment to allow the Company to extend the deadline from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $175,000 or (y) $0.055 per share for each Public Share that was not redeemed in connection with the Special Meeting for each such one-month extension, and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with. On April 21, 2023, the Company deposited an aggregate of $175,000 (the “Extension Payment”) into the Trust Account, representing approximately $0.03 per public share remaining outstanding after the redemptions described below, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from April 24, 2023 to May 24, 2023 (the “First Extension”). The First Extension is the first of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation. On May 4, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from May 24, 2023 to June 24, 2023 (the “Monthly Extension”). On June 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from June 24, 2023 to July 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On July 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from July 24, 2023 to August 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On August 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from August 24, 2023 to September 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On September 12, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from September 24, 2023 to October 24, 2023 (the “Monthly Extension”). The Monthly Extension is the sixth of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On October 13, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from October 24, 2023 to November 24, 2023 (the “Monthly Extension”). The Monthly Extension is the seventh of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On November 24, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $0.03 per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from November 24, 2023 to December 24, 2023 (the “Monthly Extension”). The Monthly Extension is the eighth of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended.
On December 18, 2023, at 9:00 a.m. ET, DUET Acquisition Corp., a Delaware corporation (the “Company”), held a virtual special meeting of its stockholders pursuant to due notice (the “Special Meeting”). At the Special Meeting, the stockholders of the Company entitled to vote at the meeting (the “Stockholders”) cast their votes and approved the Trust Amendment Proposal. At the Special Meeting, the Stockholders approved a proposal to amend the Trust Agreement (the “Trust Amendment Proposal”) to allow the Company to extend on a monthly basis through January 24, 2025 the date by which (each such date, a “Deadline Date”) Continental must liquidate the Trust Account if the Company has not completed its initial business combination (the “Trust Amendment”) by depositing into the Trust Account by the 24th calendar day of each of such thirteen months unless the Company’s initial business combination (the “business combination”) has been completed earlier (each such payment and resulting extension of the Deadline Date, an “Extension”) the lesser of (i) $40,000 or (ii) $0.04 per share for each public share that is not redeemed in connection with the Special Meeting. The procedures in the Trust Amendment conform to the procedures contained in an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Charter Amendment”) and Additional Charter Amendment Proposals (as defined below) that were also approved by the Stockholders at the Special Meeting and are described under Item 5.03 below, which description is incorporated herein by reference. The Company and Continental entered into the Trust Amendment on December 18, 2023. On December 19, 2023, the Company deposited an aggregate of $40,000 (the “Extension Payment”) into the Trust Account, representing approximately $0.04 per public share remaining outstanding after the redemptions described below, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from January 24, 2024 to February 24, 2024 (the “January Extension”). The January Extension is the first of up to twelve monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended by the Charter Amendment.
As of December 31, 2023 and 2022, there was $1,090,000 and nil outstanding under the Extension Loans, respectively.
Administrative Services Arrangement
The Company’s Sponsor has agreed, commencing from the date that the Company’s securities are first listed on Nasdaq through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company has agreed to pay to DUET Partners LLC, the Sponsor, $10,000 per month for these services during the 15-month period to complete a business combination. For the year ended December 31, 2023 and 2022, the Company had paid $45,000 and $120,000 for administrative services, respectively. For the year ended December 31, 2023 and 2022, the Company had accrued $75,000 and nil for administrative services, respectively.
| 50 |
Item 14. Principal Accounting Fees and Services
The following is a summary of fees paid or to be paid to Adeptus Partners, LLC, or Adeptus Partners, for services rendered.
Audit Fees. Audit fees consist of fees for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Adeptus Partners in connection with regulatory filings. The aggregate fees of Adeptus Partners for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 8-K for the respective periods and other required filings with the SEC for the year ended December 31, 2023 and 2022 totaled approximately $ 58,500 and $61,000, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. During the year ended December 31, 2023 and 2022, we did not pay Adeptus Partners any audit-related fees, respectively.
Tax Fees. We did not pay Adeptus Partners for tax return services, planning and tax advice for the year ended December 31, 2023 and 2022, respectively.
All Other Fees. We did not pay Adeptus Partners for any other services for the year ended December 31, 2023 and 2022, respectively.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
| 51 |
part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Form 10-K:
(1) Financial Statements:
(2) Financial Statement Schedules:
None.
(3) Exhibits
| 52 |
DUET ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of DUET Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of DUET Acquisition Corp. (the Company) as of December 31, 2023 and 2022, and the related statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two periods ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two periods ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has negative working capital and an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2021.
March 29, 2024
PCAOB ID: 3686
| F-2 |
DUET ACQUISITION CORP.
BALANCE SHEETS
| December 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | $ | $ | ||||||
| Cash and Marketable Securities held in trust account | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accrued expenses | $ | $ | ||||||
| Account payable | ||||||||
| Amount due to related party | ||||||||
| Franchise tax payable | ||||||||
| Income tax payable | ||||||||
| Excise tax liability | ||||||||
| Extension loan | ||||||||
| Working capital loan | ||||||||
| Total Current Liabilities | ||||||||
| Deferred underwriter commission | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Class A common stock $ par value; shares authorized; and shares subject to possible redemption issued and outstanding, at $ per share, as of December 31, 2023 and 2022, respectively | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preference Shares, $ par value; shares authorized; issued and outstanding | ||||||||
| Class A common stock, $ par value; shares authorized; shares issued and outstanding (excluding and shares subject to possible redemption, as of December 31, 2023 and 2022, respectively) | ||||||||
| Class B common stock, $ par value; shares authorized; shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
DUET ACQUISITION CORP.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
| For the Year Ended | ||||||||
| 2023 | 2022 | |||||||
| Formation and operating costs | $ | ( | ) | $ | ( | ) | ||
| Franchise tax | ( | ) | ( | ) | ||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Interest earned on marketable securities held in trust account | ||||||||
| Net Income (Loss) before income tax provision | ( | ) | ||||||
| Income tax provision | ( | ) | ( | ) | ||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Weighted average shares outstanding of Class A common stock | ||||||||
| Basic and diluted net income (loss) per common stock | $ | $ | ) | |||||
| Weighted average shares outstanding of Class B common stock | ||||||||
| Basic and diluted net income (loss) per common stock | $ | ) | $ | ) | ||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
DUET ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
| Class A | Class B | Additional | Total | |||||||||||||||||||||||||
| Common Stock | Common Stock | Paid in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Remeasurement of Class A Common Stock Subject to Redemption | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Excise tax liability | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Class A | Class B | Additional | Total | |||||||||||||||||||||||||
| Common Stock | Common Stock | Paid in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Sale of Units in Initial Public Offering, net of offering costs | - | |||||||||||||||||||||||||||
| Class A Common Stock subject to possible redemption | ( | ) | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||
| Sale of Private Placement Units | - | |||||||||||||||||||||||||||
| Representative share | - | |||||||||||||||||||||||||||
| Offering and underwriting costs | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Deferred underwriting commission | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Re-classification | - | - | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – December 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
DUET ACQUISITION CORP.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
| For the Year Ended | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | ( | ) | ( | ) | ||||
| Interest withdrawn from the Trust Account | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Amount due to related party | ||||||||
| Franchise tax payable | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Cash withdrawn from Trust Account in connection with redemption | ||||||||
| Investment of cash in Trust Account | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from working capital loan | ||||||||
| Proceeds from extension loan | ||||||||
| Redemption of Class A common stock | ( | ) | ||||||
| Proceeds from sale of Units, net of IPO costs | ||||||||
| Proceeds from sale of private placement units | ||||||||
| Repayment of promissory note – related party | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash | ||||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Deferred underwriting fee payable | $ | $ | ||||||
| Initial Classification of Class A Common Stock subject to redemption | $ | $ | ||||||
| Deferred offering costs paid for by Promissory note – related party | $ | $ | ||||||
| Remeasurement of Class A Common Stock subject to redemption | $ | $ | ||||||
| Excise tax liability accrued for Class A Common Stock subject to redemption | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
DUET ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS
DUET Acquisition Corp. (the “Company”) is a blank check company incorporated in the State of Delaware on September 20, 2021. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities (“Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination.
As of December 31, 2023, the Company had not commenced any operations. All activity for the period from September 20, 2021 (inception) through December 31, 2023, relates to the Company’s formation, the initial public offering described below and activities necessary to identify a potential target and prepare for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is DUET Partners LLC (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 19, 2022.
On
January 24, 2022, the Company consummated its Initial Public Offering of units (the “Units” and, with respect to
the Class A common stock included in the Units being offered, the “Public Shares”), at $ per Unit, generating gross
proceeds of $
Simultaneously
with the consummation of the closing of the Initial Public Offering, the Company consummated the private placement of an aggregate of
units (the “Private Placement Units”) to the Sponsor, at a price of $ per Private Placement Unit, generating
total gross proceeds of $
Subsequently,
on January 24, 2022, the Company consummated the closing of the sale of additional units at a price of $ per unit (the “Units”)
upon receiving notice of the underwriters’ election to fully exercise their overallotment option (“Overallotment Units”),
generating additional gross proceeds of $
Simultaneously
with the exercise of the overallotment, the Company consummated the Private Placement of an additional Private Placement Units
to DUET Partners LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $
A
total of $
Transaction
costs of the Initial Public Offering with the exercise of the overallotment amounted to $
| F-7 |
Following
the closing of the Initial Public Offering $
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 the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that
together have a fair market value equal to at least
The
Company will provide its 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. In connection with a Business Combination, the Company
may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem
their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $
The
Company will have until 24 months (subject to a three month extension of time, as set forth in the Company’s registration statement)
from the closing of the Initial Public Offering to consummate a Business Combination (the “Combination Period”). If the Company
is unable to complete 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 no more than five business days thereafter, redeem
| F-8 |
On
April 19, 2023, the Company held a virtual special meeting of its stockholders (the “Special Meeting”). At
the Special Meeting, the stockholders of the Company approved the proposal (the “Extension Amendment Proposal”)
to amend the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the Company must (i) consummate
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company
and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete
such business combination, and (iii) redeem or repurchase
On
December 18, 2023, the Company held a virtual special meeting of its stockholders (the “Special Meeting”).
At the Special Meeting, the stockholders of the Company approved the proposal (the “Extension Amendment Proposal”)
to amend the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the Company must (i) consummate
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company
and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete
such business combination, and (iii) redeem or repurchase
In
connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of
shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate
price of $ per share, for an aggregate of approximately $
On
December 19, 2023, the Company deposited two payments in an aggregate of $
| F-9 |
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor 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 amounts in the Trust Account to below $ per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 accounting firm), prospective target businesses or 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.
Termination of the Merger Agreement
On July 25, 2022, the Company entered into a definitive Business Combination Agreement and Plan of Merger (the “Merger Agreement”) with Millymont Limited, a private limited company incorporated in Ireland (“Holdco”), Duet Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdco, J. Streicher Technical Services, LLC, a Delaware limited liability company, Anteco Systems, S.L., trading as AnyTech365, a company incorporated in Spain and registered at the Commercial Registry of Malaga under reference MA-122108, Miguel Ángel Casales Ruiz and Thomas Marco Balsloev, as the sellers’ representatives, and Lee Keat Hin, as the Company’s representative.
On April 6, 2023, the Company provided the other parties with written notice of the termination of the Merger Agreement pursuant to Section 11.1 thereof (the “Termination”). No party will be required to pay another party a termination fee as a result of the Termination.
The termination of the Merger Agreement also terminates and makes void the Support Agreement, the Non-Competition and Non-Solicitation Agreement, and the Lock-up Agreement (each as defined in the Merger Agreement), each of which were executed concurrently with the Merger Agreement.
Business Combination Agreement
As previously disclosed, the Company entered into a binding letter of intent with Fenix 360 Pte. Ltd., a Singapore private company limited by shares (the “Target”), on July 6, 2023, pursuant to which DUET agreed to acquire all of the outstanding equity interests of the Target. On November 28, 2023, DUET and the Target entered into a definitive Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”). DUET and the Target are sometimes referred to this Annual Report on Form 10-K, individually, as a “Party” and, collectively, as the “Parties.”
Our Chairman of the Board of Directors, Larry Gan Nyap Liou, serves as a financial advisor to the Target pursuant to a pre-existing relationship with the Target. Accordingly, Mr. Gan has recused himself, and will continue to recuse himself, from all Board decisions related to the Business Combination.
| F-10 |
Domestication
Pursuant
to and upon the closing (the “Closing”) of the transactions contemplated in the Business Combination Agreement
(collectively, the “Business Combination”), the Company will transfer by way of continuation from the State of Delaware
to the Cayman Islands and domesticate (the “Domestication”) as a Cayman Islands exempted company limited by shares in
accordance with Section 390 of the Delaware General Corporation Law, as amended, and Part XII of the Cayman Islands Companies Act,
as amended (the “Cayman Companies Act”). In connection with the Domestication,
Business Combination
Pursuant
to the Business Combination Agreement, as consideration for the Business Combination, the shareholders of the Target (each, a “Target
Shareholder” and, together, the “Target Shareholders”) are entitled to receive an aggregate of DUET Ordinary
Shares, valued at $ per share for an aggregate value equal to $
Upon the terms and subject to the conditions of the Business Combination Agreement, at or prior to the Closing, each Target Shareholder will deliver to Continental Stock Transfer & Trust Company (the “Exchange Agent”) a share exchange agreement in the form mutually agreed to between the Parties (a “Share Exchange Agreement”) that has been duly executed by that Target Shareholder, surrender any original certificates for the Target Ordinary Shares held by such Target Shareholder, and deliver such other documents reasonably requested by DUET. In exchange, DUET will issue and cause the Exchange Agent to deliver to each Target Shareholder the amount of DUET Ordinary Shares due to such Target Shareholder pursuant to the Business Combination Agreement.
Representations and Warranties; Covenants
Pursuant to the Business Combination Agreement, the Parties made customary representations and warranties for transactions of this type. The Business Combination Agreement includes certain covenants that are customary for transactions of this type, including obligations of the Parties to use reasonable best efforts to operate their respective businesses in the ordinary course and to refrain from taking certain specified actions without the prior written consent of the applicable party, in each case, subject to certain exceptions and qualifications. The Parties have agreed not to solicit, negotiate, or enter into a competing transaction. Additionally, the Target has agreed to certain other covenants, including to (a) deliver the PCAOB Financials (as defined in the Business Combination Agreement) to DUET no later than December 11, 2023, (b) conclude investigations, examinations and diligence with respect to certain agreed-upon items by December 12, 2023 (the “Due Diligence Period”), and (c) onboard certain employees of one of the Target’s primary software developers. The covenants in the Business Combination Agreement generally will not survive the Closing, subject to certain exceptions, including certain covenants and agreements that by their terms are to be performed in whole or in part after the Closing.
Reserve Against Certain Liabilities
Certain of the Target Shareholders (the “Legacy Shareholders”) are to deposit with the Escrow Agent at Closing their pro rata portion of an aggregate of DUET Ordinary Shares otherwise issuable to the Legacy Shareholders as Exchange Consideration (the “Escrow Shares”). The Escrow Shares are subject to a quarterly release following the Closing and are reserved to cover losses arising out of or in connection with the Target’s rescission plan for tokens that were issued by management of the Target, any pending or threatened legal proceedings required to be disclosed by the Target, and any other matters mutually agreed upon by the Parties (collectively, the “Covered Matters”). To the extent the Target incurs losses based on an action against the Target or its affiliates by any third party with respect to the Covered Matters, the Legacy Shareholders consent to and agree to reasonably and promptly allow the post-Closing company to redeem an aggregate number of Escrow Shares with a value equal to the amount of such loss incurred by the post-Closing company therefrom, with the value of the Escrow Shares to be determined using the 5-Day VWAP of the DUET Ordinary Shares.
| F-11 |
Conditions to Obligations of Both Parties at Closing
The obligations of the Parties to consummate the Business Combination are subject to the satisfaction of the following conditions, any one or more of which may be waived by in writing by either or both of the Parties: (a) DUET stockholder approval of the Business Combination has been obtained; (b) all of the Target Shareholders have submitted a Share Exchange Agreement and have exchanged all of the Target Ordinary Shares for the DUET Ordinary Shares in accordance with the terms of the Business Combination Agreement no later than the date of the DUET Stockholders’ Meeting (defined below); (c) the Proxy/Registration Statement (as defined below) shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”), and no stop order suspending the effectiveness of the Proxy/Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the U.S. Securities and Exchange Commission (the “SEC”) and not withdrawn; (d) the Nasdaq Stock Market LLC (“Nasdaq”) shall have completed its review of the “Listing of Additional Shares Notification Form” filed by DUET with Nasdaq with respect to the DUET Ordinary Shares to be issued in connection with the Business Combination; (e) no Exchange Objection (as defined in the Business Combination Agreement) shall have been raised, or any such Exchange Objection which has been raised shall have been addressed; (f) no federal, state, provincial, municipal, local or foreign government, governmental authority, taxing, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal (“Governmental Authority”) shall have enacted, issued, promulgated, enforced or entered any statute, law, ordinance, rule, order, or regulation (“Law”) that is then in effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits consummation of the Business Combination, other than any such restraint that is immaterial, or for which the relevant Governmental Authority does not have jurisdiction over either of the parties hereto with respect to the Business Combination; and (g) all Closing deliverables required under the Business Combination Agreement have been provided.
Conditions to Obligations of DUET at Closing
Pursuant to the Business Combination Agreement, the obligations of DUET to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by DUET: (a)(i) the representations and warranties of the Target regarding the capitalization of the Target are true and correct in all respects of the date of the Closing except with respect to such representations and warranties speaking to an earlier date, which shall be true and correct at and as of such date, subject to changes made to the Business Combination Agreement, (ii) the Target’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of the Target shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions, and (iii) each of the representations and warranties of the Target other than the Target’s Fundamental Representations shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions; (b) each of the covenants of the Target to be performed as of or prior to the Closing shall have been performed in all material respects; (c) there shall not have occurred a Company Material Adverse Effect (as defined in the Business Combination Agreement); (d) each of the Restrictive Covenant Agreements (as defined in the Business Combination Agreement) with each of the Key Executives (as defined in the Business Combination Agreement) shall be in full force and effect at Closing; (e) the Target’s unaudited consolidated statement of financial positions and consolidated statements of comprehensive income, changes in equity and cash flows of the Target and its Subsidiaries as of and for the nine-month period ended September 30, 2023, which comply with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant shall have been provided; and (f) all closing deliveries required by the Business Combination Agreement shall have been delivered.
Conditions to Obligations of the Target at Closing
The obligation of the Target to consummate is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Target: (a) subject to certain qualifications and exceptions in each: (i) the representations and warranties of DUET regarding the capitalization of DUET shall be true and correct as of the Closing, (ii) DUET’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of DUET shall be materially true and correct as of date of the Closing, subject to certain exceptions, and (iii) each of the representations and warranties of DUET contained in the Business Combination Agreement other than those regarding organization, due authorization, absence of changes, capitalization, and brokers’ fees shall be true and correct as of Closing; (b) the Class A Common Stock shall remain listed on the Nasdaq Global Market; and (c) each of the covenants of DUET to be performed as of or prior to the Closing shall have materially been performed.
| F-12 |
Termination
The
Business Combination Agreement may be terminated and the transactions therein may be abandoned: (a) by DUET pursuant to a failure of
the Target to deliver timely the PCAOB Financials, or comply with the requests of DUET during the Due Diligence Period; (b) by DUET if
the Proxy/Registration Statement is not declared effective or such effectiveness is materially delayed due to any action or omission
by the Target; (c) by the Target if DUET is delisted from the Nasdaq Global Market for any reason other than a breach by the Target or
Legacy Shareholders of obligations to the Business Combination Agreement; (d) by mutual written consent of all Parties; (e) by DUET or
the Target if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or order that is then in
effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits their consummation;
(f) by DUET if (i) there is a breach of any representation, warranty, covenant or agreement on the part of the Target, such that the
conditions obligating DUET to close would not be satisfied, subject to a 30 day cure period for the Target, or (ii) the Closing has not
occurred on or before the date on which the DUET charter expires and the Parties agree it shall not be extended (the “Agreement
End Date”), unless DUET is in material breach of the Business Combination Agreement; (g) by DUET if the original certificates for
the Target duly endorsed for transfer to DUET have not been submitted for exchange along with duly executed Share Exchange Agreements
from the Target Shareholders by the date of the DUET Stockholders’ Meeting; (h) by the Target by written notice to DUET if (i)
there is any breach of any representation, warranty, covenant or agreement on the part DUET set forth in the Business Combination Agreement,
such that the conditions obligating the Target to close would not be satisfied at Closing, subject to a 30 day cure period for DUET upon
notice, or (ii) the Closing has not occurred on or before the Agreement End Date, unless the Target is in material breach of the Business
Combination Agreement; or (i) if the resolution of outstanding accrued underwriting fees payable to EF Hutton, division of Benchmark
Investments LLC, are not resolved, in a manner satisfactory to both DUET and the Target before the Closing. In the event the Business
Combination Agreement is terminated pursuant to (a), (b) or (f) above, the Target shall pay DUET $
The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by the full text of the Business Combination Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
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 auditor 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.
| F-13 |
Going Concern, Liquidity and Capital Resources
As
of December 31, 2023, the Company had $
The
Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $
We currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management plans to address this uncertainty during the period leading up to the business combination, however this cannot be guaranteed.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
| F-14 |
Use of Estimates
The preparation of financial statements in conformity with GAAP requires 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 period.
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. 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 had
Marketable Securities Held in Trust Account
At
December 31, 2023 and 2022, substantially all of the assets held in the Trust Account were held in mutual funds. At December 31, 2023
and 2022, the balance in the Trust Account was $
Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering and that were charged to stockholders’ equity upon the completion of the Offering. Should the Offering have proved to be unsuccessful, these deferred costs, as well as additional expenses incurred, would have been charged to operations.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
| F-15 |
ASC Topic 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’s management determined the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of December 31, 2023 and 2022 and no amounts accrued for interest and penalties. 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.
The Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature 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) are classified as temporary equity. At all other times, shares are classified as stockholders’ equity. 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, and is therefore classified as temporary equity on the balance sheet.
On
December 31, 2022, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not
subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption. On April 19,
2023, the Company held a special meeting of its stockholders in connection with the approval of the Extension Amendment Proposal and
the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised
their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $
On December 31, 2023, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption.
If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
| F-16 |
As of December 31, 2023 and 2022, the Class A Common Stock subject to possible redemption reflected on the balance sheet is reconciled in the following table:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Redeemable Class A Common Stock – Opening Balance | $ | $ | ||||||
| Less: | ||||||||
| Redemption of Class A common stock, including interest | ( | ) | ||||||
| Plus: | ||||||||
| Re-measurement of carrying value to redemption value | ||||||||
| Redeemable Class A Common Stock - Ending Balance | $ | $ | ||||||
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of shares of Class B Common Stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 6). At December 31, 2023 and 2022, the Company did not have any dilutive securities and 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 income (loss) per share is the same as basic income (loss) per share for the periods presented. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value at December 31, 2023 and 2022.
For the Year Ended December 31, 2023 | For the Year Ended December 31, 2022 | |||||||||||||||
| Redeemable Common Stock | Non- Redeemable Common Stock | Redeemable Common Stock | Non-Redeemable Common Stock | |||||||||||||
| Basic and diluted net income(loss) per share: | ||||||||||||||||
| Numerators: | ||||||||||||||||
| Allocation of net income(loss) including carrying value to redemption value | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Allocation of net income | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Denominators: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| Basic and diluted net income(loss) per share | $ | $ | ) | $ | ) | $ | ) | |||||||||
| F-17 |
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A common stock were charged to stockholders’ equity upon the completion of the Initial Public Offering.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $
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 Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | 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. |
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:
| Level | December 31, 2023 | December 31, 2022 | ||||||||||
| Assets: | ||||||||||||
| Cash and marketable securities held in trust account | 1 | $ | $ | |||||||||
| F-18 |
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40. The Company has determined that the Warrants qualify for equity treatment in the Company’s financial statements.
Recent Accounting Standards
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statement.
Risks and Uncertainties
Management has evaluated the impact of the COVID-19 pandemic on the industry 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Inflation Reduction Act of 2022
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 (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. 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. The IR Act applies only to repurchases that occur after December 31, 2022.
| F-19 |
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 holders, 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.
At
this time, it has been determined that the IR Act tax provisions would have an impact to the Company’s fiscal 2023 tax provision
as there were redemptions by the public stockholders in April 2023 and December 2023; as a result, the Company recorded $
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company offered for sale up to Units at a purchase price of $ per Unit. Each Unit
consists of one share of Class A common stock and one redeemable warrant (“Public Warrant”). Each Public Warrant will entitle
the holder to purchase one share of Class A common stock at an exercise price of $
NOTE 4. PRIVATE PLACEMENT
The
Sponsor purchased an aggregate of placement units at a price of $ per unit, for an aggregate purchase price of $
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On
October 17, 2021, the Sponsor purchased Founder Shares for an aggregate purchase price of $
The initial stockholders have agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees as disclosed herein) until, with respect to any of the Class B common stock, the earlier of (i) six months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $ per share (as adjusted for share subdivisions, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, or earlier, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property.
| F-20 |
Promissory Note – Related Party
On
October 1, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate
principal amount of $
Working Capital Loan
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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of
a Business Combination, without interest, or, at the lender’s discretion, up to $
On
July 6, 2023, the Company issued a promissory note (the “Promissory Note”) in the principal amount of $
Extension Loan
On
April 19, 2023, the Stockholders of the Company approved the Extension Amendment and the Trust Amendment to allow the Company to extend
the deadline from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine
one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the
lesser of (x) $
| F-21 |
On
December 18, 2023, at 9:00 a.m. ET, DUET Acquisition Corp., a Delaware corporation (the “Company”), held a
virtual special meeting of its stockholders pursuant to due notice (the “Special Meeting”). At the Special
Meeting, the stockholders of the Company entitled to vote at the meeting (the “Stockholders”) cast their votes
and approved the Trust Amendment Proposal. At the Special Meeting, the Stockholders approved a proposal to amend the Trust Agreement
(the “Trust Amendment Proposal”) to allow the Company to extend on a monthly basis through January 24, 2025
the date by which (each such date, a “Deadline Date”) Continental must liquidate the Trust Account if the Company
has not completed its initial business combination (the “Trust Amendment”) by depositing into the Trust Account
by the 24th calendar day of each of such thirteen months unless the Company’s initial business combination (the “business
combination”) has been completed earlier (each such payment and resulting extension of the Deadline Date, an “Extension”)
the lesser of (i) $
As
of December 31, 2023 and 2022, there was $
Convertible Note Purchase Agreement
On
July 6, 2023, DUET Partners LLC (the “Sponsor”) and Fenix entered into a convertible note purchase agreement (the “Note
Purchase Agreement”), pursuant to which Fenix agreed to loan $
| F-22 |
The Note Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party thereto. The representations and warranties contained therein were made only for the purposes of the Note Purchase Agreement, and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain limitations set forth therein.
The Fenix Notes are due and payable by the Sponsor upon the closing of the Proposed Business Combination between the Company and Fenix (the “Maturity Date”). The Fenix Notes are convertible into common stocks of the Company pursuant to terms that will be set forth in the Definitive Agreement. The Fenix Notes will be cancelled and the principal amount of the loans disbursed by the Sponsor to the Company (as described below in the section titled “Promissory Note”) shall be forgiven, and the balance of the principal amount of the Fenix Notes not disbursed by the Sponsor to the Company will be returned to Fenix (i) in the event that a Definitive Agreement is not signed by July 31, 2023 or such later date that may be mutually agreed between the parties), (ii) if a Definitive Agreement is entered into and then subsequently terminated by the Company, or (iii) if the PCAOB audited financial statements of Fenix have not been delivered by the date mutually agreed between the parties and stipulated in the Business Combination Agreement.
The issuance of the Fenix Notes will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The foregoing descriptions of the Note Purchase Agreement and the Fenix Notes are summaries only and are qualified in their entirety by the full text of the Note Purchase Agreement and the form of the Fenix Notes which is attached to the Note Purchase Agreement, a copy of which is attached as Exhibit 10.2 hereto and is incorporated herein by reference.
Administrative Services Arrangement
The
Company’s Sponsor has agreed, commencing from the date that the Company’s securities are first listed on Nasdaq through the
earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general
and administrative services, including office space, utilities and administrative services, as the Company may require from time to time.
The Company has agreed to pay to the Sponsor $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stocks issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the 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 Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stocks). The holders of these securities will be entitled to make up to three demands, excluding short form registration 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 completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
| F-23 |
Underwriting Agreement
The
Company granted the underwriters a 45-day option to purchase up to an additional
The
underwriters were entitled to a cash underwriting discount of one and one-half percent (
Additionally, shares of our Class A common stock were issued to the underwriter upon the closing of Initial Public Offering.
NOTE 7. STOCKHOLDERS’ EQUITY
Class A Common Stock — Our amended and restated memorandum and articles of association authorize the Company to issue shares of Class A common stock with a par value of $ per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. On December 31, 2023 and 2022, there were shares of Class A Common Stock issued and outstanding, excluding and shares of Class A Common Stock subject to possible redemption, respectively.
Class B Common Stock — The Company is authorized to issue shares of Class B common stock with a par value of $ per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. As of December 31, 2023 and 2022, there were shares of Class B common stock issued and outstanding, such that the Initial Stockholders will maintain ownership of at least 20% of the issued and outstanding shares after the Initial Public Offering.
Preferred Shares — The Company is authorized to issue preferred shares with a par value of $ per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At December 31, 2023 and 2022, there were preferred shares issued or outstanding.
Warrants — Public Warrants may only be exercised for a whole number of shares. 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 (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stocks 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 stocks issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stocks is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
| F-24 |
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 commercially reasonable efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stocks issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stocks until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stocks is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies 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 elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption
of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $
| ● | in whole and not in part; | |
| ● | at a price of $ per Public Warrant; | |
| ● | upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and | |
| ● | if,
and only if, the last reported sale price of the Class A Common Stock equals or exceeds $ |
If and when the warrants become redeemable by the Company, 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 common stocks issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock 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 stocks 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.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering.
| F-25 |
NOTE 8. INCOME TAX
The income tax provision consists of the following:
| Years Ended | Years Ended | |||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Federal | ||||||||
| Current | $ | $ | ||||||
| Deferred | ||||||||
| State and Local | ||||||||
| Current | $ | $ | ||||||
| Deferred | ||||||||
| Change in valuation allowance | ||||||||
| Income tax provision | $ | $ | ||||||
The Company’s net deferred tax assets are as follows:
| Years Ended | Years Ended | |||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Deferred Tax Assets | ||||||||
| Sec. 195 Start-up Costs | $ | $ | ||||||
| Acquisition Cost | ||||||||
| Total Deferred Tax Assets | ||||||||
| Deferred Tax Liability | — | — | ||||||
| Unrealized gain on Investment in Trust Account | ||||||||
| Total Deferred Tax Assets | ||||||||
| Less: Valuation allowance | ( | ) | ||||||
| Deferred Tax Assets, net of allowance | $ | $ | ||||||
As
of December 31, 2023 and 2022, the Company had
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 deferred tax assets and therefore established a full valuation allowance of $
| F-26 |
A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
| Years Ended | Years Ended | |||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Statutory federal income tax rate | % | % | ||||||
| State taxes, net of federal tax benefit | % | % | ||||||
| Return to Accrual & Prior Year True Ups | ( | )% | % | |||||
| Transaction costs allocated to warrant issuance | % | % | ||||||
| Change in valuation allowance | % | % | ||||||
| Income tax provision | % | % | ||||||
The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to the recording of full valuation allowances on deferred tax assets.
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open to examination by the taxing authorities. There were no unrecognized tax benefits as of December 31, 2023 and 2022. No amounts were accrued for the payment of interest and penalties as of December 31, 2023 and 2022. 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. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
NOTE 9. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after the balance sheet date. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than what is listed below:
On
February 16, 2024, the Company, caused to be deposited $
| F-27 |
Item 16. Form 10-K Summary
None.
| 53 |
SIGNATURES
Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 1st day of April, 2024.
| DUET ACQUISITION CORP. | ||
| By: | /s/ Dharmendra Magasvaran | |
| Name: | Dharmendra Magasvaran | |
| Title: | Co-Chief Executive Officer | |
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Larry Gan Nyap Liou | Chairman of the Board of Directors | April 1, 2024 | ||
| Larry Gan Nyap Liou | ||||
| /s/ Yeoh Oon Lai | Co-Chief Executive Officer | April 1, 2024 | ||
| Yeoh Oon Lai | (principal executive officer) | |||
| /s/ Dharmendra Magasvaran | Co-Chief Executive Officer | April 1, 2024 | ||
| Dharmendra Magasvaran | (principal executive officer) | |||
| /s/ Lee Keat Hin | Chief Financial Officer | April 1, 2024 | ||
| Lee Keat Hin | (principal financial and accounting officer) |
| 54 |
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith. |
| *** | Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request. |
| (1) | Incorporated by reference to the Company’s Form S-1, filed with the SEC on December 3, 2021. |
| (2) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on January 24, 2022. |
| (3) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on November 30, 2023. |
| (4) | Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023. |
| (5) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on April 24, 2023. |
| (6) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on December 20, 2023. |
| (7) | Incorporated by reference to the Company’s Form 8-K, filed with the SEC on July 6, 2023. |
| 55 |
Exhibit 31.1
CERTIFICATION
We, Yeoh Oon Lai and Dharmendra Magasvaran, certify that:
| 1. | We have reviewed this annual report on Form 10-K of DUET Acquisition Corp.; |
| 2. | Based on our knowledge, this report does not contain any untrue statements 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 our 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: April 1, 2024 |
|
| /s/ Yeoh Oon Lai | |
| Yeoh Oon Lai | |
| Co-Chief Executive Officer | |
| (Principal Executive Officer) | |
| /s/ Dharmendra Magasvaran | |
| Dharmendra Magasvaran | |
| Co-Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Lee Keat Hin, certify that:
| 1. | I have reviewed this annual report on Form 10-K of DUET Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statements 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: April 1, 2024 | /s/ Lee Keat Hin |
| Lee Keat Hin | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION
In connection with the Annual Report of DUET Acquisition Corp. (the “Registrant”) on Form 10-K for the annual period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Yeoh Oon Lai and Dharmendra Magasvaran, Co-Chief Executive Officers of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: April 1, 2024 |
|
| /s/ Yeoh Oon Lai | |
| Yeoh Oon Lai | |
| Co-Chief Executive Officer | |
| (Principal Executive Officer) | |
| /s/ Dharmendra Magasvaran | |
| Dharmendra Magasvaran | |
| Co-Chief Executive Officer | |
| (Principal Executive Officer) |
This certification is made solely for the purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the United States Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
Exhibit 32.2
CERTIFICATION
In connection with the Annual Report of DUET Acquisition Corp. (the “Registrant”) on Form 10-K for the annual period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Lee Keat Hin, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Date: April 1, 2024 | /s/ Lee Keat Hin |
| Lee Keat Hin | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
This certification is made solely for the purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the United States Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
Exhibit 97.1
DUET ACQUISITION CORP.
Incentive Compensation Recovery Policy (the “Policy”)
1. Recovery of Excess Incentive Compensation. If DUET Acquisition Corp., a Delaware corporation (the “Company”) is required to prepare a Restatement, the Company’s board of directors (the “Board”) shall, unless the compensation committee of the Board (the “Compensation Committee”) determines it to be Impracticable, take reasonably prompt action to recover all Recoverable Compensation from any Covered Person. The Company’s obligation to recover Recoverable Compensation is not dependent on if or when the restated financial statements are filed. Subject to applicable law, the Board may seek to recover Recoverable Compensation by requiring a Covered Person to repay such amount to the Company; by adding “holdback” or deferral policies to incentive compensation; by adding post-vesting “holding” or “no transfer” policies to equity awards; by set-off of a Covered Person’s other compensation; by reducing future compensation; or by such other means or combination of means as the Board, in its sole discretion, determines to be appropriate. This Policy is in addition to (and not in lieu of) any right of repayment, forfeiture or off-set against any Covered Person that may be available under applicable law or otherwise (whether implemented prior to or after adoption of this Policy). The Board may, in its sole discretion and in the exercise of its business judgment, determine whether and to what extent additional action is appropriate to address the circumstances surrounding any Restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate.
2. Administration of Policy. The Board shall have full authority to administer, amend or terminate this Policy. The Board shall, subject to the provisions of this Policy, make such determinations and interpretations and take such actions in connection with this Policy as it deems necessary, appropriate or advisable. All determinations and interpretations made by the Board shall be final, binding and conclusive. The Board may delegate any of its powers under this Policy to the Compensation Committee of the Board or any subcommittee or delegate thereof.
3. Acknowledgement by Executive Officers. The Board shall provide notice to and seek written acknowledgement of this Policy from each Executive Officer; provided that the failure to provide such notice or obtain such acknowledgement shall have no impact on the applicability or enforceability of this Policy.
4. No Indemnification. Notwithstanding the terms of any of the Company’s organizational documents, any corporate policy or any contract, no Covered Person shall be indemnified against the loss of any Recoverable Compensation.
5. Disclosures. The Company shall make all disclosures and filings with respect to this Policy and maintain all documents and records that are required by the applicable rules and forms of the U.S. Securities and Exchange Commission (the “SEC”) (including, without limitation, Rule 10D-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and any applicable Exchange listing standard.
6. Definitions. In addition to terms otherwise defined in this Policy, the following terms, when used in this Policy, shall have the following meanings:
| - 1 - |
“Applicable Period” means the three completed fiscal years preceding the earlier to occur of: (i) the date that the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare a Restatement; or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement. “Applicable Period” also includes, in addition to the three fiscal year period described in the preceding sentence, any transition period (that results from a change in the Company’s fiscal year) within or immediately following that completed three fiscal year period; provided, further, a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months would be deemed a completed fiscal year.
“Covered Person” means any person who receives Recoverable Compensation.
“Exchange” means any national securities exchange or national securities association upon which the Company has a class of securities listed.
“Executive Officer” includes the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person (including any executive officer of the Company’s subsidiaries or affiliates) who performs similar policy-making functions for the Company. At a minimum, the term “Executive Officer” shall include all executive officers identified in SEC filings pursuant to Item 401(b) of Regulation S-K, 17 C.F.R. §229.401(b).
“Financial Reporting Measure” means a measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part (including “non-GAAP” financial measures, such as those appearing in earnings releases) from such measures; provided, however, that any such measure need not be presented within the Company’s financial statements or included in a filing made with the SEC. Examples of Financial Reporting Measures include measures based on: revenues, net income, operating income, financial ratios, EBITDA, liquidity measures (such as free cash flow), return measures (such as return on assets or return on invested capital), profitability of one or more segments, and cost per employee. Stock price and total shareholder return (“TSR”) also are Financial Reporting Measures.
“Impracticable” means, after exercising a normal due process review of all the relevant facts and circumstances and taking all steps required by Exchange Act Rule 10D-1 and any applicable Exchange listing standard, the Compensation Committee determines that recovery of the Recoverable Compensation is impracticable because: (i) it has determined that the direct expense that the Company would pay to a third party to assist in enforcing this Policy and recovering the otherwise Recoverable Compensation would exceed the amount to be recovered; (ii) it has concluded that the recovery of the Recoverable Compensation would violate home country law adopted prior to November 28, 2022; or (iii) it has determined that the recovery of the Recoverable Compensation would cause a tax-qualified retirement plan, under which benefits are broadly available to the Company’s employees, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. The Company must: (i) in the case of clause (i) of the preceding sentence, prior to making that determination, make a reasonable attempt to recover any Recoverable Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the Exchange; and (ii) in the case of clause (ii) of the preceding sentence, obtain an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a violation, and provide that opinion to the Exchange.
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure; however it does not include: (i) base salaries; (ii) discretionary cash bonuses; (iii) awards (either cash or equity) that are based upon subjective, strategic or operational standards; and (iv) equity awards that vest solely on the passage of time.
| - 2 - |
“Received” – Incentive-Based Compensation is deemed “Received” in any Company fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.
“Recoverable Compensation” means all Incentive-Based Compensation (calculated on a pre-tax basis) Received after October 2, 2023 by a Covered Person: (i) after beginning service as an Executive Officer; (ii) who served as an Executive Officer at any time during the performance period for that Incentive-Based Compensation; (iii) while the Company had a class of securities listed on an Exchange; and (iv) during the Applicable Period, that exceeded the amount of Incentive-Based Compensation that otherwise would have been Received had the amount been determined based on the Financial Reporting Measures, as reflected in the Restatement. With respect to Incentive-Based Compensation based on stock price or TSR, when the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in an accounting restatement: (i) the amount must be based on a reasonable estimate of the effect of the Restatement on the stock price or TSR upon which the Incentive-Based Compensation Received by the Covered Person originally was based; and (ii) the Company must maintain documentation of the determination of the reasonable estimate and provide such documentation to the Exchange.
“Restatement” means an accounting restatement of any of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under U.S. securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (often referred to as a “Big R” restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (often referred to as a “little r” restatement). A Restatement does not include situations in which financial statement changes did not result from material non-compliance with financial reporting requirements, such as, but not limited to retrospective: (i) application of a change in accounting principles; (ii) revision to reportable segment information due to a change in the structure of the Company’s internal organization; (iii) reclassification due to a discontinued operation; (iv) application of a change in reporting entity, such as from a reorganization of entities under common control; (v) adjustment to provision amounts in connection with a prior business combination; and (vi) revision for stock splits, stock dividends, reverse stock splits or other changes in capital structure.
Adopted by the Board of Directors on November 30, 2023
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DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS |
12 Months Ended |
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Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS | NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS
DUET Acquisition Corp. (the “Company”) is a blank check company incorporated in the State of Delaware on September 20, 2021. The Company was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities (“Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination.
As of December 31, 2023, the Company had not commenced any operations. All activity for the period from September 20, 2021 (inception) through December 31, 2023, relates to the Company’s formation, the initial public offering described below and activities necessary to identify a potential target and prepare for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is DUET Partners LLC (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on January 19, 2022.
On January 24, 2022, the Company consummated its Initial Public Offering of units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), at $ per Unit, generating gross proceeds of $75,000,000, and incurring offering costs of $5,161,516, of which $2,250,500 was for deferred underwriting commissions.
Simultaneously with the consummation of the closing of the Initial Public Offering, the Company consummated the private placement of an aggregate of units (the “Private Placement Units”) to the Sponsor, at a price of $ per Private Placement Unit, generating total gross proceeds of $3,562,500 (the “Private Placement”).
Subsequently, on January 24, 2022, the Company consummated the closing of the sale of additional units at a price of $ per unit (the “Units”) upon receiving notice of the underwriters’ election to fully exercise their overallotment option (“Overallotment Units”), generating additional gross proceeds of $11,250,000 and incurred additional offering costs of $506,250, of which $337,500 are for deferred underwriting commissions. Each Unit consists of one share of Class A common stock of the Company, par value $ per share (“Class A Common Stock”), one redeemable warrant of the Company (“Warrant”), with each whole Warrant entitling the holder thereof to purchase one share of Class A Common Stock for $ per share, subject to adjustment, pursuant to the Company’s registration statement on Form S-1 (File No. 333-261494).
Simultaneously with the exercise of the overallotment, the Company consummated the Private Placement of an additional Private Placement Units to DUET Partners LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $337,500.
A total of $87,543,750, comprised of the proceeds from the Offering and the proceeds of private placements that closed on January 20, 2022 and January 24, 2022, net of the underwriting commissions, discounts, and offering expenses, was deposited in a trust account (“Trust Account”) which may be invested 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 meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to the Company’s stockholders, as described below.
Transaction costs of the Initial Public Offering with the exercise of the overallotment amounted to $4,374,016 consisting of $1,293,750 of cash underwriting fees, $2,587,500 of deferred underwriting fees and $492,766 of other costs.
Following the closing of the Initial Public Offering $818,211 of cash was held outside of the Trust Account available for working capital purposes. As of December 31, 2023, we have available to us $87,134 of cash on our balance sheet and a working capital deficit of $3,702,694.
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 the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing of a definitive agreement to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its 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. In connection with a Business Combination, the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.
The Company will have until 24 months (subject to a three month extension of time, as set forth in the Company’s registration statement) from the closing of the Initial Public Offering to consummate a Business Combination (the “Combination Period”). If the Company is unable to complete 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 no more than five business days thereafter, redeem 100% of the outstanding 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 (net of taxes payable and less 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Public Offering price per Unit of $.
On April 19, 2023, the Company held a virtual special meeting of its stockholders (the “Special Meeting”). At the Special Meeting, the stockholders of the Company approved the proposal (the “Extension Amendment Proposal”) to amend the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A Common Stock included as part of the units sold in the Initial Public Offering from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $175,000 or (y) $ per share for each Public Share that was not redeemed in connection with the Special Meeting for each such one-month extension, unless the closing of the Company’s initial Business Combination shall have occurred, in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with.
On December 18, 2023, the Company held a virtual special meeting of its stockholders (the “Special Meeting”). At the Special Meeting, the stockholders of the Company approved the proposal (the “Extension Amendment Proposal”) to amend the Company’s Amended and Restated Certificate of Incorporation to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses, which we refer to as a “business combination,” (ii) cease its operations if it fails to complete such business combination, and (iii) redeem or repurchase 100% of the Company’s Class A common stock (the “Class A Common Stock”) included as part of the units sold in the Company’s initial public offering that was consummated on January 24, 2022, which we refer to as the “IPO,” from January 24, 2024 (the “Termination Date”) to January 24, 2025 or such earlier date as determined by the board of directors, pursuant to twelve one-month extensions, which we refer to as the “Extension,” and such later date, the “Extended Date,” provided that (i) the Sponsor, or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $40,000 or (y) $ per share for each public share that is not redeemed in connection with the Special Meeting for each such one-month extension commencing December 24, 2023 until January 24, 2025 unless the closing of the Company’s initial business combination shall have occurred (the “Extension Payment”) in exchange for a non-interest bearing, unsecured promissory note payable upon consummation of a business combination (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with.
In connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $41.2 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $14.1 million before the Extension Payment.
On December 19, 2023, the Company deposited two payments in an aggregate of $80,000 (the “Extension Payment”) into the Trust Account, which enables the Company to extend the period of time it has to consummate its initial business combination by two months from December 24, 2023 to February 24, 2024. On February 16, 2024, the Company caused to be deposited $40,000 into the Company’s Trust Account, allowing the Company to extend the period of time it has to consummate its initial Business Combination by one month from February 24, 2024 to March 24, 2024. On March 19, 2024, the Company caused to be deposited $40,000 into the Company’s Trust Account, allowing the Company to extend the period of time it has to consummate its initial Business Combination by one month from March 24, 2024 to April 24, 2024. The foregoing extensions are permitted under the Company’s governing documents.
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor 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 amounts in the Trust Account to below $ per share (whether or not the underwriters’ over-allotment option is exercised in full), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 accounting firm), prospective target businesses or 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.
Termination of the Merger Agreement
On July 25, 2022, the Company entered into a definitive Business Combination Agreement and Plan of Merger (the “Merger Agreement”) with Millymont Limited, a private limited company incorporated in Ireland (“Holdco”), Duet Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Holdco, J. Streicher Technical Services, LLC, a Delaware limited liability company, Anteco Systems, S.L., trading as AnyTech365, a company incorporated in Spain and registered at the Commercial Registry of Malaga under reference MA-122108, Miguel Ángel Casales Ruiz and Thomas Marco Balsloev, as the sellers’ representatives, and Lee Keat Hin, as the Company’s representative.
On April 6, 2023, the Company provided the other parties with written notice of the termination of the Merger Agreement pursuant to Section 11.1 thereof (the “Termination”). No party will be required to pay another party a termination fee as a result of the Termination.
The termination of the Merger Agreement also terminates and makes void the Support Agreement, the Non-Competition and Non-Solicitation Agreement, and the Lock-up Agreement (each as defined in the Merger Agreement), each of which were executed concurrently with the Merger Agreement.
Business Combination Agreement
As previously disclosed, the Company entered into a binding letter of intent with Fenix 360 Pte. Ltd., a Singapore private company limited by shares (the “Target”), on July 6, 2023, pursuant to which DUET agreed to acquire all of the outstanding equity interests of the Target. On November 28, 2023, DUET and the Target entered into a definitive Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”). DUET and the Target are sometimes referred to this Annual Report on Form 10-K, individually, as a “Party” and, collectively, as the “Parties.”
Our Chairman of the Board of Directors, Larry Gan Nyap Liou, serves as a financial advisor to the Target pursuant to a pre-existing relationship with the Target. Accordingly, Mr. Gan has recused himself, and will continue to recuse himself, from all Board decisions related to the Business Combination.
Domestication
Pursuant to and upon the closing (the “Closing”) of the transactions contemplated in the Business Combination Agreement (collectively, the “Business Combination”), the Company will transfer by way of continuation from the State of Delaware to the Cayman Islands and domesticate (the “Domestication”) as a Cayman Islands exempted company limited by shares in accordance with Section 390 of the Delaware General Corporation Law, as amended, and Part XII of the Cayman Islands Companies Act, as amended (the “Cayman Companies Act”). In connection with the Domestication, (a) each share of DUET’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one ordinary share of DUET (the “DUET Ordinary Shares”), (b) each share of DUET’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), that is issued and outstanding immediately prior to the Domestication shall become one DUET Ordinary Share, (c) each warrant of DUET that is outstanding immediately prior to the Domestication shall, from and after the Domestication, represent the right to purchase one DUET Ordinary Share at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the Warrant Agreement, dated January 19, 2022 by and between DUET and Continental Stock Transfer & Trust Company, and (d) the governing documents of DUET shall be amended and restated in the form of the amended and restated memorandum and articles of association of DUET in a form to be mutually agreed between the Parties (the “DUET A&R Charter”), and, as so amended and restated, the DUET A&R Charter will be the memorandum and articles of association of DUET until thereafter amended in accordance with the terms thereof and the Cayman Companies Act.
Business Combination
Pursuant to the Business Combination Agreement, as consideration for the Business Combination, the shareholders of the Target (each, a “Target Shareholder” and, together, the “Target Shareholders”) are entitled to receive an aggregate of DUET Ordinary Shares, valued at $ per share for an aggregate value equal to $610,000,000. Each Target Shareholder will be entitled to receive, in accordance with terms of the Business Combination Agreement, one DUET Ordinary Share for each share of the Target (the “Target Ordinary Shares”) held by such Target Shareholder (the “Exchange Consideration”). As of the Effective Time (as defined in the Business Combination Agreement), each Target Shareholder, upon receiving the Exchange Consideration, shall cease to have any other rights in and to the Target.
Upon the terms and subject to the conditions of the Business Combination Agreement, at or prior to the Closing, each Target Shareholder will deliver to Continental Stock Transfer & Trust Company (the “Exchange Agent”) a share exchange agreement in the form mutually agreed to between the Parties (a “Share Exchange Agreement”) that has been duly executed by that Target Shareholder, surrender any original certificates for the Target Ordinary Shares held by such Target Shareholder, and deliver such other documents reasonably requested by DUET. In exchange, DUET will issue and cause the Exchange Agent to deliver to each Target Shareholder the amount of DUET Ordinary Shares due to such Target Shareholder pursuant to the Business Combination Agreement.
Representations and Warranties; Covenants
Pursuant to the Business Combination Agreement, the Parties made customary representations and warranties for transactions of this type. The Business Combination Agreement includes certain covenants that are customary for transactions of this type, including obligations of the Parties to use reasonable best efforts to operate their respective businesses in the ordinary course and to refrain from taking certain specified actions without the prior written consent of the applicable party, in each case, subject to certain exceptions and qualifications. The Parties have agreed not to solicit, negotiate, or enter into a competing transaction. Additionally, the Target has agreed to certain other covenants, including to (a) deliver the PCAOB Financials (as defined in the Business Combination Agreement) to DUET no later than December 11, 2023, (b) conclude investigations, examinations and diligence with respect to certain agreed-upon items by December 12, 2023 (the “Due Diligence Period”), and (c) onboard certain employees of one of the Target’s primary software developers. The covenants in the Business Combination Agreement generally will not survive the Closing, subject to certain exceptions, including certain covenants and agreements that by their terms are to be performed in whole or in part after the Closing.
Reserve Against Certain Liabilities
Certain of the Target Shareholders (the “Legacy Shareholders”) are to deposit with the Escrow Agent at Closing their pro rata portion of an aggregate of DUET Ordinary Shares otherwise issuable to the Legacy Shareholders as Exchange Consideration (the “Escrow Shares”). The Escrow Shares are subject to a quarterly release following the Closing and are reserved to cover losses arising out of or in connection with the Target’s rescission plan for tokens that were issued by management of the Target, any pending or threatened legal proceedings required to be disclosed by the Target, and any other matters mutually agreed upon by the Parties (collectively, the “Covered Matters”). To the extent the Target incurs losses based on an action against the Target or its affiliates by any third party with respect to the Covered Matters, the Legacy Shareholders consent to and agree to reasonably and promptly allow the post-Closing company to redeem an aggregate number of Escrow Shares with a value equal to the amount of such loss incurred by the post-Closing company therefrom, with the value of the Escrow Shares to be determined using the 5-Day VWAP of the DUET Ordinary Shares.
Conditions to Obligations of Both Parties at Closing
The obligations of the Parties to consummate the Business Combination are subject to the satisfaction of the following conditions, any one or more of which may be waived by in writing by either or both of the Parties: (a) DUET stockholder approval of the Business Combination has been obtained; (b) all of the Target Shareholders have submitted a Share Exchange Agreement and have exchanged all of the Target Ordinary Shares for the DUET Ordinary Shares in accordance with the terms of the Business Combination Agreement no later than the date of the DUET Stockholders’ Meeting (defined below); (c) the Proxy/Registration Statement (as defined below) shall have become effective under the Securities Act of 1933, as amended (the “Securities Act”), and no stop order suspending the effectiveness of the Proxy/Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the U.S. Securities and Exchange Commission (the “SEC”) and not withdrawn; (d) the Nasdaq Stock Market LLC (“Nasdaq”) shall have completed its review of the “Listing of Additional Shares Notification Form” filed by DUET with Nasdaq with respect to the DUET Ordinary Shares to be issued in connection with the Business Combination; (e) no Exchange Objection (as defined in the Business Combination Agreement) shall have been raised, or any such Exchange Objection which has been raised shall have been addressed; (f) no federal, state, provincial, municipal, local or foreign government, governmental authority, taxing, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal (“Governmental Authority”) shall have enacted, issued, promulgated, enforced or entered any statute, law, ordinance, rule, order, or regulation (“Law”) that is then in effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits consummation of the Business Combination, other than any such restraint that is immaterial, or for which the relevant Governmental Authority does not have jurisdiction over either of the parties hereto with respect to the Business Combination; and (g) all Closing deliverables required under the Business Combination Agreement have been provided.
Conditions to Obligations of DUET at Closing
Pursuant to the Business Combination Agreement, the obligations of DUET to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by DUET: (a)(i) the representations and warranties of the Target regarding the capitalization of the Target are true and correct in all respects of the date of the Closing except with respect to such representations and warranties speaking to an earlier date, which shall be true and correct at and as of such date, subject to changes made to the Business Combination Agreement, (ii) the Target’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of the Target shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions, and (iii) each of the representations and warranties of the Target other than the Target’s Fundamental Representations shall be true and correct as of the date of the Closing, subject to certain qualifications and exceptions; (b) each of the covenants of the Target to be performed as of or prior to the Closing shall have been performed in all material respects; (c) there shall not have occurred a Company Material Adverse Effect (as defined in the Business Combination Agreement); (d) each of the Restrictive Covenant Agreements (as defined in the Business Combination Agreement) with each of the Key Executives (as defined in the Business Combination Agreement) shall be in full force and effect at Closing; (e) the Target’s unaudited consolidated statement of financial positions and consolidated statements of comprehensive income, changes in equity and cash flows of the Target and its Subsidiaries as of and for the nine-month period ended September 30, 2023, which comply with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant shall have been provided; and (f) all closing deliveries required by the Business Combination Agreement shall have been delivered.
Conditions to Obligations of the Target at Closing
The obligation of the Target to consummate is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Target: (a) subject to certain qualifications and exceptions in each: (i) the representations and warranties of DUET regarding the capitalization of DUET shall be true and correct as of the Closing, (ii) DUET’s Fundamental Representations (as defined in the Business Combination Agreement) other than those regarding the capitalization of DUET shall be materially true and correct as of date of the Closing, subject to certain exceptions, and (iii) each of the representations and warranties of DUET contained in the Business Combination Agreement other than those regarding organization, due authorization, absence of changes, capitalization, and brokers’ fees shall be true and correct as of Closing; (b) the Class A Common Stock shall remain listed on the Nasdaq Global Market; and (c) each of the covenants of DUET to be performed as of or prior to the Closing shall have materially been performed.
Termination
The Business Combination Agreement may be terminated and the transactions therein may be abandoned: (a) by DUET pursuant to a failure of the Target to deliver timely the PCAOB Financials, or comply with the requests of DUET during the Due Diligence Period; (b) by DUET if the Proxy/Registration Statement is not declared effective or such effectiveness is materially delayed due to any action or omission by the Target; (c) by the Target if DUET is delisted from the Nasdaq Global Market for any reason other than a breach by the Target or Legacy Shareholders of obligations to the Business Combination Agreement; (d) by mutual written consent of all Parties; (e) by DUET or the Target if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or order that is then in effect and which has the effect of making the Business Combination illegal or which otherwise prevents or prohibits their consummation; (f) by DUET if (i) there is a breach of any representation, warranty, covenant or agreement on the part of the Target, such that the conditions obligating DUET to close would not be satisfied, subject to a 30 day cure period for the Target, or (ii) the Closing has not occurred on or before the date on which the DUET charter expires and the Parties agree it shall not be extended (the “Agreement End Date”), unless DUET is in material breach of the Business Combination Agreement; (g) by DUET if the original certificates for the Target duly endorsed for transfer to DUET have not been submitted for exchange along with duly executed Share Exchange Agreements from the Target Shareholders by the date of the DUET Stockholders’ Meeting; (h) by the Target by written notice to DUET if (i) there is any breach of any representation, warranty, covenant or agreement on the part DUET set forth in the Business Combination Agreement, such that the conditions obligating the Target to close would not be satisfied at Closing, subject to a 30 day cure period for DUET upon notice, or (ii) the Closing has not occurred on or before the Agreement End Date, unless the Target is in material breach of the Business Combination Agreement; or (i) if the resolution of outstanding accrued underwriting fees payable to EF Hutton, division of Benchmark Investments LLC, are not resolved, in a manner satisfactory to both DUET and the Target before the Closing. In the event the Business Combination Agreement is terminated pursuant to (a), (b) or (f) above, the Target shall pay DUET $3,500,000 within 10 days of such termination.
The foregoing description of the Business Combination Agreement does not purport to be complete and is qualified in its entirety by the full text of the Business Combination Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
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 auditor 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.
Going Concern, Liquidity and Capital Resources
As of December 31, 2023, the Company had $87,134 of cash in its operating bank account.
The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to cover certain offering costs on the Company’s behalf in exchange for issuance of Founder Shares (as defined in Note 5), and loan from the Sponsor of $190,478 under the Note (as defined in Note 5). Following the IPO of the Company on January 24, 2022 (as described in Note 1), a total of $193,535 under the promissory note was repaid on January 24, 2022. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account. In addition, 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 in Note 5). As of December 31, 2023, there was $1,242,500 outstanding under Working Capital Loans.
We currently believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations. The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplates the continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management plans to address this uncertainty during the period leading up to the business combination, however this cannot be guaranteed.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| 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 conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires 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 period.
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. 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 had no cash equivalents as of December 31, 2023 and December 31, 2022.
Marketable Securities Held in Trust Account
At December 31, 2023 and 2022, substantially all of the assets held in the Trust Account were held in mutual funds. At December 31, 2023 and 2022, the balance in the Trust Account was $13,979,449 and $88,592,161, respectively.
Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering and that were charged to stockholders’ equity upon the completion of the Offering. Should the Offering have proved to be unsuccessful, these deferred costs, as well as additional expenses incurred, would have been charged to operations.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 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’s management determined the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of December 31, 2023 and 2022 and no amounts accrued for interest and penalties. 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.
The Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature 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) are classified as temporary equity. At all other times, shares are classified as stockholders’ equity. 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, and is therefore classified as temporary equity on the balance sheet.
On December 31, 2022, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption. On April 19, 2023, the Company held a special meeting of its stockholders in connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $37,167,327. On December 19, 2023, the Company held a special meeting of its stockholders in connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $41.2 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $14.1 million before the Extension Payment.
On December 31, 2023, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption.
If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
As of December 31, 2023 and 2022, the Class A Common Stock subject to possible redemption reflected on the balance sheet is reconciled in the following table:
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of shares of Class B Common Stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 6). At December 31, 2023 and 2022, the Company did not have any dilutive securities and 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 income (loss) per share is the same as basic income (loss) per share for the periods presented. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value at December 31, 2023 and 2022.
Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A common stock were charged to stockholders’ equity upon the completion of the Initial Public Offering.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. On December 31, 2023 and 2022, the Company did not experience losses on this account and management believes the Company is not exposed to significant risks on such account.
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 Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40. The Company has determined that the Warrants qualify for equity treatment in the Company’s financial statements.
Recent Accounting Standards
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statement.
Risks and Uncertainties
Management has evaluated the impact of the COVID-19 pandemic on the industry 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Inflation Reduction Act of 2022
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 (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. 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. The IR Act applies only to repurchases that occur after December 31, 2022.
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 holders, 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.
At this time, it has been determined that the IR Act tax provisions would have an impact to the Company’s fiscal 2023 tax provision as there were redemptions by the public stockholders in April 2023 and December 2023; as a result, the Company recorded $785,497 excise tax liability as of December 31, 2023. The Company will continue to monitor for updates to the Company’s business along with guidance issued with respect to the IR Act to determine whether any adjustments are needed to the Company’s tax provision in future periods.
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INITIAL PUBLIC OFFERING |
12 Months Ended |
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Dec. 31, 2023 | |
| Regulated Operations [Abstract] | |
| INITIAL PUBLIC OFFERING | NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company offered for sale up to Units at a purchase price of $ per Unit. Each Unit consists of one share of Class A common stock and one redeemable warrant (“Public Warrant”). Each Public Warrant will entitle the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share (see Note 7).
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PRIVATE PLACEMENT |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Private Placement | |
| PRIVATE PLACEMENT | NOTE 4. PRIVATE PLACEMENT
The Sponsor purchased an aggregate of placement units at a price of $ per unit, for an aggregate purchase price of $3,900,000. Each Placement Unit is identical to the units sold in the Initial Public Offering. The placement units were sold in a private placement that closed simultaneously with the closing of this offering. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Placement Warrants will expire worthless.
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RELATED PARTY TRANSACTIONS |
12 Months Ended |
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Dec. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On October 17, 2021, the Sponsor purchased Founder Shares for an aggregate purchase price of $25,000. The number of Founder Shares will equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding shares of common stocks after the Initial Public Offering.
The initial stockholders have agreed not to transfer, assign or sell any of the Class B common stock (except to certain permitted transferees as disclosed herein) until, with respect to any of the Class B common stock, the earlier of (i) six months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $ per share (as adjusted for share subdivisions, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, or earlier, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property.
Promissory Note – Related Party
On October 1, 2021, the Sponsor issued an unsecured promissory note to the Company, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000, to be used for payment of costs related to the Initial Public Offering. The note is non-interest bearing and payable on the earlier of (i) December 31, 2022 or (ii) the consummation of the Initial Public Offering. As of December 31, 2023 and 2022, the Company had borrowed and $190,478 under the promissory note with the Sponsor which was repaid on January 21, 2022.
Working Capital Loan
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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into units at a price of $10.00 per unit. Such units would be identical to the Private Placement Units. 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.
On July 6, 2023, the Company issued a promissory note (the “Promissory Note”) in the principal amount of $1,500,000 to the Sponsor. The Promissory Note was issued to provide the Company with additional working capital, and the funds provided in accordance therewith will not be deposited into the Company’s Trust Account. The Company issued the Promissory Note in consideration for a loan from the Sponsor to fund the Company’s extension costs and working capital requirements. The Promissory Note bears no interest and is due and payable upon the earlier to occur of (i) the date on which the Company’s initial business combination is consummated and (ii) the liquidation of the Company on or before July 23, 2023 (subject to the extension of the period in which the Company must complete its initial business combination pursuant to the Company’s governing documents, or such later liquidation date as may be approved by the Company’s stockholders). At the election of the Sponsor, the unpaid principal amount of the Promissory Note may be converted into units of the Company (the “Conversion Units”) and the total Conversion Units so issued shall be equal to: (x) the portion of the principal amount of the Promissory Note being converted divided by (y) the conversion price of ten dollars ($10.00), rounded up to the nearest whole number of Conversion Units. As of December 31, 2023 and 2022, there was $1,242,500 and $100,000 outstanding under the Working Capital Loans, respectively.
Extension Loan
On April 19, 2023, the Stockholders of the Company approved the Extension Amendment and the Trust Amendment to allow the Company to extend the deadline from April 24, 2023 to January 24, 2024, or such earlier date as determined by the board of directors, pursuant to nine one-month extensions, provided that (i) the Sponsor or its affiliates or permitted designees will deposit into the Trust Account the lesser of (x) $175,000 or (y) $ per share for each Public Share that was not redeemed in connection with the Special Meeting for each such one-month extension, and (ii) the procedures relating to any such extension, as set forth in the Trust Agreement, shall have been complied with. On April 21, 2023, the Company deposited an aggregate of $175,000 (the “Extension Payment”) into the Trust Account, representing approximately $ per public share remaining outstanding after the redemptions described below, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from April 24, 2023 to May 24, 2023 (the “First Extension”). The First Extension is the first of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation. On May 4, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from May 24, 2023 to June 24, 2023 (the “Monthly Extension”). On June 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from June 24, 2023 to July 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On July 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from July 24, 2023 to August 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On August 20, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from August 24, 2023 to September 24, 2023 (the “Monthly Extension”). The Monthly Extension is the third of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On September 12, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from September 24, 2023 to October 24, 2023 (the “Monthly Extension”). The Monthly Extension is the sixth of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On October 13, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from October 24, 2023 to November 24, 2023 (the “Monthly Extension”). The Monthly Extension is the seventh of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended. On November 24, 2023, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $175,000 into the Company’s trust account, representing approximately $ per public share, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from November 24, 2023 to December 24, 2023 (the “Monthly Extension”). The Monthly Extension is the eighth of up to nine monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended.
On December 18, 2023, at 9:00 a.m. ET, DUET Acquisition Corp., a Delaware corporation (the “Company”), held a virtual special meeting of its stockholders pursuant to due notice (the “Special Meeting”). At the Special Meeting, the stockholders of the Company entitled to vote at the meeting (the “Stockholders”) cast their votes and approved the Trust Amendment Proposal. At the Special Meeting, the Stockholders approved a proposal to amend the Trust Agreement (the “Trust Amendment Proposal”) to allow the Company to extend on a monthly basis through January 24, 2025 the date by which (each such date, a “Deadline Date”) Continental must liquidate the Trust Account if the Company has not completed its initial business combination (the “Trust Amendment”) by depositing into the Trust Account by the 24th calendar day of each of such thirteen months unless the Company’s initial business combination (the “business combination”) has been completed earlier (each such payment and resulting extension of the Deadline Date, an “Extension”) the lesser of (i) $40,000 or (ii) $ per share for each public share that is not redeemed in connection with the Special Meeting. The procedures in the Trust Amendment conform to the procedures contained in an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Charter Amendment”) and Additional Charter Amendment Proposals (as defined below) that were also approved by the Stockholders at the Special Meeting and are described under Item 5.03 below, which description is incorporated herein by reference. The Company and Continental entered into the Trust Amendment on December 18, 2023. On December 19, 2023, the Company deposited an aggregate of $40,000 (the “Extension Payment”) into the Trust Account, representing approximately $ per public share remaining outstanding after the redemptions described below, which enables the Company to extend the period of time it has to consummate its initial business combination by one month from January 24, 2024 to February 24, 2024 (the “January Extension”). The January Extension is the first of up to twelve monthly extensions permitted under the Company’s Amended and Restated Certificate of Incorporation, as amended by the Charter Amendment.
As of December 31, 2023 and 2022, there was $1,090,000 and outstanding under the Extension Loans, respectively.
Convertible Note Purchase Agreement
On July 6, 2023, DUET Partners LLC (the “Sponsor”) and Fenix entered into a convertible note purchase agreement (the “Note Purchase Agreement”), pursuant to which Fenix agreed to loan $200,000 to the Sponsor at the signing of the Letter of Intent and an additional $800,000 at the signing of the Definitive Agreement. In addition, in order to finance any further extensions in connection with the Proposed Business Combination, Fenix shall at its discretion, loan funds as may be required up to another $500,000. The Sponsor will sell and issue to Fenix one or more unsecured, non-interest-bearing notes in connection with the aforementioned loans, with an aggregate principal amount of up to $1,500,000 (the “Fenix Notes”).
The Note Purchase Agreement contains customary representations, warranties, conditions and indemnification obligations by each party thereto. The representations and warranties contained therein were made only for the purposes of the Note Purchase Agreement, and as of specific dates, were solely for the benefit of the parties to such agreement and are subject to certain limitations set forth therein.
The Fenix Notes are due and payable by the Sponsor upon the closing of the Proposed Business Combination between the Company and Fenix (the “Maturity Date”). The Fenix Notes are convertible into common stocks of the Company pursuant to terms that will be set forth in the Definitive Agreement. The Fenix Notes will be cancelled and the principal amount of the loans disbursed by the Sponsor to the Company (as described below in the section titled “Promissory Note”) shall be forgiven, and the balance of the principal amount of the Fenix Notes not disbursed by the Sponsor to the Company will be returned to Fenix (i) in the event that a Definitive Agreement is not signed by July 31, 2023 or such later date that may be mutually agreed between the parties), (ii) if a Definitive Agreement is entered into and then subsequently terminated by the Company, or (iii) if the PCAOB audited financial statements of Fenix have not been delivered by the date mutually agreed between the parties and stipulated in the Business Combination Agreement.
The issuance of the Fenix Notes will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The foregoing descriptions of the Note Purchase Agreement and the Fenix Notes are summaries only and are qualified in their entirety by the full text of the Note Purchase Agreement and the form of the Fenix Notes which is attached to the Note Purchase Agreement, a copy of which is attached as Exhibit 10.2 hereto and is incorporated herein by reference.
Administrative Services Arrangement
The Company’s Sponsor has agreed, commencing from the date that the Company’s securities are first listed on Nasdaq through the earlier of the Company’s consummation of a Business Combination and its liquidation, to make available to the Company certain general and administrative services, including office space, utilities and administrative services, as the Company may require from time to time. The Company has agreed to pay to the Sponsor $10,000 per month for these services during the 15-month period to complete a business combination. For the year ended December 31, 2023 and 2022, the Company had paid $45,000 and $120,000 for administrative services, respectively. For the year ended December 31, 2023 and 2022, the Company had accrued $75,000 and for administrative services, respectively.
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COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, Private Placement Units and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stocks issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the 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 Initial Public Offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stocks). The holders of these securities will be entitled to make up to three demands, excluding short form registration 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 completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to an additional 15% of the total number of Units in the Initial Public Offering to cover over-allotments. The aforementioned option was exercised in full on January 24, 2022.
The underwriters were entitled to a cash underwriting discount of one and one-half percent (1.5%) of the gross proceeds of the Initial Public Offering, or $1,293,750. In addition, the underwriters are entitled to a deferred fee of three percent (3.0%) of the gross proceeds of the Initial Public Offering, or $2,587,500 upon closing of the Business Combination. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
Additionally, shares of our Class A common stock were issued to the underwriter upon the closing of Initial Public Offering.
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STOCKHOLDERS’ EQUITY |
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Dec. 31, 2023 | ||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | NOTE 7. STOCKHOLDERS’ EQUITY
Class A Common Stock — Our amended and restated memorandum and articles of association authorize the Company to issue shares of Class A common stock with a par value of $ per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. On December 31, 2023 and 2022, there were shares of Class A Common Stock issued and outstanding, excluding and shares of Class A Common Stock subject to possible redemption, respectively.
Class B Common Stock — The Company is authorized to issue shares of Class B common stock with a par value of $ per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. As of December 31, 2023 and 2022, there were shares of Class B common stock issued and outstanding, such that the Initial Stockholders will maintain ownership of at least 20% of the issued and outstanding shares after the Initial Public Offering.
Preferred Shares — The Company is authorized to issue preferred shares with a par value of $ per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At December 31, 2023 and 2022, there were preferred shares issued or outstanding.
Warrants — Public Warrants may only be exercised for a whole number of shares. 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 (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stocks 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 stocks issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stocks is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available.
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 commercially reasonable efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stocks issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stocks until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stocks is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies 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 elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
If and when the warrants become redeemable by the Company, 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 common stocks issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock 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 stocks 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.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering.
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INCOME TAX |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAX | NOTE 8. INCOME TAX
The income tax provision consists of the following:
The Company’s net deferred tax assets are as follows:
As of December 31, 2023 and 2022, the Company had zero of U.S. federal and state net operating loss carryovers available to offset future taxable income. The federal net operating losses can be carried forward indefinitely, subject to a limitation in utilization against 80% of annual taxable income.
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 deferred tax assets and therefore established a full valuation allowance of $539,705 and as of December 31, 2023 and 2022.
A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to the recording of full valuation allowances on deferred tax assets.
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open to examination by the taxing authorities. There were no unrecognized tax benefits as of December 31, 2023 and 2022. No amounts were accrued for the payment of interest and penalties as of December 31, 2023 and 2022. 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. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
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SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after the balance sheet date. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than what is listed below:
On February 16, 2024, the Company, caused to be deposited $40,000 into the Company’s trust account, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from February 24, 2024 to March 24, 2024 (the “Extension”). The Extension is permitted under the Company’s governing documents. On March 19, 2024, DUET Acquisition Corp., a Delaware corporation (the “Company”), caused to be deposited $40,000 into the Company’s Trust Account, allowing the Company to extend the period of time it has to consummate its initial business combination by one month from March 24, 2024 to April 24, 2024 (the “Extension”). The Extension is permitted under the Company’s governing documents. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation
The accompanying financial statements are presented in U.S. Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
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| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with GAAP requires 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 period.
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. 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 had no cash equivalents as of December 31, 2023 and December 31, 2022.
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| Marketable Securities Held in Trust Account | Marketable Securities Held in Trust Account
At December 31, 2023 and 2022, substantially all of the assets held in the Trust Account were held in mutual funds. At December 31, 2023 and 2022, the balance in the Trust Account was $13,979,449 and $88,592,161, respectively.
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| Deferred offering costs | Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering and that were charged to stockholders’ equity upon the completion of the Offering. Should the Offering have proved to be unsuccessful, these deferred costs, as well as additional expenses incurred, would have been charged to operations.
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| Income Taxes | Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 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’s management determined the United States is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of December 31, 2023 and 2022 and no amounts accrued for interest and penalties. 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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| Class A Common Stock Subject to Possible Redemption |
The Company accounts for its shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that feature 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) are classified as temporary equity. At all other times, shares are classified as stockholders’ equity. 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, and is therefore classified as temporary equity on the balance sheet.
On December 31, 2022, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption. On April 19, 2023, the Company held a special meeting of its stockholders in connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $37,167,327. On December 19, 2023, the Company held a special meeting of its stockholders in connection with the approval of the Extension Amendment Proposal and the Trust Amendment Proposal at the Special Meeting, holders of shares of the Company’s Class A Common Stock exercised their right to redeem those shares for cash at an approximate price of $ per share, for an aggregate of approximately $41.2 million. Following the payment of the redemptions, the Trust Account will have a balance of approximately $14.1 million before the Extension Payment.
On December 31, 2023, there are shares of Class A Common Stock related to the Private Placement Units outstanding, which are not subject to redemption, and shares of Class A Common Stock outstanding, which are subject to possible redemption.
If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement is treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).
As of December 31, 2023 and 2022, the Class A Common Stock subject to possible redemption reflected on the balance sheet is reconciled in the following table:
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| Net income (loss) per share |
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding during the period, excluding common stock subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of shares of Class B Common Stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 6). At December 31, 2023 and 2022, the Company did not have any dilutive securities and 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 income (loss) per share is the same as basic income (loss) per share for the periods presented. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates fair value at December 31, 2023 and 2022.
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| Offering Costs Associated with the Initial Public Offering | Offering Costs Associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A common stock were charged to stockholders’ equity upon the completion of the Initial Public Offering.
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| Concentration of Credit Risk | Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. On December 31, 2023 and 2022, the Company did not experience losses on this account and management believes the Company is not exposed to significant risks on such account.
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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 Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:
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| Derivative Financial Instruments | Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for the Warrants in accordance with the guidance contained in ASC 815-40. The Company has determined that the Warrants qualify for equity treatment in the Company’s financial statements.
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| Recent Accounting Standards | Recent Accounting Standards
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statement.
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| Risks and Uncertainties | Risks and Uncertainties
Management has evaluated the impact of the COVID-19 pandemic on the industry 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Additionally, as a result of the military action commenced in February 2022 by the Russian Federation and Belarus in the country of Ukraine and related economic sanctions, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. Further, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and related sanctions on the world economy and the specific impact on the Company’s financial position, results of operations and/or ability to consummate a Business Combination are not yet determinable. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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| Inflation Reduction Act of 2022 | Inflation Reduction Act of 2022
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 (including redemptions) of stock by publicly traded domestic (i.e., U.S.) corporations and certain domestic subsidiaries of publicly traded foreign corporations. 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. The IR Act applies only to repurchases that occur after December 31, 2022.
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 holders, 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.
At this time, it has been determined that the IR Act tax provisions would have an impact to the Company’s fiscal 2023 tax provision as there were redemptions by the public stockholders in April 2023 and December 2023; as a result, the Company recorded $785,497 excise tax liability as of December 31, 2023. The Company will continue to monitor for updates to the Company’s business along with guidance issued with respect to the IR Act to determine whether any adjustments are needed to the Company’s tax provision in future periods. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CLASS A COMMON STOCK REFLECTED ON BALANCE SHEET | As of December 31, 2023 and 2022, the Class A Common Stock subject to possible redemption reflected on the balance sheet is reconciled in the following table:
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| SCHEDULE OF NET INCOME (LOSS) BASIC AND DILUTED PER SHARE |
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| SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIC | The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of December 31, 2023 and 2022:
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INCOME TAX (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INCOME TAX PROVISION | The income tax provision consists of the following:
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| SCHEDULE OF NET DEFERRED TAX ASSETS | The Company’s net deferred tax assets are as follows:
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| SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION | A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
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SCHEDULE OF CLASS A COMMON STOCK REFLECTED ON BALANCE SHEET (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Accounting Policies [Abstract] | ||
| Redeemable Class A Common Stock – Opening Balance | $ 87,543,750 | $ 87,543,750 |
| Redemption of Class A common stock, including interest | (78,549,722) | |
| Re-measurement of carrying value to redemption value | 4,031,832 | |
| Redeemable Class A Common Stock - Ending Balance | $ 13,025,860 | $ 87,543,750 |
SCHEDULE OF NET INCOME (LOSS) BASIC AND DILUTED PER SHARE (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Redeemable Common Stock [Member] | ||
| Allocation of net income(loss) including carrying value to redemption value | $ 938,012 | $ (162,488) |
| Allocation of net income | $ 4,199,916 | $ (162,488) |
| Weighted-average shares outstanding, basic | 6,627,390 | 8,502,812 |
| Weighted-average shares outstanding, diluted | 6,627,390 | 8,502,812 |
| Basic net income (loss) per share | $ 0.14 | $ (0.02) |
| Diluted net income (loss) per share | $ 0.14 | $ (0.02) |
| Non Redeemable Common Stock [Member] | ||
| Allocation of net income(loss) including carrying value to redemption value | $ (715,241) | $ (307,075) |
| Allocation of net income | $ 54,687 | $ (307,075) |
| Weighted-average shares outstanding, basic | 2,156,250 | 2,156,250 |
| Weighted-average shares outstanding, diluted | 2,156,250 | 2,156,250 |
| Basic net income (loss) per share | $ (0.33) | $ (0.14) |
| Diluted net income (loss) per share | $ (0.33) | $ (0.14) |
SCHEDULE OF FAIR VALUE MEASUREMENT ON RECURRING BASIC (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Fair Value, Inputs, Level 1 [Member] | ||
| Platform Operator, Crypto-Asset [Line Items] | ||
| Cash and marketable securities held in trust account | $ 13,979,449 | $ 88,592,161 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
Dec. 19, 2023 |
Dec. 18, 2023 |
Apr. 19, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Jan. 24, 2022 |
|
| Cash equivalents | $ 0 | $ 0 | ||||
| Marketable securities | $ 13,979,449 | $ 88,592,161 | ||||
| Temproary equity, shares outstanding | 1,283,336 | 8,625,000 | ||||
| Redemption of shares | 100,000,000 | 100,000,000 | ||||
| Temporary equity, redemption price per share | $ 10.15 | $ 10.15 | ||||
| Aggregate amount | $ 14,100,000 | $ 818,211 | ||||
| Cash, FDIC insured amount | 250,000 | |||||
| Excise tax liability | $ 785,497 | |||||
| Common Class A [Member] | ||||||
| Common stock, shares outstanding | 476,250 | 476,250 | ||||
| Common Class A [Member] | Extension Amendment and Trust Amendment [Member] | ||||||
| Redemption of shares | 3,760,678 | 3,760,678 | 3,580,986 | |||
| Temporary equity, redemption price per share | $ 10.95 | $ 10.95 | $ 10.38 | |||
| Shares redeemed value | $ 41,200,000 | $ 41,200,000 | $ 37,167,327 | |||
| Common Class B [Member] | ||||||
| Common stock, shares outstanding | 2,156,250 | 2,156,250 | ||||
| Common stock subject to forfeiture of shares | 281,250 |
INITIAL PUBLIC OFFERING (Details Narrative) - IPO [Member] |
12 Months Ended |
|---|---|
|
Dec. 31, 2023
$ / shares
shares
| |
| Subsidiary, Sale of Stock [Line Items] | |
| Number of common stock issued | shares | 8,625,000 |
| Shares issued price per share | $ 10.00 |
| Exercise price of warrants | $ 11.50 |
PRIVATE PLACEMENT (Details Narrative) - Private Placement [Member] |
12 Months Ended |
|---|---|
|
Dec. 31, 2023
USD ($)
$ / shares
shares
| |
| Subsidiary, Sale of Stock [Line Items] | |
| Number of stock units issued | shares | 390,000 |
| Share price per share | $ / shares | $ 10.00 |
| Incurring offering costs | $ | $ 3,900,000 |
STOCKHOLDERS’ EQUITY (Details Narrative) - $ / shares |
Dec. 31, 2023 |
Dec. 31, 2022 |
Oct. 17, 2021 |
|---|---|---|---|
| Class of Stock [Line Items] | |||
| Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
| Preferred stock, shares issued | 0 | 0 | |
| Preferred stock, shares outstanding | 0 | 0 | |
| Warrant [Member] | |||
| Class of Stock [Line Items] | |||
| Shares issued, price per share | $ 0.01 | ||
| Common Class A [Member] | |||
| Class of Stock [Line Items] | |||
| Common stock, shares authorized | 100,000,000 | 100,000,000 | |
| Common stock, par value | $ 0.0001 | $ 0.0001 | |
| Common stock, shares issued | 476,250 | 476,250 | |
| Common stock, shares outstanding | 476,250 | 476,250 | |
| Common stock, shares redemption | 1,283,336 | 8,625,000 | |
| Warrant exercise price | $ 18.00 | ||
| Common Class B [Member] | |||
| Class of Stock [Line Items] | |||
| Common stock, shares authorized | 10,000,000 | 10,000,000 | |
| Common stock, par value | $ 0.0001 | $ 0.0001 | |
| Common stock, shares issued | 2,156,250 | 2,156,250 | |
| Common stock, shares outstanding | 2,156,250 | 2,156,250 | |
| Shares issued, price per share | $ 12.00 |
SCHEDULE OF INCOME TAX PROVISION (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Federal | ||
| Current | $ 153,561 | $ 229,101 |
| Deferred | ||
| State and Local | ||
| Current | ||
| Deferred | ||
| Change in valuation allowance | ||
| Income tax provision | $ 153,561 | $ 229,101 |
SCHEDULE OF NET DEFERRED TAX ASSETS (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred Tax Assets | ||
| Sec. 195 Start-up Costs | $ 275,594 | |
| Acquisition Cost | 264,111 | |
| Total Deferred Tax Assets | 539,705 | |
| Deferred Tax Liability | ||
| Unrealized gain on Investment in Trust Account | ||
| Total Deferred Tax Assets | ||
| Less: Valuation allowance | (539,705) | |
| Deferred Tax Assets, net of allowance |
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION (Details) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Statutory federal income tax rate | 21.00% | 21.00% |
| State taxes, net of federal tax benefit | ||
| Return to Accrual & Prior Year True Ups | (74.38%) | |
| Transaction costs allocated to warrant issuance | ||
| Change in valuation allowance | 143.41% | |
| Income tax provision | 90.03% | 21.00% |
INCOME TAX (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Federal and state net operating loss | $ 0 | $ 0 |
| Limitation on annual taxable income | The federal net operating losses can be carried forward indefinitely, subject to a limitation in utilization against 80% of annual taxable income | |
| Valuation allowance | $ 539,705 |
SUBSEQUENT EVENTS (Details Narrative) - Extension Amendment and Trust Amendment [Member] - USD ($) |
Mar. 19, 2024 |
Feb. 16, 2024 |
Dec. 19, 2023 |
Nov. 24, 2023 |
Oct. 13, 2023 |
Sep. 12, 2023 |
Aug. 20, 2023 |
Jul. 20, 2023 |
Jun. 20, 2023 |
May 04, 2023 |
Apr. 21, 2023 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Subsequent Event [Line Items] | |||||||||||
| Business combination, extension payment | $ 40,000 | $ 175,000 | $ 175,000 | $ 175,000 | $ 175,000 | $ 175,000 | $ 175,000 | $ 175,000 | $ 175,000 | ||
| Business combination, extension date | Feb. 24, 2024 | Dec. 24, 2023 | Nov. 24, 2023 | Oct. 24, 2023 | Sep. 24, 2023 | Aug. 24, 2023 | Jul. 24, 2023 | Jun. 24, 2023 | May 24, 2023 | ||
| Subsequent Event [Member] | |||||||||||
| Subsequent Event [Line Items] | |||||||||||
| Business combination, extension payment | $ 40,000 | $ 40,000 | |||||||||
| Business combination, extension date | Apr. 24, 2024 | Mar. 24, 2024 |