ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto
which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may
differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under
“Special Note Regarding Forward-Looking Statements” and elsewhere in this Annual Report on Form 10-K.
7
Overview
We are a blank check company incorporated as a
Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Initial Business Combination”).
We intend to effectuate an Initial Business Combination
using cash from the proceeds of our initial public offering (the “Public Offering”) that closed on March 15, 2022 (the “Closing
Date”) and the private placement warrants sold in a private placement (the “Private Placement Warrants”) that closed
on the Closing Date and from additional issuances, if any, of, our capital stock and our debt, or a combination of cash, stock and debt.
Our business activities from inception to December
31, 2022 consisted primarily of our preparation for our Public Offering that was completed on March 15, 2022 and, since the Closing Date,
identification and evaluation of prospective acquisition targets for an Initial Business Combination.
At December 31, 2022, we had cash of $545,655
and working capital deficit of $148,043. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans.
We cannot assure you that our plans to complete an Initial Business Combination will be successful.
Results of Operations
For the year ended December 31, 2022, we had net income of $593,905
which consisted of interest income earned in the amount of $1,818,565 on cash and funds held in the Trust Account, a gain on the over-allotment
liability of $19,432, partially offset by operating expenses totaling $904,193. In addition, the Company recorded an income tax provision
of $339,899.
For the period from June 14, 2021 (inception)
through December 31, 2021, we had a net loss of $1,430 which consisted solely of formation expenses.
Going Concern Considerations, Liquidity and Capital Resources
On March 15, 2022, we consummated the Initial
Public Offering of 11,000,000 Units at a price of $10.00 per Unit, which includes the exercise by the underwriters of the over-allotment
option to purchase an additional 1,350,000 Units, generating gross proceeds of $123,500,000. Simultaneously with the closing of the Initial
Public Offering and exercise of the over-allotment option, we consummated the sale of 5,405,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds of $5,405,000.
Following the Initial Public Offering, the exercise
of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants, a total of $125,970,000 was placed
in the Trust Account and as of December 31, 2022, we had $545,655 of cash held outside of the Trust Account, after payment of costs related
to the Initial Public Offering, and available for working capital purposes. Transaction costs amounted to $6,951,081 consisting of $1,235,000
of underwriting fees, $4,322,500 of deferred underwriting fees payable and $597,334 of other offering costs. In addition, the Company
recorded the fair value of $776,815 for representative shares issued upon close of the Public Offering as well as the fair value of the
remaining over-allotment option of $19,432 as offering costs.
For the year ended December 31, 2022, cash used in operating activities
was $725,102 which consisted of net income of $593,905, interest earned on marketable securities held in the Trust Account of $1,812,882,
the gain on the change in fair value of the over-allotment liability of $19,432 and changes in operating assets and liabilities provided
$513,307 of cash from operating activities.
For the year ended December 31, 2022, the Company
used cash of $125,970,000 in investing activities for the purchase of investments in the Trust Account following
the Initial Public Offering, the exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement
Warrants.
For the year ended December 31, 2022, cash from
financing activities provided $127,240,757. The Company received gross proceeds of $128,905,000 from the
Initial Public Offering, the exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants.
These increases were offset by payment of the underwriting fees and offering costs of $1,235,000 and $429,243, respectively.
For the period from June 14, 2021 (inception)
through December 31, 2021, cash used in operating activities was $0 which consisted of the net loss of $1,430 offset by advances from
related party of $939 and changes in operating assets and liabilities provided $491 of cash from operating activities.
As of December 31, 2022, we had investments held in the Trust Account
of $127,782,882 principally invested in U.S. government securities. Interest income on the balance in the Trust Account may be used by
us to pay taxes, and to pay up to $100,000 of any dissolution expenses. In March 2023, $200,050 was withdrawn from the Trust to pay taxes.
8
At December 31, 2022, the Company had cash outside
of trust of $545,655 and working capital deficit of $148,043. Further, the Company has incurred and expects to continue to incur significant
costs in pursuit of its financing and acquisition plans. In connection with the Company’s assessment of going concern considerations
in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” management has determined that the Company has funds that are sufficient to fund the
working capital needs of the Company until the consummation of an initial business combination or the winding up of the Company as stipulated
in the Company’s amended and restated memorandum of association. However, management has determined that these liquidity risks,
as well as if the Company is unsuccessful in consummating an initial business combination within 15 months, or June 15, 2023 as the Company
deposited $1,235,000 into the trust account in March 2023 to fund the automatic 3-month extension, (or up to 18 months, by September 15,
2023, if the Company extends the period of time to consummate a business combination) from the closing of the IPO, the requirement that
the Company cease all operations, redeem the public shares and thereafter liquidate and dissolve raises substantial doubt about the ability
to continue as a going concern for the next twelve months from the issuance of this filing. The balance sheets do not include any adjustments
that might result from the outcome of this uncertainty. The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America (“US GAAP”), which contemplate continuation of the
Company as a going concern.
We intend to use substantially all of the funds
held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding the deferred underwriting
commissions, to complete an initial business combination. To the extent that capital stock or debt is used, in whole or in part, as consideration
to complete an 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 growth strategies. If an initial business combination
agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price or requires us to have a minimum amount
of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements or arrange for third-party
financing.
On July 27, 2021, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) March 31, 2022 or (ii) the consummation
of the Initial Public Offering (the “Original Maturity Date”). On May 20, 2022, the Company and the Sponsor amended and restated
the Promissory Note (the “Amended Note”) (i) to extend the Original Maturity Date to a new maturity date which shall be upon
the earlier of the closing of the Company’s initial business combination or the Company’s liquidation, and (ii) to permit
the holder of the Amended Note, in its sole discretion, to convert any or all of the unpaid principal under the Amended Note into warrants,
at a price of $1.00 per warrant, upon consummation of the Company’s initial business combination. As of December 31, 2022 and 2021,
there was $125,341 outstanding under the Promissory Note. On May 20, 2022, the Company and the Sponsor entered into the Amended Note (i)
to extend the Original Maturity Date to a new maturity date which shall be upon the earlier of the closing of the Company’s initial
business combination or the Company’s liquidation, and (ii) to permit the holder of the Amended Note, in its sole discretion, to
convert any or all of the unpaid principal under the Amended Note into Warrants, at a price of $1.00 per warrant, upon consummation of
the Company’s initial business combination.
Off-Balance Sheet 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 into any off-balance sheet
financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into
any non-financial agreements involving assets.
Contractual Obligations
At December 31, 2022, we did not have any long-term
debt, capital lease obligations, operating lease obligations or long-term liabilities. In connection with the Public Offering, we entered
into an administrative support agreement pursuant to which we agreed to pay an affiliate of the Sponsor a total of $10,000 per month for
office space, utilities and secretarial, and administrative support services. Upon the earlier of the completion of the Initial Business
Combination and the Company’s liquidation, we will cease paying these monthly fees.
Pursuant to the Underwriting Agreement., upon
the consummation of our Initial Business Combination, we will pay the underwriters a cash fee in an amount equal to 3.5% of the gross
proceeds of the Public Offering (exclusive of any applicable finders’ fees which might become payable). No fee will be due if we
do not complete an Initial Business Combination.
9
Critical Accounting Policies and Significant
Estimates
The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
We have identified the following as our critical accounting policies:
Net Income (Loss) per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per share of common stock is computed by
dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. The Company applies the
two-class method in calculating earnings per share. The remeasurement adjustment associated with the redeemable shares of Class A
Common Stock is excluded from income (loss) per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share
of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering and (ii) the Private
Placement since the exercise of the warrants is contingent upon the occurrence of future events. .
As of December 31, 2022, the warrants are exercisable to purchase 11,580,000 shares of Class A common stock in the aggregate. As a result,
diluted income (loss) per share of common stock is the same as basic income (loss) per common stock for the periods presented. On March
10, 2022, the Company effectuated a 1.1-for-1 share split on the Class B common stock, resulting in an aggregate of 3,162,500 founder
shares outstanding (up to 412,500 shares of which were subject to forfeiture, of which 75,000 were forfeited, resulting in 337,500 common
stock shares outstanding subsequent to March 10, 2022). Basic net income per share of common stock excludes the 337,500 shares subject
to forfeiture from weighted average shares outstanding between January 1, 2022 through March 10, 2022 due to the contingency with forfeiture.
Diluted net income per share of common stock weighted average shares outstanding considers the 337,500 shares subject to forfeiture as
outstanding during the entire year ended December 31, 2022. For the period from June 14, 2021 (inception) through December 31, 2021, the
412,500 shares subject to forfeiture were excluded from the basic and diluted weighted average shares outstanding.
Class A common stock subject to possible redemption
The Company accounts for its shares of Class A
common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing Liabilities
from Equity”. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value.
Conditionally redeemable common stock (including 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, common stock is classified as stockholders’ equity. The shares of the Company’s Class
A common stock feature certain redemption rights that are considered by the Company to be outside of the Company’s control and subject
to the occurrence of uncertain future events.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale
of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. US 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). The determination of fair value of the Representative Shares to the underwriter represent
the most significant accounting estimate related to the fair value of financial instruments. The 123,500 Representative Shares have a
grant date fair value of $6.29 per share or an aggregate of $776,815. The Company measured the fair value of the Representative Shares
on the grant date of the award utilizing a valuation model which considers certain assumptions. These assumptions include the offering
price, the marketability of the Company and the probability of initial business combination. Upon the Initial Public Offering, such amounts
were allocated to offering costs within stockholders’ equity (deficit).
Warrants
We account for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in ASC 480, and FASB ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment is conducted at the time warrant issuance
and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued
or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded at their
initial fair value on the date of issuance, and each balance sheet date thereafter. We account for our outstanding warrants as equity-classified
instruments.
10
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the Company’s balance sheet.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required
to make disclosures under this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
Our financial statements and the notes thereto
begin on page F-1 of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure controls are procedures that are designed
with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report,
is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls
are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the
chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management
evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”),
the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange
Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures
were effective.
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.
Management’s Report on Internal Controls
Over Financial Reporting
This Annual Report on Form 10-K does not
include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our
independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal control
over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN
JURISDICTIONS THAT PREVENT INSPECTIONS
None.
11
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
The following table sets forth information about
our directors and executive officers as of the date of this annual report.
Name Age Position
Jaymes Winters 60 Chief Executive Officer and Director
Alexander Monje 33 Chairman of the Board
Vlad Prantsevich 32 Chief Financial Officer and Director
David Campbell 61 Director
Michael Patterson 58 Director
Karin-Joyce (KJ) Tjon 60 Director
Yvonne Brown 63 Director
Jaymes Winters is our Chief Executive Officer.
With over 15 years experience as a Chief Executive Officer in the oil and gas, telecommunications and retail spaces with extensive
mergers and acquisitions (M&A) experience, Mr. Winters been Chief Executive Officer at Mach FM Corp. since its inception in 2015 and
oversaw 600 MHz spectrum acquisition via an auction conducted by the Federal Communications Commission, or FCC. He designed a Simultaneous
Multiple Round (SMR) analysis using historical data from previous FCC auctions to predict the total amount bid by other participants within
5%. Prior to that, he was founder and Chief Executive Officer of United Energy Inc., which for seven consecutive years was one of the
largest African American owned businesses on the west coast with annual revenues of nearly $100 million and 1,000 employees. Mr. Winters
has directed and negotiated four M&A transactions utilizing private equity firms. For over nine years, he was an adjunct professor
in the School of Business at Portland State University teaching business strategy, mergers and acquisitions, venture capital and is the
author of an upcoming college textbook titled “Chronicles of an Urban CEO” (Kendall Hunt Publishing Company, August 2021).
Mr. Winters holds a B.S. Business Administration with a minor in Economics from Oregon State University.
Alexander Monje has been the chairman of our board of directors since
March 10, 2022. Since February 2022, Mr. Monje is the Founder and CEO of Biscayne Ventures Advisors. From 2021 to 2022, Mr. Monje served
as Chief Legal Officer of Benessere Investment Group, a consulting and advisory firm with a focus on special purpose acquisition companies.
Mr. Monje has spent the last 8 years in law and finance. From 2018 to 2020, Mr. Monje worked as a commercial litigator representing domestic
and international investors and entrepreneurs, small to midsize private companies, and public companies in several dispute forums. While
in law school, in 2017, Mr. Monje worked in the chambers of Justice R. Fred Lewis at the Florida Supreme Court and, from 2015 to 2017,
worked as a law clerk for a law firm focusing on commercial litigation and corporate transactions. From 2014 to 2015, Mr. Monje worked
in institutional equity sales at Gabelli & Company. From 2013 to 2014, Mr. Monje worked in investment management at Morgan Stanley.
He graduated with Honors from the University of Miami School of Law and earned his B.S. from the University of Miami.
Vlad Prantsevich is our Chief Financial Officer
and a member of our board of directors. Mr. Prantsevich joined Mach FM Corp. in 2015 and serves as the EVP of Operations. Mr. Prantsevich
leads key corporate strategy, finance and operations planning responsibilities, as well as M&A initiatives that include identifying
acquisition candidates, financial modeling, transaction structuring, and proprietary valuation models. Additionally, Mr. Prantsevich has
more than 6 years of executive management level experience in charge of Corporate Finance at 64 Audio, a global pro audio and consumer
electronics brand, where he helped lead the business through a period of rapid growth, implementing key processes, driving software-based
improvements of operations, and development of manufacturing and sales channel partners. Mr. Prantsevich holds a B.S. in Business Administration
from Portland State University.
12
David Campbell has been a director since March
10, 2022. Since March 2021, Mr. Campbell has been the Chief Operations Officer for Aero Design Labs, Inc. From January 2018 to March 2021,
he was self employed as an aviation consultant. September 2014 to January 2018, he was President and Chief Executive Officer for Horizon
Air of the Alaska Air Group (NYSE: “ALK”). He has more than 20 years of experience as an executive in the aviation sector,
leading finance, flight operations, maintenance & engineering functions with extensive experience in crisis management, restructuring
and turnaround of underperforming operations, billion-dollar budgetary and P&L responsibilities. He has served on boards at American
Airlines Federal Credit Union, North Texas Leaders and Executives Advocating Diversity, Greater Portland Inc., and Make-A-Wish. David
has a B.S. Business Administration and Management from Louisiana Tech University and an M.B.A. from University of Texas-Arlington.
Michael Patterson has been a director since March
10, 2022. Since 1985, Mr. Patterson has served as the Chief Administrative Officer and Chief Legal Officer for Blue Cross and Blue Shield
of Alabama, where he has held several roles, working his way up from a staff accountant to Senior Legal Counsel and then to Chief Legal
Officer, overseeing acquisitions totaling over $500 million in transactional value while adding 700,000 healthcare customers/members for
the company. He has served on the board of Lakeshore Foundation, an organization that encourages and provides opportunities for people
with disabilities to live a healthy lifestyle through activity, research, advocacy and health promotion. A graduate of the University
of Alabama at Birmingham with a Bachelor of Science in Accounting, Patterson received his Juris Doctorate from the Birmingham School of
Law in 1993 and was admitted to the Alabama bar that same year. He was appointed and served as the State of Alabama Revenue Commissioner
from March 2000 until 2001.
Karin-Joyce (KJ) Tjon has been a director since
March 10, 2022. Ms. Tjon is also a Director at Volcon, Inc. (NASDAQ, “VLCN”)
and Kaleyra, Inc. (NYSE, “KLR”). Ms. Tjon served as Chief Financial Officer of Alorica Inc. from July 2018 to May 2020.
From February 2017 to August 2017, she served as President and Chief Operating Officer of Scientific Games, Inc. Ms. Tjon has more than
6 years of executive management level experience as a Chief Executive Officer for publicly listed companies and large privately held companies.
Ms. Tjon has served as Chief Financial Officer and Executive Vice President for Epiq Systems (NASDAQ: “EPIQ”) where she was
responsible for legal, governance and risk compliance as well as all areas of international corporate finance, including financial planning
and analysis, accounting, SEC filings, tax planning, investor relations, and SAP support. As a part of the executive team, she worked
through a strategic review process which culminated in the sale of the company to a strategic buyer, backed by private equity. At Alvarez
& Marsal LLC, a leading global professional services firm, Ms. Tjon served in several interim C-level posts guiding global clients
through operational restructurings, business planning and execution, complex negotiations, financial audit and regulatory compliance issues,
and technology issues. Ms. Tjon graduated summa cum laude from Ohio University with a B.S.S in Organizational Behavior & Management
and received her M.B.A. from Columbia University.
Yvonne Brown has been a director since March 10,
2022. Currently retired, Ms. Brown was self-employed as an IT management consultant from January 2019 to March 2021. Between November
2014 and July 2018, Ms. Brown served as roles as Director of Digital Business and Director of Transitions at Cognizant Technology Solutions.
From March 2013 to June 2014, Ms. Brown served as Vice President of Transition/Transformation Management Services with Xerox Business
Services, LLC where she led a global organization providing IT services to clients in diverse industries supporting the Information Technology
Outsourcing division’s revenue of over $1 billion. Prior to 2013, Ms. Brown had an extensive career with Electronic Data Systems
Inc. and HP Enterprise Services leading the planning and execution of complex transition and transformation mission-critical programs
with globally dispersed resources, for IT outsourcing megadeal contracts valued over $100 million. Ms. Brown has more than 20 years of
senior management experience in the IT sector and is accomplished in the delivery of technology enablement services, strategic outsourcing,
governance, and stakeholder management. Ms. Brown’s experience spans the total range from sales through planning, analysis, solution
design, development, testing, integration, and implementation. Ms. Brown has a B.A. in Computer Science from East Carolina University
and an M.S. in Engineering Management from Southern Methodist University.
13
Number and Terms of Office of Officers and
Directors
Our board of directors has seven members and 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 Yvonne Brown and Michael Patterson will expire at our first annual meeting of
stockholders. The term of office of the second class of directors, consisting of David Campbell and Karin-Joyce Tjon, will expire
at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Jaymes Winters, Vlad Prantsevich
and Alexander Monje 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, Chief Executive Officer, 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 determined that David Campbell, Michael Patterson, Karin-Joyce (KJ) Tjon, Yvonne Brown, and Alexander
Monje 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.
Audit Committee
We established an audit committee of the board
of directors. Michael Patterson, Yvonne Brown and Karin-Joyce (KJ) Tjon serve as members of our audit committee, and Karin-Joyce (KJ)
Tjon 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 Michael Patterson, Yvonne Brown and Karin-Joyce (KJ) Tjon 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 Karin-Joyce (KJ) Tjon qualifies as an “audit committee
financial expert” as defined in applicable SEC rules.
We adopted an audit committee
charter, which details the principal functions of the audit committee, including:
14
Compensation Committee
We have established a compensation committee of
the board of directors. David Campbell, Karin-Joyce (KJ) Tjon and Alexander Monje 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. David Campbell, Karin-Joyce (KJ) Tjon and Alexander Monje are independent and Alexander Monje chairs
the compensation committee.
We adopted a compensation committee charter, which
details the principal functions of the compensation committee, including:
● reviewing on an annual basis our executive compensation policies and plans;
Notwithstanding the foregoing, as indicated above,
other than the payment to Mach FM, an affiliate of our sponsor, of $10,000 per month, for up to 18 months, for 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 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.
15
Director Nominations
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. The directors who will participate
in the consideration and recommendation of director nominees are David Campbell, Michael Patterson, Karin-Joyce (KJ) Tjon, Yvonne
Brown, and Alexander Monje. 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 have adopted a code of ethics that applies
to all of our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that govern
all aspects of our business.
Legal Proceedings Involving Our Officers and
Directors
On August 3, 2017, Jaymes W. Winters II,
our Chief Executive Officer, filed a petition for bankruptcy under Chapter 7 of the Bankruptcy Code (the “Chapter 7 Case”)
in the United States Bankruptcy Court Western District of Washington (Tacoma) (the “Court”) (Case No. 17-42965) to avoid a
$2,480,000 judicial lien against his personal residence obtained by Sterling Savings Bank (the “Sterling Savings Lien”), which
was held by Umpqua Bank, the successor to Sterling Savings Bank. On November 9, 2018, the Court partially granted Mr. Winters’s
motion to avoid the judgment lien of Umpqua Bank and all but $160,725.00 of Umpqua Bank’s judicial lien was avoided. On May 14,
2018, while the Chapter 7 Case was still open, Mr. Winters filed another petition for bankruptcy under Chapter 13 of the Bankruptcy
Code in the United States Bankruptcy Court Western District of Washington (Tacoma) (Case Number: 3:17-BK-42965) to further protect his
rights in relation to the Sterling Savings Lien. The Court granted a voluntary dismissal of the Chapter 13 Case on November 27, 2018.
As of the date of this prospectus, both the Chapter 7 Case and the Chapter 13 Case are closed.
Conflicts of Interest
Subject to pre-existing fiduciary or contractual
duties as described below, our officers and directors have agreed to present any business opportunities presented to them in their capacity
as a director or officer of our company to us. Certain of our officers and directors presently 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, 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.
Our officers and directors may become officers
or directors of another special purpose acquisition company with a class of securities intended to be registered under the Exchange Act,
even prior to us entering into a definitive agreement for our initial business combination.
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Potential investors should also be aware of the
following other potential conflicts of interest:
The conflicts described above may not be resolved
in our favor.
In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
● the corporation could financially undertake the opportunity;
● the opportunity is within the corporation’s line of business; and
Accordingly, as a result of multiple business
affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the
above-listed criteria to multiple entities. Furthermore, 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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Below is a table summarizing the entities to which
our executive officers and directors currently have fiduciary duties or contractual obligations:
Individual(1) Entity(2) Entity’s Business Affiliation
Jaymes Winters Mach FM Corp. Telecommunications CEO
Vlad Prantsevich Mach FM Corp. Telecommunications Executive Vice President
1964 Ears, LLC Audio / Electronics Financial Manager
David Campbell Aero Design Labs, Inc Aviation Chief Operations Officer
Karin-Joyce (KJ) Tjon Volcon, Inc Electric Vehicles Director
Kaleyra, Inc. Software Director
Yvonne Brown N/A N/A N/A
Alexander Monje Biscayne Ventures Advisors Venture Capital Founder & CEO
Accordingly, if any of the above executive officers,
or directors becomes aware of a business combination opportunity which is suitable for any of the above entities to which he or she has
current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business
combination opportunity to such entity, and only present it to us if such entity rejects the opportunity.
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 we seek to complete our initial
business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions, that such an initial business combination is fair
to our company from a financial point of view.
In the event that we submit our initial business
combination to our public stockholders for a vote, pursuant to the letter agreement, our sponsor, officers and directors have agreed to
vote any founder shares held by them and any public shares purchased during or after the offering (including in open market and privately
negotiated transactions) in favor of our initial business combination.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange
Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10%
of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our shares of Common Stock and other equity securities. These executive officers, directors, and greater than
10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting
persons.
Based solely on our review of such forms furnished
to us and written representations from certain reporting persons, we believe that, during 2022, our directors, executive officers, and
ten percent stockholders complied with all Section 16(a) filing requirements.
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ITEM 11. EXECUTIVE COMPENSATION
Employment Agreements
We have not entered into any employment agreements
with our executive officers and have not made any agreements to provide benefits upon termination of employment.
Executive Officers and Director Compensation
None of our officers has received any cash compensation
for services rendered to us. Commencing on the date of March 10, 2022, we have agreed to pay Mach FM, an affiliate of 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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information
with respect to the beneficial ownership of our voting securities by (i) each person who is known by us to be the beneficial owner of
more than 5% of our issued and outstanding ordinary shares, (ii) each of our officers and directors, and (iii) all of our officers and
directors as a group as of March 16, 2023.
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Unless otherwise indicated, we believe that all
persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following
table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of the warrants or conversion of rights,
as the warrants are not exercisable within 60 days of March 16, 2023 and the rights are not convertible within 60 days of March 16, 2023.
Amount and Nature of Approximate Percentage of Outstanding
Name and Address of Beneficial Owner(1) Beneficial Ownership Common Stock
Jaymes Winters — —
Vlad Prantsevich — —
David Campbell — —
Michael Patterson — —
Karin-Joyce (KJ) Tjon — —
Yvonne Brown — —
Alexander Monje — —
All current directors and executive officers as a group (seven individuals) — —
Five Percent Holders of Nubia
All of the founder shares issued and outstanding
prior to the IPO are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us entered into by
our sponsor, officers and directors. Those lock-up provisions provide that such securities are not transferable or saleable (i) in the
case of the founder shares (or shares of common stock issuable upon conversion thereof), until the earlier to occur of: (A) six months
after the completion of our initial business combination and (B) subsequent to our initial business combination, if the reported last
sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing after our initial business combination.
In the case of the placement warrants, until 30 days after the completion of our initial business combination, except in each case (a)
to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any
affiliates of our sponsor, (b) in the case of an individual, by gift to a member of one of the members of the individual’s immediate
family or to a trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person
or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of any of
our officers, our directors, the initial stockholders or members of our sponsor; (d) in the case of an individual, pursuant to a qualified
domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination
at prices no greater than the price at which the securities were originally purchased; (f) in the event of our liquidation prior to the
completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s limited liability company
agreement upon dissolution of our sponsor; or (h) in the event of our liquidation, merger, capital stock exchange, reorganization or other
similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities
or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a)
through (e) or (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions
and the other restrictions contained in the letter agreements and by the same agreements entered into by our sponsor with respect to such
securities.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Insider Shares
On
August 17, 2021, we issued an aggregate of 2,875,000 shares of our Class B common stock to Mach FM Acquisitions LLC to
for an aggregate purchase price of $25,000 in cash, or approximately $0.009 per share. On March 10, 2022, we effectuated a 1.1-for-1 share
split, resulting in an aggregate of 3,162,500 founder shares outstanding. The Company subsequently forfeit 75,000 founder shares in connection
with the partial exercise of the underwriters’ over-allotment option, resulting in the Sponsor holding 3,087,500 founder shares.
The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding
shares upon completion of this offering (excluding the representative shares). The founder shares may not, subject to certain limited
exceptions, be transferred, assigned or sold by the holder.
Simultaneously with the closing of the IPO, we
consummated the private placement with the Sponsor of 5,405,000 Private Warrants at a price of $1.00 per Private Warrant, generating total
proceeds of $5,405,000.
On May 20, 2022, we entered
into an amended and restated promissory note (the “Amended Note”) pursuant to which the Company amended and restated its outstanding
promissory note issued to the Company’s sponsor, Mach FM Acquisitions LLC, on July 27, 2021, in the aggregate principal amount of
$300,000 (the “Original Note”).
Pursuant to the Amended
Note, we amended the Original Note by (i) extending the original maturity date from the date on which we consummated its initial public
offering to a new maturity date which shall be upon the closing of a Repayment/Conversion Trigger Event, as such term is defined below,
and (ii) by permitting the holder of the Amended Note, in its sole discretion, to convert any or all of the unpaid principal under the
Amended Note into warrants, at a price of $1.00 per warrant, upon consummation of the Company’s initial business combination. “Repayment/Conversion
Trigger Event” means:
Administrative Services Agreement
The Company entered into an agreement, commencing
on March 15, 2022 through the earlier of the Company’s consummation of a business combination and its liquidation, to pay the Sponsor
a total of $10,000 per month for office space, utilities, secretarial and administrative support. However, pursuant to the terms of such
agreement, the Sponsor agreed to defer the payment of such monthly fee. Any such unpaid amount will accrue without interest and be due
and payable no later than the date of the consummation of initial business combination.
Related Party Policy
We have not yet adopted a formal policy for the
review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved
or ratified in accordance with any such policy.
Effective as of March 10, 2022, we adopted a Code
of Ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our
board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our Code of Ethics,
conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee
of indebtedness) involving the company. A form of the Code of Ethics that we adopted is filed as an exhibit to the registration statement
filed with the SEC in connection with this offering.
In addition, our audit committee, pursuant to
a written charter that we adopted effective as of the date of this prospectus, will be responsible for reviewing and approving related
party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee
present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the
members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members
of the audit committee will be required to approve a related party transaction. A form of the audit committee charter we adopted is filed
as an exhibit to the registration statement filed with the SEC in connection with this offering. We also require each of our directors
and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures are intended to determine whether
any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director,
employee or officer.