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 contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
All statements other than statements of historical fact included in this Annual Report including, without limitation, statements under this "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 Annual Report, 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 many factors, including those set forth under "Forward-Looking Statements," "Item 1A. Risk Factors," and elsewhere in this Annual Report.
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We are a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more target businesses (a "Business Combination"). We intend to effectuate our Business Combination using cash from the proceeds of our initial public offering ("IPO") and the sale of the placement units that occurred simultaneously with the completion of our IPO, our capital stock, debt or a combination of cash, stock, and debt.
We have identified an acquisition target and, as described in further detail below, executed a merger agreement with the intention of closing a Business Combination on or before the time allotted to do so. We expect to continue to incur significant costs in the pursuit of these acquisition plans and cannot assure you that we will be successful. The information that follows under the heading "Proposed Business Combination" and elsewhere in this Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information relevant to assess the Company from our management's perspective regarding the Company.
Proposed Business Combination
Business Combination Agreement
On
Sponsor Support Agreement
Contemporaneously with the execution of the Merger Agreement,
Stockholder Support Agreement
Contemporaneously with the execution of the Merger Agreement, certain officers and directors of the Company delivered Support Agreements, pursuant to which, among other things, the Company stockholders agreed to vote in favor of the Merger and the transactions contemplated by the Merger Agreement. In addition, the Company agreed to use its best efforts to obtain additional Support Agreements from certain of its stockholders.
Registration Rights Agreement
In connection with the Closing, Cycurion, the Company, and certain of their respective stockholders will enter into a registration rights agreement (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, the Combined Company will be required to file a registration statement covering the resale of registrable securities held by the stockholder's party thereto.
Termination
The Merger Agreement may be terminated at any time prior to the consummation of
the Merger by mutual written consent of Cycurion, as applicable, and Company and
in certain other limited circumstances, including if the Merger has not been
consummated by
36 Table of Contents
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities for the year ended
For the year ended
For the period from
Liquidity and Capital Resources
As of
For the year ended
For the period ended
We have incurred, and expect to continue to incur, significant costs in pursuit of our acquisition plans. We may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.
Going Concern
In connection with the Company's assessment of going concern considerations in accordance with the authoritative guidance in Financial Accounting Standard Board ("FASB") Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," management has determined that the mandatory liquidation and subsequent dissolution described in Note 1 to the audited financial statements included in this Annual Report on Form 10-K, should the Company be unable to complete a Business Combination, raises substantial doubt about the Company's ability to continue as a going concern.
JOBS Act
The Jumpstart Our Business Startup Act (the "JOBS Act") contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an "emerging growth company" under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting
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standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor's attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of executive compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are no longer an "emerging growth company," whichever is earlier.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets, or liabilities, which would be considered
off-balance sheet arrangements as of
Contractual Obligations
Registration Rights
The holders of Founder Shares, Private Placement Units, and units that may be issued upon conversion of Working Capital Loans, if any, are entitled to registration rights pursuant to a registration rights agreement that was signed on the date of the IPO. These holders are entitled to certain demand and "piggyback" registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. 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 from the final prospectus
relating to the IPO to purchase up to 1,500,000 additional Units to cover
over-allotments, if any, at the IPO price less the underwriting discounts and
commissions. On
The underwriters were paid an underwriting fee of
Business Combination Marketing Agreement
The Company has engaged A.G.P. as an advisor in connection with a Business
Combination to assist the Company in holding meetings with its stockholders to
discuss the potential Business Combination and the target business' attributes,
introduce the Company to potential investors that are interested in purchasing
the Company's securities in connection with a Business Combination, assist the
Company in obtaining stockholders' approval for a Business Combination, and
assist the Company with its press releases and public filings in connection with
a Business Combination. The Company will pay A.G.P. a fee for such marketing
services upon the consummation of a Business Combination in an amount equal to
4.5% of the gross proceeds of the IPO, or
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with generally accepted accounting principles in
Net Loss per Common Share
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period, excluding shares
of common stock subject to forfeiture by the Sponsor. The 11,876,000 potential
shares of common stock for outstanding Public Warrants and Private Placement
Warrants to purchase the Company's stock were excluded from diluted loss per
share for the year ended
Accounting for Warrants
The Company accounts for warrants as either equity-classified or liability-classified, instruments based on an assessment of the instruments' specific terms and applicable authoritative guidance in ASC 480, and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company's own common shares, and whether the instrument holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of warrant issuance, and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.
Common Stock subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in ASC 480. Shares of common stock subject to
mandatory redemption (if any) are classified as a liability instrument and are
measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain events not
solely within the Company's control) is classified as temporary equity. At all
other times, common stock is classified as stockholders' equity. The Company's
Public Shares sold in the IPO feature certain redemption rights that are
considered to be outside of the Company's control and subject to occurrence of
uncertain future events. Accordingly, on
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
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