Sizzle Acquisition Corp. (the “Company,”
“we”, “our” or “us”) is filing this Amendment No. 1 to its Annual Report on Form 10-K/A (the “Amendment”),
to amend and restate its Annual Report on Form 10-K for the period ended December 31, 2021, originally filed with the Securities and Exchange
Commission (the “SEC”) on April 15, 2022 (the “Original Filing”), for the purpose of correcting inappropriate
treatment of a payment (the “Payment”) to one of its financial advisors that was inappropriately recorded as an expense in
the Company’s Statement of Operations for the year ended December 31, 2021. The Payment should have been recorded as part of the
additional paid in capital in the Company’s Statement of Changes in Stockholders’ Deficit for the same period.
Except as described above, no other information included in the Annual
Report on Form 10-K of Sizzle Acquisition Corp., as of and for the period ended December 31, 2021, as filed with the SEC on April 15,
2022 (the “Original Filing”) is being amended or updated by this Amendment No. 1 and, other than as described herein, this Amendment
No. 1 does not purport to reflect any information or events subsequent to the Original Filing. We have not amended our previously filed
Report on Form 8-K. This Amendment No. 1 continues to describe the conditions as of the date of the Original Filing and, except as expressly
contained herein, we have not updated, modified or supplemented the disclosures contained in the Original Filing. Accordingly, this Amendment
No. 1 should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.
The restatement does not have an impact on the
Company’s cash position.
The Company’s management has concluded that a
material weakness remains in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures
were not effective. The Company’s remediation plan with respect to such material weakness is described in more detail in Item 9 of this
report.
PART
I
Item
1. Business.
Overview
We
are a Delaware blank check company incorporated in October 2020 whose business purpose is to effect our initial business
combination.
While
we may pursue an initial business combination opportunity in any business, industry, sector or geographical location, we are currently
focusing on the restaurant, hospitality, food and beverage, retail, consumer, food and food related technology and real estate
industries such as “proptech,” including sectors that service or are connected to these industries in the United States
and other developed countries. These industries complement our leadership team’s extensive background and we are capitalizing
on the ability of our leadership team to identify and acquire a target business in such sectors.
We
are focusing our initial business combination efforts on targets that (i) have strong brand and business fundamentals; (ii) may
have been adversely affected by COVID-related shutdowns, but have a definable path forward; (iii) will benefit from
our leadership team’s expertise in creating, building, marketing, distributing, leading and monetizing brands and products;
(iv) will likely benefit from enhanced data gathering to support cross-channel distribution; and (v) can serve
as a platform company to make future bolt-on acquisitions.
Initial
Public Offering
On
November 8, 2021, we consummated our initial public offering of 15,500,000 units. Each unit consists of one share of common stock,
and one-half of one redeemable warrant of the Company, with each warrant entitling the holder thereof to purchase one share of
common stock for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company
of $155,000,000.
Simultaneously
with the closing of the initial public offering, we completed the private sale of an aggregate of 770,000 shares to our sponsor
at a purchase price of $10.00 per private placement share, generating gross proceeds of $7,700,000.
A
total of $158,100,000, comprised of $152,805,604.06 of the proceeds from the initial public offering and $5,294,395.94 of the
proceeds of the sale of the private placement shares was placed in the trust account maintained by Continental, acting as trustee.
Our
management team is led by Steve Salis, our Chairman of the Board of Directors and Chief Executive Officer, and Jamie Karson, our
Non-Executive Vice-Chairman of the Board of Directors. We must complete our initial business combination by February 8, 2023,
which is 15 months from the closing of our initial public offering. If our initial business combination is not consummated by
February 8, 2023, then our existence will terminate, and we will distribute all amounts in the trust account.
Industry
Opportunity
While
we may acquire a business in any industry, our focus is in the restaurant, retail, consumer, tech, real estate, and hospitality
industries. The leadership team has had demonstrable success over a period of years creating, buying and managing businesses in
these industries. The leadership team has demonstrated an ability to spot undervalued assets in one or more of these industries.
We also believe that businesses in these industries represent opportunities for growth and consolidation over the next 12-24 month
period. Sales by businesses in these industries have been materially and adversely affected by COVID. While we expect overall
rents to decrease as a percentage of sales, this will be offset by increased labor and increased operating costs due to high third-party delivery
costs which represents a larger portion of the typical revenue mix. Revenue choppiness combined with increased costs will result
in a number of companies and their owners weighing their strategic alternatives.
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 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.
| ● | Large
Market Opportunity. We are seeking to acquire one or more businesses that operate
in large addressable markets. We believe operating in these market segments will create
the opportunity for significant growth, including those with embedded or underexploited
growth opportunities and those that may benefit from synergistic bolt-on acquisitions,
new product markets and geographies, increased production capacity, expense reduction
and increased operating leverage. |
| ● | Strong
Potential Competitive Position. We are focusing on acquisition targets that have
the potential to develop a leading, growing or significant niche market position in their
respective industries and that can form the foundation to add additional companies in
the future. We are analyzing the strengths and weaknesses of target businesses relative
to their competitors. We are seeking to acquire one or more businesses that we believe
have the ability to demonstrate advantages such as improvements to quality of care or
significant measurable cost savings when compared to their competitors, which may help
to develop and increase their market position and profitability. |
| ● | Experienced
Management Team. We are seeking to acquire one or more businesses with a complete
and experienced management team that provides a platform for us to further develop the
acquired company. We are seeking to partner with a potential target’s management
team and expect that the operating and financial abilities of our leadership team will
complement the acquired company’s existing capabilities. |
| ● | 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. |
| ● | Strong
Cash Flow. We are focusing on targets with cash flow metrics equal to or exceeding
its public company competitors and which demonstrate a clear path to gaining market share
and profitable growth. |
| ● | Opportunity
For Broader Consolidation. We are focusing on companies in underpenetrated market
segments and distribution channels and present expansion opportunities for their existing
brands. We are seeking to obtain high-level efficiencies for back-office, including
but not limited to purchasing, HR, accounting and finance and construction management. |
| ● | Strong
Millennial/Gen Z Consumers Base; Use of Data. We believe that target companies with
a core base of millennial and Gen Z consumers attract consumers of all different age
groups. We believe that once the millennial and Gen Z consumer develops brand loyalty
they will market the concept or product through social media platforms thus creating
brand buzz on a cost efficient basis. We also believe that the use of data in consumer-facing businesses
is becoming increasing important. We intend to find a suitable target where data collection
around consumer preferences could potentially result in increased guest frequency, higher
per person check averages and ultimately, higher revenues. |
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 leadership may deem relevant.
Effecting
a Business Combination
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination
or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable),
or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek
stockholder approval of our proposed business combination or allow stockholders to sell their shares to us in 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 otherwise require us to seek stockholder approval. If we decide to allow stockholders to sell
their shares to us in a tender offer, we will file tender offer documents with the SEC which will contain substantially the same
financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will
consummate our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or
upon consummation of such business combination and, if we seek stockholder approval, unless otherwise required by applicable law,
regulation or stock exchange rules, a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. We have no specified maximum percentage threshold for conversions in our amended and restated certificate of incorporation
and even those public stockholders who vote in favor of our initial business combination have the right to convert their public
shares. As a result, this may make it easier for us to consummate our initial business combination.
We
will have until February 8, 2023 to consummate an initial business combination. If we are unable to consummate an initial business
combination within such time period, we will redeem 100% of our outstanding public shares for a pro rata portion of the funds
held in the trust account, 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 tax obligations, divided by the number of then outstanding
public shares, subject to applicable law and as further described herein, and then seek to dissolve and liquidate. We expect the
pro rata redemption price to be approximately $10.20 per share of common stock, without taking into account any interest earned
on such funds. However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims of
creditors which may take priority over the claims of our public stockholders.
Fair
Market Value of Target Business
Nasdaq
listing rules require that the target business or businesses that we acquire must collectively have a fair market value equal
to at least 80% of the balance of the funds in the trust account (excluding deferred underwriting commissions and taxes payable)
at the time of the execution of a definitive agreement for our initial business combination. Notwithstanding the foregoing, if
we are not then listed on Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% fair market value
test.
We
currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business
or businesses. We may, however, structure our initial business combination where we merge directly with the target business or
a newly formed subsidiary or where we acquire less than 100% of such interests or assets of the target business in order to meet
certain objectives of 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. 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 of a target.
In this case, we could 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 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 trust account balance test.
The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation
materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with
our analysis of the fair market value of the target business, as well as the basis for our determinations. If our board is not
able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an
unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions, with
respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an investment banking firm as
to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.
Lack
of Business Diversification
We
may seek to effect a business combination with more than one target business, although we expect to complete our business combination
with just one business. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating
a business combination with only a single entity, our lack of diversification may:
| ● | subject
us to numerous economic, competitive and regulatory developments, any or all of which
may have a substantial adverse impact upon the particular industry in which we may operate
subsequent to a business combination, and |
| ● | result
in our dependency upon the performance of a single operating business or the development
or market acceptance of a single or limited number of products, processes or services. |
If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for
each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Limited
Ability to Evaluate the Target Business’ Management
Although
we scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination,
we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition, we cannot
assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot
presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management
or advisory positions with us following a business combination, it is unlikely that they will devote their full-time efforts
to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation
of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination.
Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them
to receive compensation in the form of cash payments and/or our securities for services they would render to the company after
the consummation of the business combination. While the personal and financial interests of our key personnel may influence their
motivation in identifying and selecting a target business, their ability to remain with the company after the consummation of
a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential
business combination. Additionally, we cannot assure you that our officers and directors will have significant experience or knowledge
relating to the operations of the particular target business.
Following
a 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 any such additional managers we do
recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for
or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on
deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares
to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders
to sell their shares to us in 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 otherwise require us to seek stockholder
approval. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender
all of his, her or its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer
documents with the SEC which will contain substantially the same financial and other information about the initial business combination
as is required under the SEC’s proxy rules. Whether we seek stockholder approval or engage in a tender offer, we will consummate
our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon consummation
of such business combination and, if we seek stockholder approval, unless otherwise required by applicable law, regulation or
stock exchange rules, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
We have no specified maximum percentage threshold for redemptions in our amended and restated certificate of incorporation and
even those public stockholders who vote in favor of our initial business combination have the right to redeem their public shares.
As a result, this may make it easier for us to consummate our initial business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated
under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes
any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account
upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets immediately
prior to or upon consummation and this may force us to seek third party financing which may not be available on terms acceptable
to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate
another suitable target within the applicable time period, if at all. Public stockholders may therefore have to wait until February
8, 2023 in order to be able to receive a pro rata share of the trust account.
Our
sponsor, officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed
business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed
initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial
business combination.
None
of our officers, directors, sponsor, or their affiliates has indicated any intention to purchase units or shares of common stock
in our initial public offering or from persons in the open market or in private transactions. However, if we hold a meeting to
approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against
such proposed business combination or that they wish to convert their shares, our officers, directors, sponsor, or their affiliates
could make such purchases in the open market or in private transactions in order to influence the vote and reduce the number of
conversions. Notwithstanding the foregoing, our officers, directors, sponsor, and their affiliates will not make purchases of
shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which
are rules designed to stop potential manipulation of a company’s stock.
Conversion
Rights
At
any meeting called to approve an initial business combination, public stockholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the
aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business
combination, less any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the opportunity
to sell their shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for
an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due
but not yet paid.
Our
sponsor, initial stockholders and our officers and directors will not have conversion rights with respect to any shares of common
stock owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in our
initial public offering or in the aftermarket.
We
may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either
(i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically
using the DWAC System, at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection
with the proposal to approve the business combination. There is a nominal cost associated with the above-referenced delivery
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically
charge the tendering broker a nominal amount and it would be up to the broker whether or not to pass this cost on to the holder.
However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The
need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be
effectuated. However, in the event we require stockholders seeking to exercise conversion rights prior to the consummation of
the proposed business combination and the proposed business combination is not consummated this may result in an increased cost
to stockholders.
Any
proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate
whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would
have from the time the stockholder received our proxy statement up until the vote on the proposal to approve the business combination
to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific
facts of each transaction. However, as the delivery process can be accomplished by the stockholder, whether or not he is a record
holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his
broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average
investor. However, we cannot assure you of this fact.
Any
request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or
the expiration of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an
election of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may
simply request that the transfer agent return the certificate (physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account.
In such case, we will promptly return any shares delivered by public holders.
Liquidation
if No Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 15 months from the closing of our initial
public offering, or until February 8, 2023, to complete an initial business combination. If we have not completed an initial business
combination by such 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 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 any interest not previously released
to us but net of taxes payable, 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 our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above)
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Management
believes that this condition raises substantial doubt about our ability to continue as a
going concern.
Our
sponsor, officers and directors have agreed that they will not propose any amendment to our amended and restated certificate of
incorporation that would affect our public stockholders’ ability to convert or sell their shares to us in connection with
a business combination as described herein or affect the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete a business combination by February 8, 2023 unless we provide our public stockholders with the opportunity
to convert their shares of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest not previously released to us but net of franchise and income
taxes payable, divided by the number of then outstanding public shares. This redemption right shall apply in the event of the
approval of any such amendment, whether proposed by our sponsor, executive officers, directors or any other person.
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 100% of our outstanding public shares in the event we do not complete our initial business combination within the required
time period may be considered a liquidation 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. It is our intention to redeem our public shares
as soon as reasonably possible following February 8, 2023, 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.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public
shares in the event we do not complete our initial business combination within the required time period is not considered a liquidation
distribution under Delaware law and such redemption distribution is deemed to be unlawful, 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 liquidation distribution.
Because
we will not be complying with Section 280 of the DGCL, 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 ten 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.
We
are required to seek to have all third parties (including any vendors or other entities we engage after our initial public offering)
and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they
may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited,
thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that
any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the
funds in the trust account to our public stockholders. Nevertheless, Marcum, our independent registered public accounting firm,
and the underwriters of our initial public offering, will not execute agreements with us waiving such claims to the monies held
in the trust account. Furthermore, there is no guarantee that other vendors, service providers and prospective target businesses
will execute such agreements. Nor is there any guarantee that, even if they execute such agreements with us, they will not seek
recourse against the trust account. Our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account
are not reduced below $10.20 per share by the claims of target businesses or claims of vendors or other entities that are owed
money by us for services rendered or contracted for or products sold to us, but we cannot assure you that it will be able to satisfy
its indemnification obligations if it is required to do so. 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 believe it is unlikely that our
sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally, the agreement our sponsor
entered into specifically provides for two exceptions to the indemnity it has given: it will have no liability (1) as to
any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right,
title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims
for indemnification by the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.20
due to claims or potential claims of creditors.
We
anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after February 8, 2023 and anticipate
it will take no more than 10 business days to effectuate such distribution. The holders of the founder shares have waived their
rights to participate in any liquidation distribution from the trust account with respect to such shares. There will be no distribution
from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of any subsequent liquidation
from our remaining assets outside of the trust account.
If
we are unable to complete an initial business combination and expend all of the net proceeds of our initial public offering and
the sale of the private shares, other than the proceeds deposited in the trust account, and without taking into account interest,
if any, earned on the trust account, the initial per-share redemption price would be $10.20. As discussed above, the proceeds
deposited in the trust account could become subject to claims of our creditors that are in preference to the claims of public
stockholders.
Our
public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete a business
combination within the required time period, if the stockholders seek to have us convert or purchase their respective shares upon
a business combination which is actually completed by us or upon certain amendments to our amended and restated certificate of
incorporation prior to consummating an initial business combination. In no other circumstances shall a stockholder have any right
or interest of any kind to or in the trust account.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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 to our public stockholders at least $10.20 per share.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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 all amounts received
by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders
promptly after February 8, 2023, this may be viewed or interpreted as giving preference to our public stockholders over any potential
creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached
their fiduciary duties to our creditors and/or may have acted in bad faith, and 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.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public
offering that will apply to us until the consummation of our initial business combination. These provisions cannot be amended
without the approval of a majority of our stockholders. If we seek to amend any provisions of our amended and restated certificate
of incorporation that would affect our public stockholders’ ability to convert or sell their shares to us in connection
with a business combination as described herein or affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete a business combination by February 8, 2023, we will provide dissenting public stockholders with the
opportunity to convert their public shares in connection with any such vote. This conversion right shall apply in the event of
the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or any
other person. Our sponsor, officers and directors have agreed to waive any conversion rights with respect to any founder shares
and any public shares they may hold in connection with any vote to amend our amended and restated certificate of incorporation.
Specifically, our amended and restated certificate of incorporation provides, among other things, that:
| ● | we
shall either (1) seek stockholder approval of our initial business combination at
a meeting called for such purpose at which stockholders may seek to convert their shares,
regardless of whether they vote for or against the proposed business combination or do
not vote at all, into their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), or (2) provide our stockholders with the
opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), in each case subject
to the limitations described herein; |
| ● | we
will consummate our initial business combination only if we have net tangible assets
of at least $5,000,001 immediately prior to or upon consummation of such business combination
and, if we seek stockholder approval, unless otherwise required by applicable law, regulation
or stock exchange rules, a majority of the outstanding shares of common stock voted are
voted in favor of the business combination; |
| ● | if
our initial business combination is not consummated by February 8, 2023, then we will
redeem all of the outstanding public shares and thereafter liquidate and dissolve our
company; |
| ● | upon
the consummation of our initial public offering, approximately $158.1 million, was placed
into the trust account; |
| ● | we
may not consummate any other business combination, merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar transaction prior to our initial
business combination; and |
| ● | prior
to our initial business combination, we may not issue additional stock that participates
in any manner in the proceeds of the trust account, or that votes as a class with the
common stock sold in our initial public offering on an initial business combination. |
Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there may be numerous potential target businesses that we could acquire with the net proceeds of our initial public
offering and the sale of the private shares, our ability to compete in acquiring certain sizable target businesses may be limited
by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
| ● | our
obligation to seek stockholder approval of a business combination or engage in a tender
offer may delay the completion of a transaction; |
| ● | our
obligation to convert or repurchase shares of common stock held by our public stockholders
may reduce the resources available to us for a business combination; and |
| ● | our
outstanding warrants, and the potential future dilution they represent. |
Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our leadership
believes, however, that our status as a public entity and potential access to the United States public equity markets may
give us a competitive advantage over privately held entities having a similar business objective as ours in acquiring a target
business with significant growth potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Employees
We
have two executive officers and one non-executive vice chairman of the board. These individuals are not obligated to devote
any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The
amount of time they will devote in any time period will vary based on whether a target business has been selected for the business
combination and the stage of the business combination process the company is in. Accordingly, once a suitable target business
to acquire has been located, management may spend more time investigating such target business and negotiating and processing
the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target
business. We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to
our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
Periodic
Reporting and Audited Financial Statements
We
have registered our units, 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, including this Report, 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 any proxy solicitation
materials or tender offer documents sent to stockholders to assist them in assessing the target business. These financial statements
will need to be prepared in accordance with or reconciled to United States generally accepted accounting principles or international
financial reporting standards as promulgated by the International Accounting Standards Board. We cannot assure you that any particular
target business identified by us as a potential acquisition candidate will have the necessary financial statements. To the extent
that this requirement cannot be met, we may not be able to acquire the proposed target business.
We
may be required to have our internal control procedures audited for the fiscal year ending December 31, 2022 as required
by the Sarbanes-Oxley Act. 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 acquisition.
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:
| ● | we
are a blank check company with no revenue or basis to evaluate our ability to select
a suitable business target; |
| ● | we
may not be able to select an appropriate target business or businesses and complete our
initial business combination in the prescribed time frame; |
| ● | our
expectations around the performance of a prospective target business or businesses may
not be realized; |
| ● | we
may not be successful in retaining or recruiting required officers, key employees
or directors following our initial business combination; |
| ● | our
officers and directors may have difficulties allocating their time between the Company
and other businesses and may potentially have conflicts of interest with our business
or in approving our initial business combination; |
| ● | we
may not be able to obtain additional financing to complete our initial business combination
or reduce the number of shareholders requesting redemption; |
| ● | we
may issue our shares to investors in connection with our initial business combination
at a price that is less than the prevailing market price of our shares at that time; |
| ● | you
may not be given the opportunity to choose the initial business target or to vote on
the initial business combination; |
| ● | trust
account funds may not be protected against third party claims or bankruptcy; |
| ● | an
active market for our public securities’ may not develop and you will have limited
liquidity and trading; |
| ● | the
availability to us of funds from interest income on the trust account balance may be
insufficient to operate our business prior to the business combination; |
| ● | our
financial performance following a business combination with an entity may be negatively
affected by their lack an established record of revenue, cash flows and experienced
management; |
| ● | there
may be more competition to find an attractive target for an initial business combination,
which could increase the costs associated with completing our initial business combination
and may result in our inability to find a suitable target; |
| ● | changes
in the market for directors and officers liability insurance could make it more difficult
and more expensive for us to negotiate and complete an initial business combination; |
| ● | we
may attempt to simultaneously complete business combinations with multiple prospective
targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and
profitability; |
| ● | we
may engage one or more of our underwriters or one of their respective affiliates to provide
additional services to us after the initial public offering, which may include acting
as a financial advisor in connection with an initial business combination or as placement
agent in connection with a related financing transaction. Our underwriters are entitled
to receive deferred underwriting commissions that will be released from the trust account
only upon a completion of an initial business combination. These financial incentives
may cause them to have potential conflicts of interest in rendering any such additional
services to us after the initial public offering, including, for example, in connection
with the sourcing and consummation of an initial business combination; |
| ● | we
may attempt to complete our initial business combination with a private company about
which little information is available, which may result in a business combination with
a company that is not as profitable as we suspected, if at all; |
| ● | since
our initial stockholders will lose their entire investment in us if our initial business
combination is not completed (other than with respect to any public shares they may acquire
during or after our initial public offering), and because our sponsor, officers and directors
may profit substantially even under circumstances in which our public stockholders would
experience losses in connection with their investment, a conflict of interest may arise
in determining whether a particular business combination target is appropriate for our
initial business combination; |
| ● | changes
in laws or regulations or how such laws or regulations are interpreted or applied, or
a failure to comply with any laws or regulations, may adversely affect our business,
including our ability to negotiate and complete our initial business combination, and
results of operations; |
| ● | the
value of the founder shares following completion of our initial business combination
is likely to be substantially higher than the nominal price paid for them, even if the
trading price of our common stock at such time is substantially less than $10.00 per
share; |
| ● | resources
could be spent in researching acquisitions that are not completed, which could materially
adversely affect subsequent attempts to locate and acquire or merge with another business.
If we have not completed our initial business combination within the required time period,
our public stockholders may receive only approximately $10.00 per share, or less than
such amount in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless; |
| ● | our
ability to identify a target and to consummate an initial business combination may be
adversely affected by economic uncertainty and volatility in the financial markets, including
as a result of the military conflict in Ukraine; |
|
● |
if the funds held
outside of our trust account are insufficient to allow us to operate until at least February 8, 2023, our ability to fund
our search for a target business or businesses or complete an initial business combination may be adversely affected; |
|
|
|
|
|
● |
we
have identified a material weakness in our internal control over financial reporting as of
December 31, 2021. If we are unable to maintain an effective system of our internal control
over financial reporting, we will not be able to accurately report our financial results in
a timely manner, which may adversely affect investor confidence in us and materially and adversely
affect our business and operating results; |
|
|
|
|
● |
our independent
registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a going concern, since we will cease all operations except for the purpose of liquidating if we
are unable to complete an initial business combination by February 8, 2023;
|
|
● |
we have restated our financial statements, which may affect investor
confidence, our stock price, our ability to raise capital in the future, our results of operations and financial condition, our ability
to complete an initial business combination, and which may result in stockholder litigation; |
|
● |
if third parties
bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders
may be less than $10.20; and |
|
|
|
|
● |
our search for an
initial business combination, and any target business with which we ultimately consummate an initial business combination,
may be materially adversely affected by the recent coronavirus (COVID-19) outbreak and other events, and the status of debt
and equity markets. |
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
2. Properties.
Our
executive offices are located at 4201 Georgia Avenue NW, Washington DC 20011, and our telephone number is (202) 846-0300. The
cost for our use of this space is included in the $10,000 per month fee we pay to an affiliate of our executive officers for office
space, administrative and shared personnel support services. We consider our current office space adequate for our current operations.
Item
3. Legal Proceedings.
To
the knowledge of our management team, there is no litigation currently pending or contemplated against us, any of our officers
or directors in their capacity as such or against any of our property.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance.
Directors
and Executive Officers
As
of the date of this Report, our directors and officers are as follows:
Name |
|
Age |
|
Title |
Steve Salis |
|
38 |
|
Chairman of the Board of Directors and Chief Executive Officer |
Jamie Karson |
|
64 |
|
Non-Executive Vice-Chairman of the Board of Directors |
Daniel Lee |
|
42 |
|
Head of Business Development |
Nestor Nova |
|
41 |
|
Chief Financial Officer |
Karen Kelley |
|
56 |
|
Director |
Warren Thompson |
|
62 |
|
Director |
David Perlin |
|
59 |
|
Director |
Carolyn Trabuco |
|
52 |
|
Director |
The
experience of our directors and executive officers is as follows:
Steve
Salis has served as our Chairman and Chief Executive Officer since inception. Mr. Salis serves as the CEO of
Salis Holdings, LLC, a company he founded in 2015. Salis Holdings, LLC is a privately-held multi-brand, multi-platform holding
company, which owns restaurants and hospitality assets in Washington D.C. and acquires brands with a high price and value correlation
for sale through multiple distribution channels. Prior to founding Salis Holdings, Mr. Salis co-founded &pizza in
July 2011, a fast casual pizza brand which delivers individual pizzas cooked within 90 seconds, and served as its CEO from
July 2011 to March 2015. As CEO, he assembled successful leadership teams, implemented business and personnel evaluation
tools and communicated on a regular basis with the investment community. Additionally, since November 2016, he has served
as the Chairman, President, and owner of Kramerbooks, a 44 year old bookstore in Washington D.C. Prior to &pizza,
Mr. Salis nurtured his entrepreneurial spirit in New York City where he worked in the restaurant and hospitality space
learning the business from the ground up, working with acclaimed operators, including how to evaluate key operating and acquisition
metrics for restaurant and hospitality companies. Mr. Salis attended the University of New Hampshire from 2002-2004 where
he studied Economics and Business Administration.
Jamie
Karson has served as our Non-Executive Vice Chairman since inception. Mr. Karson has served as Executive
Chairman of Salis Holdings since June 2018, a multi-brand, multi-platform holding company. Mr. Karson and Mr. Salis
work closely together on a day to day basis. Mr. Karson assists in analyzing operating performance while working with the
team, on all aspects of the business, including analyzing potential acquisitions and strategic partnerships. This includes negotiating
strategic initiatives with funding sources such as private equity partners, family officers, and commercial banks. From 2001 to
May 2008, Mr. Karson was the CEO and Chairman of the Board of Steve Madden, where he partnered with the executive team,
developing and acquiring new brands and new channels of distribution, making retail store openings and closing decisions, managing
shareholder communications and relationships, and oversight. Additionally, from January 2009 to January 2014, he was
the CEO and COO of Think Pink, LLC which operated 5 QSR Pinkberry restaurants in Connecticut where his responsibilities including
all hiring and firing, making all real estate decisions, financial modeling and negotiation of the sale of the Company. From August 2015
to September 2017, Mr. Karson served as the CEO and Chairman of the Board of Original Soupman (QTCQV:SOUP) where he
increased annual revenues and cut monthly loses by establishing distribution in key supermarket chains around the country including
Kroger, Publix, ShopRite, Wegmans, Stop & Shop, and Costco. SOUP filed a petition under Chapter 11 of the federal Bankruptcy
Code in June 2017, which resulted in a sale of the assets of the company to an investor group as part of the formal bankruptcy
auction process in October, 2017. After the sale was completed, the bankruptcy case ultimately converted into a Chapter 7. Mr. Karson
left the company after the bankruptcy sale was completed in October 2017. From October 2017 to June 2018, Mr. Karson
served as an independent consultant. Mr. Karson received a B.A. in Political Science from the University of North Carolina,
Chapel Hill and his J.D. from New York Law School.
Daniel
Lee has served as our Head of Business and Corporate Development since November 2021. Since May 2018, Mr. Lee
has been SVP of Business Development at Salis Holdings LLC, where he works on potential acquisitions and financings for the company.
Since December 2016, Mr. Lee has been a Managing Partner at Candlelight Capital Advisors, LLC, an advisory and consulting
firm providing outsourced business strategy and corporate development services for media, technology and consumer companies. Mr. Lee
served as the CFO of RiskSpan, Inc. from December 2017 to April 2019 and previously as the Director of Finance from
December 2016 to November 2017. At RiskSpan, Inc. he lead corporate finance functions, including business planning and
budgeting, financial forecasting, cash flow management, and reporting for senior leadership and private equity investors. From
October 2016 to August 2016, Mr. Lee was a partner at an early-stage venture firm in Washington D.C., NextGen
Venture Partners, LLC which focused on technology-enabled startups. Before NextGen, Mr. Lee was an Equity Analyst at
Profit Investment Management from November 2011 to December 2012, before becoming a Senior Equity Analyst in December 2012
where he was responsible for identifying, analyzing and recommending new investment ideas for the financial, financial technology
and industrial sectors, until September 2015. Mr. Lee received a B.A. in Economics from the University of Virginia.
Nestor
Nova has served as our Chief Financial Officer since September 2021. From December 2014 to September 2021, Mr. Nova
served as Chief Financial Officer of Nando’s Restaurant Group, where he led the growth and transformation of the North American
organization and franchise locations of Nandos Peri Peri Chicken. From September 2013 to December 2014, Mr. Nova was the
Finance Director Operations, Strategy and Business Development at Margaritaville, Landshark Hospitality, where he was responsible
for the implementation of a company-wide data warehouse and business intelligence tools. Additionally, from November 2010
until September 2013, Mr. Nova was the Director of Finance and Accounting at Earl Enterprises, which owns restaurants such
as Buca di Beppo, Planet Hollywood, Earl of Sandwich, among others. Prior to this, Mr. Nova served in multiple finance roles
for Universal Studios and Ginn Resorts. Mr. Nova holds a B.A. in Economics from the University of Central Florida, a Master’s
degree in Business Administration from Webster University, and an Executive Education from Harvard University focused on Driving
Corporate Performance.
Karen
Kelley has served as one of our directors since November 2021. Currently, she is the COO of Jack’s Family Restaurants,
a 200+ unit southern American fast casual chain based in Birmingham, Alabama. As COO since May 2020, she is responsible for
all aspects of operations including human resources and field operations leadership. She also is responsible for centralized operation
support such as training and supply chain. Prior to Jack’s, she served as the Chief Restaurant Operation Officer of Panera
Bread from December 2018 to May 2020, responsible for operations of over 2,000 restaurants with full profit and loss
responsibility. Additionally, she was the President and COO of Tatte Bakery from February 2018 to August 2018 and the
President and COO of Sweetgreen from December 2013 to February 2018. She was also the president of DryBar and the COO
of both Pinkberry and Jamba Juice. She has evaluated dozens of restaurant and hospitality opportunities over the past 20+ years
and is highly respected throughout the industry. Ms. Kelley attended the University of Colorado for two years. Ms. Kelley
is well qualified to serve on our Board due to her extensive leadership and development experience in the hospitality and customer
services industry.
Warren
Thompson has served as one of our directors since November 2021. Currently, Mr. Thompson is President and Chairman
of Thompson Hospitality Corporation, the largest minority-owned food service and facilities management company in the U.S.,
where he began in October 1992. Mr. Thompson has been a member of the board of directors for Compass Group North
America, a foodservice and support services company, since October 1997. Additionally, Mr. Thompson has been the owner and
an officer of Professional Crew Services LLC, a support services company, since April 2017. Also, since June 2017, Mr. Thompson
has been the owner and an officer at Innovate Food Group LLC. Mr. Thompson has been a member of the board of directors at
Duke Realty since April 2019 and of Performance Food Group Company since November 2020. Mr. Thompson received his Bachelor
of Arts in Managerial Economics from Hampden-Sydney College and holds an MBA from the University of Virginia’s Darden
School of Business Administration. Mr. Thompson is well qualified to serve on the Board due to his experience in the food
and beverage industries.
David
Perlin has served as one of our directors since November 2021. Currently, Mr. Perlin is a Senior VP at Shepherd
Kaplan Krochuk, LLC, an SEC Registered Investment Advisor based in Boston, where he began in January 2020. From April 2016 to
December 2019, he was the CEO of Pearl Investment Partners, a multi-family office investment firm and RIA, which he founded
in 2016. From April 2013 to April 2016, he was SVP and a Managing Director at Goldman Sachs, in the private wealth management
division. From June 2004 to December 2006, Mr. Perlin was a trader and partner at Keel Capital, a long-short equity
fund. Additionally, Mr. Perlin has served as the Vice Chairman of the Board of Teach for America, a non-profit in the
D.C. Region, since January 2019. Mr. Perlin received a B.S. in Accounting from New York University and an M.B.A. from New
York University, Stern School of Business. Mr. Perlin is well qualified to serve on the Board due to his experience as an
investment advisory and wealth management experience.
Carolyn
Trabuco has served as one of our directors since December 2021. Ms. Trabuco served as an advisor to the Company until
her appointment to the board of directors. Currently, Ms. Trabuco is Co-Founder and Independent Member of Public Company
Board of Directors at Azul Brazilian Airline (“Azul”), where she has been since April 2007. Ms. Trabuco serves
as Compensation Committee Chair, where she is responsible to oversee and approve all aspects of executive remuneration and remuneration
philosophy using proprietary KPIs, and Corporate Social Responsibility Leader, where she orients, delegates, and empowers ESG
efforts around issues that impact the airline and its role in society. Since December 2017, Ms. Trabuco has served as Principal
and Founder of Thistledown Advisory Group, LLC, a research consulting firm. Since August 2020, Ms. Trabuco has served as
Business Development Sector Leader for Aerospace & Defense, Advanced Manufacturing at AdvanceCT, where she established
a state level business recruitment and retention practice for the advanced manufacturing and aerospace and defense industry sectors.
From June 2016 to December 2016, Ms. Trabuco served as Managing Director under temporary assignment at Cornerstone Capital
Group, where she authored a white paper commissioned by Stewart Investors, an active, long-only equity manager, that modeled
the use of pre-financial ESG measures as a framework to forecast risks related to financial performance of 20 global oil
and mining resources companies. Ms. Trabuco graduated from Georgetown University with a B.S. in Art History and an M.B.A. from
Sacred Heart University in Public Administration.
Strategic
Advisors
Geovannie
Concepcion has served as one of our strategic advisors since November 2021. Mr. Concepcion is an accomplished
restaurant executive with a strong background in professional investing. Mr. Concepcion currently serves as the President
and CEO of The Greene Turtle Franchising Corporation, a private equity held restaurant platform company based in the Mid-Atlantic.
Previously, he served as the Chief Operating Officer of Famous Dave’s of America, a publicly traded franchise concept with
over 150 locations nationwide. In his role as COO, Mr. Concepcion oversaw all day-to-day operations and led a digital
transformation resulting in positive same store sales comps in company owned locations for six consecutive quarters after a multiyear
decline. Prior to serving as COO of Famous Dave’s, Mr. Concepcion served as the VP of Development where he had primary
responsibility for executing on the company’s store optimization and refranchising efforts. In addition, he led the company’s
national efforts with third party delivery, online ordering and digital marketing. Before joining Famous Dave’s, Mr. Concepcion
served in various capacities with Wexford Capital LP, a registered investment advisor, in the Private Equity and Real Estate Groups
as well as the Global Macro Hedge Funds from June 2009 until April 2016. Mr. Concepcion graduated from DePaul University
with a B.S. in Accounting.
Rick
Camac has served as one of our strategic advisors since November 2021. Since April 2018, Mr. Camac has served
as the Dean of the New York Institute of Culinary Education, a leader in the culinary and hospitality industry, maintaining an
active and robust alumni of supporters. Prior thereto from May 2016 to February 2017, Mr. Camac was the Vice President of
Concept Development as Asthetique Hospitality, where he developed brands, built teams, and sourced locations to bring together
new investments. From September 2004 to July 2016, Mr. Camac concentrated on operations, sales, brand development and talent
acquisition as a Partner at Fatty Crew.
Kevin
Mulcahy has served as one of our strategic advisors since March 2022. Since September 2019, Mr. Mulcahy has served as
Partner and Co-Founder of MBN Brands, a consumer-focused investment firm with more than 120 current restaurants under ownership
across several leading franchise brands. Prior thereto from September 2017 to September 2019, Mr. Mulcahy worked at Citadel Investment
Group, where he focused on public market software investments. From July 2015 to September 2017, Mr. Mulcahy worked at Falcon
Edge Capital. Mr. Mulcahy graduated from Princeton University with a A.B. in Economics and an M.B.A. from Columbia University.
Our
advisors are currently (i) assisting us in sourcing and negotiating with potential business combination targets, (ii) providing
their business insights when we assess potential business combination targets and (iii) upon our request, providing their business
insights as we work to create additional value in the businesses that we acquire. However, they have no written advisory agreement
with us. Additionally, our advisors have no other employment or compensation arrangements with us. Moreover, our advisors are
not under any fiduciary obligations to us nor will they perform board or committee functions, nor will they have any voting or
decision-making capacity on our behalf. They will also not be required to devote any specific amount of time to our efforts.
Accordingly, if any of our advisors becomes aware of a business combination opportunity which is suitable for any of the entities
to which he or she has fiduciary or contractual obligations, he or she will honor their 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 may modify or expand our roster of advisors as we source potential business combination targets or create value in businesses
that we may acquire.
Number
and Terms of Office of Officers and Directors
We
currently have six 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 full year after our first fiscal year end following our listing on Nasdaq.
The
term of office of the Class A directors, consisting of David Perlin and Carolyn Trabuco, will expire at our first annual meeting
of stockholders. The term of office of Class B directors, consisting of Karen Kelley and Warren Thompson, will expire at the second
annual meeting of stockholders. The term of office of the Class C directors, consisting of Messrs. Salis and Karson, 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.
Committees
of the Board of Directors
Audit
Committee
We
have established an audit committee of the board of directors, which consists of Karen Kelley, Carolyn Trabuco, and David Perlin,
each of whom is an independent director under Nasdaq’s listing standards. Mr. Perlin chairs the Audit Committee. The
audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
| ● | reviewing
and discussing with management and the independent auditor the annual audited financial
statements, and recommending to the board whether the audited financial statements should
be included in our Form 10-K, including this Report; |
| | |
| ● | discussing
with management and the independent auditor significant financial reporting issues and
judgments made in connection with the preparation of our financial statements; |
| | |
| ● | discussing
with management major risk assessment and risk management policies; |
| | |
| ● | monitoring
the independence of the independent auditor; |
| | |
| ● | verifying
the rotation of the lead (or coordinating) audit partner having primary responsibility
for the audit and the audit partner responsible for reviewing the audit as required by
law; |
| | |
| ● | reviewing
and approving all related-party transactions; |
| | |
| ● | inquiring
and discussing with management our compliance with applicable laws and regulations; |
| | |
| ● | pre-approving all
audit services and permitted non-audit services to be performed by our independent
auditor, including the fees and terms of the services to be performed; |
| | |
| ● | appointing
or replacing the independent auditor; |
| | |
| ● | determining
the compensation and oversight of the work of the independent auditor (including resolution
of disagreements between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work; |
| | |
| ● | establishing
procedures for the receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls or reports which raise material issues regarding
our financial statements or accounting policies; and |
| | |
| ● | approving
reimbursement of expenses incurred by our leadership team in identifying potential target
businesses. |
Financial
Experts on Audit Committee
The
audit committee will at all times be composed exclusively of “independent directors” who are “financially literate”
as defined under Nasdaq’s listing standards. Nasdaq’s standards define “financially literate” as being
able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and
cash flow statement.
In
addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment
experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background
that results in the individual’s financial sophistication. The board of directors has determined that Mr. Perlin qualifies
as an “audit committee financial expert,” as defined under rules and regulations of the SEC and has accounting or
related financial management expertise.
Compensation
Committee
We
have established a compensation committee of the board of directors, which consists of Karen Kelley and David Perlin, each of
whom is an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which are specified
in our Compensation Committee Charter, include, but are not limited to:
| ● | reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief
Executive Officer’s compensation, evaluating our Chief Executive Officer’s
performance in light of such goals and objectives and determining and approving the remuneration
(if any) of our Chief Executive Officer based on such evaluation; |
| | |
| ● | reviewing
and approving the compensation of all of our other executive officers; |
| | |
| ● | reviewing
our executive compensation policies and plans; |
| | |
| ● | implementing
and administering our incentive compensation equity-based remuneration plans; |
| | |
| ● | assisting
management in complying with our proxy statement and annual report disclosure requirements; |
| | |
| ● | approving
all special perquisites, special cash payments and other special compensation and benefit
arrangements for our executive officers and employees; |
| | |
| ● | 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. |
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 participate in the consideration and recommendation of director nominees
are Karen Kelley, Warren Thompson, Carolyn Trabuco and David Perlin. 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. You can review this document by accessing our public
filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge
upon request from us. If we make any amendments to our Code of Ethics other than technical, administrative or other non-substantive
amendments, or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics applicable to our principal
executive officer, principal financial officer principal accounting officer or controller or persons performing similar functions
requiring disclosure under applicable SEC or Nasdaq rules, we will disclose the nature of such amendment or waiver on our website
at https://sizzlespac.com/. The information included on our website is not incorporated by reference into this Report or in any
other report or document we file with the SEC, and any references to our website are intended to be inactive textual references
only.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of 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 SEC initial reports of ownership and reports of changes in ownership of our 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 the year ended
December 31, 2021, all reports applicable to our executive officers, directors and greater than 10% beneficial owners were filed
in a timely manner in accordance with Section 16(a) of the Exchange Act.
Item
11. Executive Compensation.
No
executive officer has received any cash compensation for services rendered to us. We pay VO Leadership II, Inc., an affiliate
of our executive officers, $10,000 per month for providing us with office space and certain office and secretarial services. However,
this arrangement is solely for our benefit and is not intended to provide our officers or directors compensation in lieu of a
salary. We may also pay consulting, finder or success fees to our initial stockholders, officers, directors or their affiliates
for assisting us in consummating our initial business combination with such fee to be determined in an arms’ length negotiation
based on the terms of the business combination.
Other
than the $10,000 per month administrative fee, the payment of consulting, success or finder fees to our sponsor, officers, directors,
initial stockholders or their affiliates in connection with the consummation of our initial business combination and the repayment
of the up to $150,000 loan made by our sponsor to us, no compensation or fees of any kind will be paid to our sponsor, initial
stockholders, members of our leadership team or their respective affiliates, for services rendered prior to or in connection with
the consummation of our initial business combination (regardless of the type of transaction that it is). However, they will receive
reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying
potential target businesses, performing business due diligence on suitable target businesses and business combinations as well
as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations.
There is no limit on the amount of consulting, success or finder fees payable by us upon consummation of an initial business combination.
Additionally, there is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the
extent such expenses exceed the available proceeds not deposited in the trust account, such expenses would not be reimbursed by
us unless we consummate an initial business combination.
After
our initial business combination, members of our leadership team who remain with us may be paid consulting, leadership or other
fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the
proxy solicitation materials furnished to our stockholders. However, the amount of such compensation may not be known at the time
of the stockholder 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 or a periodic report, as required by the SEC.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2022 based on information
obtained from the persons named below, with respect to the beneficial ownership of common stock, by:
| ● | each
person known by us to be the beneficial owner of more than 5% of our outstanding common
stock; |
| ● | each
of our executive officers and directors that beneficially owns our common stock; and |
| ● | all
our executive officers and directors as a group. |
In
the table below, percentage ownership is based on 21,770,600 shares of our common stock, issued and outstanding as of March 31,
2022.
Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the
private placement warrants as these warrants are not exercisable within 60 days of the date of this Report.
Name
and Address of Beneficial Owner (1) | |
Number
of Shares Beneficially Owned | | |
Approximate
Percentage of Outstanding Common Stock | |
Steve
Salis (2) | |
| 6,147,750 | | |
| 28.24 | % |
Jamie
Karson (2) | |
| 6,147,750 | | |
| 28.24 | % |
Karen
Kelly (3) | |
| — | | |
| — | |
David
Perlin (3) | |
| — | | |
| — | |
Warren
Thompson (3) | |
| — | | |
| — | |
Daniel
Lee (3) | |
| — | | |
| — | |
Nestor
Nova (3) | |
| — | | |
| — | |
Carolyn
Trabuco (3) | |
| — | | |
| — | |
VO
Sponsor, LLC | |
| 6,147,750 | | |
| 28.24 | % |
All
directors and executive officers as a group (8 individuals) (2) | |
| 6,147,750 | | |
| 28.24 | % |
| |
| | | |
| | |
Other
5% Stockholders | |
| | | |
| | |
Saba
Capital Management, L.P. (4) | |
| 1,218,912 | | |
| 5.60 | % |
| (1) | Unless
otherwise noted, the business address of each of the following entities or individuals
is c/o Sizzle Acquisition Corp., 4201 Georgia Ave NW, Washington DC 20011. |
| (2) | Represents
securities held by VO Sponsor, LLC, our sponsor, of which Steve Salis and Jamie Karson
are managing members. Accordingly, all securities held by our sponsor may ultimately
be deemed to be beneficially held by Messrs. Salis and Karson. Each such person disclaims
beneficial ownership of the reported shares other than to the extent of his ultimate
pecuniary interest therein. |
| (3) | Does
not include any securities held by VO Sponsor, LLC, of which each person is a member.
Each such person disclaims beneficial ownership of the reported shares other than to
the extent of his ultimate pecuniary interest therein. |
| (4) | According
to a Schedule 13G/A filed on February 14, 2022, Saba Capital Management, L.P., Boaz R.
Weinstein, and Saba Capital Management GP, LLC acquired 1,218,912 shares of common stock.
The business address for each of the reporting persons is 405 Lexington Avenue, 58th
Floor, New York, New York 10174. |
Securities
Authorized for Issuance under Equity Compensation Plans
None.
Changes
in Control
None.
Item
13. Certain Relationships and Related Transactions, and
Director Independence.
In
October 2020, we issued an aggregate of 2,875,000 founder shares for an aggregate purchase price of $25,000, or approximately
$0.009 per share, to our initial stockholders. On March 2, 2021, we effected a 1.25 for 1 dividend, and as a result our initial
stockholders held 3,593,750 founder shares of our common stock. On September 15, 2021, we effected an additional 1.4 for
1 dividend, and as a result our initial stockholders hold 5,031,250 founder shares. The founder shares held by our initial stockholders
includes an aggregate of up to 656,250 shares subject to forfeiture to the extent that the underwriters’ over-allotment option
is not exercised in full or in part, so that our initial stockholders will continue to own shares equal to 35% of the shares issued
in our initial public offering (excluding the private shares and assuming the initial stockholders did not purchase units in our
initial public offering). In November 2021, the Company effected a stock dividend of 1.08 shares for each share of common stock
outstanding, resulting in our sponsor holding an aggregate of 5,425,000 founder shares (excluding the 8,750 shares forfeited due
to a partial exercise by the underwriters of its over-allotment option)
Our
sponsor and Cantor purchased an aggregate of 770,000 private shares (722,750 shares by our sponsor and 47,250 shares
by Cantor for a total purchase price of $7,700,000). This purchase took place on a private placement basis simultaneously with
the consummation of our initial public offering. The purchase price for the private shares was deposited into the trust account
simultaneously with the consummation of our initial public offering. Our sponsor has agreed not to assign or sell any of the private
shares (except to certain permitted transferees) until after the completion of our initial business combination. In the event
of a liquidation prior to our initial business combination, the private shares will likely be worthless.
In
order to meet our working capital needs following the consummation of our initial public offering, our sponsor, officers and directors
or their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem
reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation
of our initial business combination, without interest, or, at holder’s discretion, up to $1,500,000 of the notes may be
converted into shares of common stock at a price of $10.00 per share. These shares would be identical to the private shares. In
the event that the 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.
The
holders of our founder shares issued and outstanding on the date of the Registration Statement, as well as the holders of the
private shares and any shares of common stock our sponsor, initial stockholders, officers, directors or their affiliates may be
issued in payment of working capital loans made to us, will be entitled to registration rights pursuant to an agreement signed
prior to or on the effective date of our initial public offering. The holders of a majority of these securities are entitled to
make up to two demands that we register such securities. The holders of the majority of the founder shares and private shares
can elect to exercise these registration rights at any time commencing on the closing of the business combination. In addition,
the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to our consummation of a business combination. We will bear the expenses incurred in connection with the filing of any such registration
statements.
On
December 19, 2020, the Company issued an unsecured promissory note to the sponsor, pursuant to which the Company may borrow up
to an aggregate principal amount of $150,000. The note is non-interest bearing and payable on the earlier of (i) December 31,
2021, (ii) the consummation of the initial public offering or (iii) the date on which the Company determines not to proceed with
the initial public offering. As of December 31, 2021, the company had $153,127 outstanding under the note, which is now due on
demand. The Sponsor acknowledged that the Company is not in default.
We
have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification
provided for in our amended and restated certificate of incorporation.
We
may also pay consulting, finder or success fees to our initial stockholders, officers, directors or their affiliates for assisting
us in consummating our initial business combination with such fee to be determined in an arms’ length negotiation based
on the terms of the business combination.
Other
than the payments to Cohen & Company Capital Markets, an affiliate of a passive member of the sponsor, $10,000 per month administrative
fee, the payment of consulting, success or finder fees to our sponsor, officers, directors, or their affiliates in connection
with the consummation of our initial business combination and repayment of the up to $150,000 loan, no compensation or fees of
any kind will be paid to our sponsor, members of our leadership team or their respective affiliates, for services rendered prior
to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is).
However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities
on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses
and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses
to examine their operations. There is no limit on the amount of consulting, success or finder fees payable by us upon consummation
of an initial business combination. Additionally, there is no limit on the amount of out-of-pocket expenses reimbursable
by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the trust account, such
expenses would not be reimbursed by us unless we consummate an initial business combination.
After
our initial business combination, members of our leadership 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 stockholders, to the extent then known, in the
proxy solicitation materials furnished to our stockholders. However, the amount of such compensation may not be known at the time
of the stockholder 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 or a periodic report, as required by the SEC.
All
ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms
believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require
prior approval by a majority of our uninterested “independent” directors or the members of our board who do not have
an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel.
We will not enter into any such transaction unless our disinterested “independent” directors determine that the terms
of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from
unaffiliated third parties.
Director
Independence
Currently,
David Perlin, Karen Kelley, Carolyn Trabuco, and Warren Thompson are each considered an “independent director” under
the Nasdaq listing rules, which 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
independent directors have regularly scheduled meetings at which only independent directors are present.
Any
affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of
directors will review and approve all affiliated transactions with any interested director abstaining from such review and approval.
Item
14. Principal Accountant Fees and Services.
The
following is a summary of fees paid to Marcum, 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 Marcum in connection with regulatory filings. The aggregate fees of Marcum for professional
services rendered for the audit of our annual financial statements, review of the financial information included in our Forms
10-Q for the respective periods and other required filings with the SEC for the year ended December 31, 2021 totaled approximately
$44,805. The aggregate fees of Marcum related to audit services in connection with our initial public offering totaled approximately
$46,350. 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, 2021 we did not pay Marcum any audit-related fees.
Tax
Fees. We paid Marcum $7,210 for tax services, planning or advice for the year ended December 31, 2021.
All
Other Fees. We did not pay Marcum for any other services for the year ended December 31, 2021.
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).
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2021 and 2020
(As
Restated)
Note
1 — Organization and Business Operations
Sizzle
Acquisition Corp. (the “Company”) was incorporated in Delaware on October 12, 2020. The Company is a blank check
company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more businesses or entities (the “Business Combination”).
As
of December 31, 2021, the Company had not commenced any operations. All activity for the period from October 12, 2020 (inception)
through December 31, 2021 related to the Company’s formation and the initial public offering (“Public Offering”),
which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived
from the Public Offering.
The
Company’s sponsor is VO Sponsor, LLC (the “Sponsor”).
The
registration statement for the Company’s Public Offering (the “Registration Statement”) was declared effective
on November 3, 2021 (the “Effective Date”). On November 8, 2021, the Company consummated its Public Offering of 15,500,000 units
(the “Units” and, with respect to the common stock included in the Units being offered, the “Public Shares”)
at $10.00 per Unit (which included a partial exercise of the underwriters’ over-allotment option), which is discussed
in Note 4 and the sale of an aggregate of 770,000 shares (the “Private Shares”) at a price of $10.00 per
Private Share in a private placement to the Sponsor and Cantor Fitzgerald & Co. (“Cantor”) that closed simultaneously
with the Public Offering. On November 8, 2021, the underwriter exercised 2,000,000 of the full 2,025,000 over-allotment
option available to them and forfeited the remainder.
Transaction
costs amounted to $11,381,247 consisting of $2,700,000 of underwriting commissions, $8,150,000 of deferred underwriting
fees and $531,247 of other cash offering costs.
The
Company’s leadership has broad discretion with respect to the specific application of the net proceeds of the Public Offering
and the sale of the Private Shares, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held
in the Trust Account (as defined below) (excluding taxes payable on income earned on the Trust Account) at the time of the agreement
to enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target 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”). Upon the closing of the Public Offering, management has agreed that an
amount equal to at least $10.20 per Unit sold in the Public Offering, including the proceeds from the sale of the Private
Shares, will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days
or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting
the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion
of a Business Combination and (ii) the distribution of the funds in the Trust Account, as described below.
Following
the closing of the Public Offering on November 8, 2021, $158,100,000 ($10.20 per Unit) from the net proceeds sold in
the Public Offering, including the proceeds of the sale of the Private Shares, was deposited in the Trust Account.
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. The decision as to whether
the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely
in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount
then in the Trust Account (initially anticipated to be $10.20 per Public Share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption
rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to
redemption will be recorded at redemption value and classified as temporary equity upon the completion of the Public Offering
in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from
Equity.”
The
Company will proceed with a Business Combination if the Company seeks stockholder approval and a majority of the shares voted
are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to
hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate
of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the
tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the
SEC containing substantially the same information as would be included in a proxy statement prior to completing a Business Combination.
If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval
for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business
Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6), EarlyBirdCapital (“EBC”) Shares
(as defined in Note 8) and any Public Shares purchased during or after the Public Offering (a) in favor of approving a Business
Combination and (b) not to redeem any shares in connection with a stockholder vote to approve a Business Combination or sell any
shares to the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder may elect
to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
The
Company will have up to 15 months from the closing of the Public Offering (the “Combination Period”) to complete
an initial Business Combination. If it has not completed an initial Business Combination by such date, the Company 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 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 any interest not previously released to it but net of taxes payable, 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 board
of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
The
Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business
Combination within the Combination Period. 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 ($10.00).
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent
any claims by a 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 amount of funds in the Trust Account to below $10.20 per
Public Share, except as to any claims by a third party who executed a valid and enforceable agreement with the Company waiving
any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account and except as to any
claims under the Company’s indemnity of the underwriters of Public Offering against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, the Insiders 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 Insiders will have to indemnify the Trust Account
due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered
public 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.
Liquidity
and Capital Resources
As
of December 31, 2021, the Company had $1,046,646 of cash in its operating bank account and a working capital of $1,079,831
(excluding franchise tax payable).
The
Company’s liquidity needs up to December 31, 2021 have been satisfied through a payment from the Sponsor of $25,000 (see
Note 6) for the Founder Shares and the loan under an unsecured promissory note from the Sponsor of $150,000 (see Note 6),
which was fully drawn down as of December 31, 2021. In addition, in order to finance transaction costs in connection with a Business
Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors
may, but are not obligated to, provide the Company Working Capital Loans, as defined below (see Note 6). As of December 31, 2021,
there were no amounts outstanding under any Working Capital Loans.
The
Company has until February 8, 2023, 15 months from the closing of the IPO, which happened on November 8, 2021, to consummate a
Business Combination (the “Combination Period”). It is uncertain that we will be able to consummate a Business Combination
within the Combination Period. If a Business Combination is not consummated within the Combination Period, there will be a mandatory
liquidation and subsequent dissolution. In connection with the Company’s assessment of going concern considerations in accordance
with the authoritative guidance FASB Accounting Standards Update (“ASU”) Topic 2014-15, “Disclosure of Uncertainties
About an Entity’s Ability to Continue as a Going Concern”, management has determined that mandatory liquidation, and
subsequent dissolution, should the Company be unable to complete a business combination, raises substantial doubt about the Company’s
ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets and liabilities should
the Company be required to liquidate after February 8, 2023.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably
possible that the virus could have a negative effect on the Company’s financial position, 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.
Note
2 — Restatement of Previously Issued Financial Statements
We
determined that, in preparing our Annual Report on Form 10-K for the year ended December 31, 2021, which we filed with the SEC
on April 15, 2022 (the “Original Filing”), we did not properly record the reimbursement of offering fees amounting
to $543,450 in the appropriate account, which resulted to an overstated formation and operations costs, and thereby, overstating
net loss. This reimbursement should have been an adjustment to the additional paid-in capital, instead of formation and operations
cost.
In
accordance with SEC Staff Accounting Bulletin Nos. 99, Materiality, and 108, Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the error and determined
that its impact was material to our previously presented financial statements, as incorporated in the Original Filing. Accordingly,
we concluded, in consultation with the Audit Committee of our Board of Directors, that our previously issued and impacted financial
statements, as incorporated in the Original Filing, should be restated to appropriately adjust the reimbursement of offering costs,
totaling $543,450, to additional paid-in capital instead of formation and operating cost.
The
impact of the restatement adjustments for our Statement of Operations, Statement of Changes in Stockholders’ Equity (Deficit),
and Statement of Cash Flows for the year ended December 31, 2021, are as follows:
| |
As
Previously | | |
| | |
As | |
Statement
of Operations (audited) | |
Reported | | |
Adjustments | | |
Restated | |
Formation
and operating cost | |
$ | 897,298 | | |
$ | (543,450 | ) | |
$ | 353,848 | |
Loss
from Operations | |
| (897,298 | ) | |
| 543,450 | | |
| (353,848 | ) |
Net
loss | |
| (888,941 | ) | |
| 543,450 | | |
| (345,491 | ) |
Basic
and diluted net income per share attributable to Class A Shares | |
| (0.14 | ) | |
| 0.09 | | |
| (0.05 | ) |
Basic
and diluted net income per share attributable to Class B Shares | |
| (0.14 | ) | |
| 0.09 | | |
| (0.05 | ) |
Statement of Changes in Stockholders’ Equity for the year ended December 31, 2021 (audited) | |
As Previously Reported | | |
Adjustments | | |
As Restated | |
Reimbursement of company expenses by the underwriter | |
$ | 543,450 | | |
$ | (543,450 | ) | |
$ | — | |
Remeasurement of common stock subject to possible redemption amount - Additional Paid-in Capital | |
| (13,885,960 | ) | |
| 543,450 | | |
| (13,342,510 | ) |
Remeasurement of common stock subject to possible redemption amount - Accumulated Deficit | |
| (6,212,554 | ) | |
| (543,450 | ) | |
| (6,756,004 | ) |
Net loss | |
| (888,941 | ) | |
| 543,450 | | |
| (345,491 | ) |
| |
As
Previously | | |
| | |
As | |
Statement
of Cash Flows for the year ended December 31, 2021 (audited) | |
Reported | | |
Adjustments | | |
Restated | |
Net
loss | |
$ | (888,941 | ) | |
$ | 543,450 | | |
$ | (345,491 | ) |
Reimbursement of company expenses by underwriter | |
| 543,450 | | |
| (543,450 | ) | |
| — | |
Note
3 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging
Growth Company Status
The
Company is an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the
Jumpstart 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 of 2002, reduced disclosure obligations regarding executive compensation in its 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.
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. The Company intends to take advantage of the benefits of this extended
transition period.
Use
of Estimates
The
preparation of the financial statements in conformity with GAAP requires the Company’s management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of 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 has $1,046,646 in cash and no cash equivalents as of December 31, 2021.
Investments
Held in Trust Account
At
December 31, 2021, the assets held in the Trust Account were held in U.S. Treasury Bills with a maturity of 185 days or less.
During the year ended December 31, 2021, the Company did not withdraw any of the interest income from the Trust Account to pay
its tax obligations.
The
Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments
- Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent
to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization
or accretion of premiums or discounts.
A
decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an
impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new
cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers
whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating
the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes
the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted
performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.
Premiums
and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using
the effective-interest method. Such amortization and accretion are included in the “interest income” line item in
the statements of operations. Interest income is recognized when earned.
Offering
Costs
The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A – “Expenses
of Offering.” Offering costs consist of underwriter, accounting, filing and legal expenses incurred through the balance
sheet date that are directly related to the Public Offering and were charged to temporary equity and stockholders’ equity
(deficit) based on the underlying instruments’ relative fair value upon the completion of the Public Offering. If the Public
Offering had proved to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, would have been charged
to operations.
Warrant
Liability
We
evaluated the Public Warrants (collectively, “Warrants”) in accordance with ASC 815-40, “Derivatives and Hedging
— Contracts in Entity’s Own Equity”, and concluded that a provision in the Warrant Agreement related to certain
tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition
of a derivative as contemplated in ASC 815, the Warrants will be recorded as derivative liabilities on the balance sheet and measured
at fair value at inception (on the date of the Public Offering) and at each reporting date in accordance with ASC 820, “Fair
Value Measurement”, with changes in fair value recognized in the statement of operations in the period of change.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to
its short-term nature.
Fair
Value Measurement
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).
The Company’s financial instruments are classified as either Level 1, Level 2 or Level 3. 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
carrying value, excluding gross unrealized holding gain and fair value of held to maturity securities on December 31, 2021 are
classified as Level 1 and are as follows:
| |
Carrying
Value as of December 31, 2021 | | |
Gross
Unrealized Gains | | |
Gross
Unrealized Losses | | |
Fair
Value as of December 31, 2021 | |
U.S.
Treasury Securities | |
$ | 158,107,411 | | |
$ | 2,792 | | |
$ | — | | |
$ | 158,110,203 | |
Common
Stock Subject to Possible Redemption
The
Company accounts for its shares of common stock subject to possible redemption in accordance with guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Shares of common stock 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 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 of common stock are classified
as stockholders’ equity (deficit). The Company’s shares of common stock sold in the Public Offering feature certain
redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of shares of redeemable
common stock to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in
capital, or in the absence of additional capital, in accumulated deficit.
All
of the 15,500,000 common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for
the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender
offer in connection with the Business Combination and in connection with certain amendments to the Company’s second amended
and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments,
which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock
subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption
and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Accordingly, at
December 31, 2021, all shares of common stock subject to possible redemption is presented as temporary equity, outside of the
stockholders’ equity (deficit) section of the Company’s balance sheet.
The
common stock subject to possible redemption reflected on the balance sheet as of December 31, 2021 is reconciled in the following
table:
Gross Proceeds | |
$ | 155,000,000 | |
Less: | |
| | |
Fair Value of public warrants | |
| (6,062,414 | ) |
Common stock issuance costs | |
| (10,936,100 | ) |
Plus: | |
| | |
Remeasurement of carrying value
to redemption value | |
| 20,098,514 | |
Common stock subject
to possible redemption | |
$ | 158,100,000 | |
Net
Loss Per Common Stock
The
Company applies the two-class method in calculating earnings per share, with one class being the redeemable shares and one class
being the non-redeemable shares. The contractual formula utilized to calculate the redemption amount approximates fair value.
Changes in fair value are not considered a dividend for the purposes of the numerator in the earnings per share calculation. Net
loss per common stock is computed by dividing the pro rata net loss between the redeemable common stock and the non-redeemable
common stock by the weighted average number of shares of common stock outstanding for each of the periods. The calculation of
diluted loss per share of common stock does not consider the effect of the warrants issued in connection with the Public Offering
since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would
be anti-dilutive.
Reconciliation
of Net Loss per Common Stock
The
Company’s net loss is adjusted for the portion of net loss that is allocable to each class of common stock. The allocable
net loss is calculated by multiplying net loss by the ratio of weighted average number of shares outstanding attributable to common
stock to the total weighted average number of shares outstanding for the period. Accordingly, basic and diluted loss per common
stock is calculated as follows:
| |
For
the year ended December 31, 2021 | | |
For
the period from October 12, 2020 (inception) to December 31, 2020 | |
| |
(As
Restated) | | |
| | |
Redeemable
Common Stock | |
| | | |
| | |
Net
loss allocable to redeemable common stock | |
$ | (122,090 | ) | |
$ | — | |
Basic
and diluted weighted average shares outstanding, redeemable common stock | |
| 2,293,151 | | |
| — | |
Basic
and diluted net loss per common stock | |
$ | (0.05 | ) | |
$ | — | |
Non-Redeemable
Common Stock | |
| | | |
| | |
Net
loss allocable to non-redeemable common stock | |
$ | (223,401 | ) | |
$ | (2,642 | ) |
Basic
and diluted weighted average shares outstanding, non-redeemable common stock | |
| 4,195,998 | | |
| 3,006,500 | |
Basic
and diluted net loss per common stock | |
$ | (0.05 | ) | |
$ | (0.00 | ) |
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
ASC
740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of
tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for
interest and penalties as of December 31, 2021 and December 31, 2020. 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.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
including funds held in Trust on behalf of the Company, which, at times, may exceed the Federal Deposit Insurance Company coverage
of $250,000. The Company has not experienced losses on this account.
Recent
Accounting Pronouncements
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in
Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments.
ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible
instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s
own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are
indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should
be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company
is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash
flows.
Management
does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statements.
Note
4 — Initial Public Offering
On
November 8, 2021, the Company consummated its Public Offering of 15,500,000 Units, which included the partial exercise
of 2,000,000 of the underwriters’ full 2,025,000 over-allotment option, at a price of $10.00 per
Unit, generating gross proceeds of $155,000,000. Each Unit consists of one share of common stock, par value $0.0001 per share and one-half
of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share
of common stock at a price of $11.50 per share.
Note
5 — Private Shares
Simultaneously
with the closing of the Public Offering and the sale of the Units, the Sponsor, and Cantor have purchased an aggregate of 770,000 Private
Shares at a price of $10.00 per Private Placement Share, for an aggregate purchase price of $7,700,000. Of the total Private
Placement Shares sold, 722,750 were purchased by the Sponsor and 47,250 were purchased by Cantor.
The
proceeds from the Private Shares were added to the proceeds from the Public Offering held in the Trust Account. If the Company
does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Shares will
be used to fund the redemption of the Public Shares (subject to the requirements of applicable law). The Private Shares are identical
to the shares in the Units sold to the public, except that the purchasers of the Private Shares have also agreed not to transfer,
assign or sell any of the Private Shares (except in connection with the same limited exceptions that the Founder Shares may be
transferred as described below) until after the completion of the Business Combination.
Note
6 — Related Party Transactions
Founder
Shares
On
November 20, 2020, the Sponsor paid $25,000 in consideration for 2,875,000 shares of common stock (the “Founder
Shares”). On March 2, 2021, the Company effected a stock dividend of 1.25 for 1 for each common stock held by
the Sponsor, resulting in the Sponsor holding an aggregate of 3,593,750 common stock, of which up to 468,750 shares were
subject to forfeiture. On September 15, 2021, the Company effected an additional 1.4 for 1 dividend, resulting
in 5,031,250 Founder Shares, of which up to 656,250 shares were subject to forfeiture to the extent that the underwriters’
over-allotment was not exercised in full or in part, so that the Sponsor collectively owns shares equal to 35% of the shares
issued in the Public Offering.
On
November 3, 2021, the Company effected an additional 1.08 for 1 dividend, and as a result, the Company’s initial
stockholders held 5,433,750 Founder Shares, which included an aggregate of up to 708,750 shares subject to forfeiture. On
November 8, 2021 the underwriter partially exercised their over-allotment option and purchased an additional 2,000,000 Units
out of the 2,025,000 available to them and forfeited the remainder. As a result, 8,750 Founder Shares were forfeited resulting
in aggregate Founder Shares outstanding of 5,425,000.
The
Company’s Sponsor, officers and directors have agreed not to transfer, assign or sell any Founder Shares or Private Shares
until the date of the consummation of our initial Business Combination. The limited exceptions include transfers, assignments
or sales to the Company’s or the Sponsor’s officers, directors, consultants or their affiliates, to an entity’s
members upon its liquidation, to relatives and trusts for estate planning purposes, by virtue of the laws of descent and distribution
upon death, pursuant to a qualified domestic relations order, to the Company for no value for cancellation in connection with
the consummation of our initial Business Combination, or in connection with the consummation of a Business Combination at prices
no greater than the price at which the shares were originally purchased, in each case where the transferee agrees to be bound
by these transfer restrictions.
Promissory
Note — Related Party
On
December 19, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant
to which the Company may borrow up to an aggregate principal amount of $150,000. The Promissory Note is non-interest bearing
and expired upon the consummation of the Public Offering. As of December 31, 2021, the Company had $153,127 outstanding under
the Promissory Note, which is now without fixed terms and due on demand. The Sponsor acknowledged that the Company is not in
default.
Administrative
Support Agreement
The
Company has agreed, commencing on the effective date of the Public Offering through the earlier of the Company’s consummation
of a Business Combination and its liquidation, to pay an affiliate of the Company’s management a total of $10,000 per
month for office space, utilities and secretarial support. As of December 31, 2021, $20,000 had been recorded or paid.
Related
Party Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or certain of the Company’s
officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Each loan would be evidenced by promissory note. 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 notes may be converted upon completion
of a Business Combination into units at a price of $10.00 per unit. 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. As of December 31, 2021, no such Working Capital Loans
were outstanding.
Note
7 — Commitments and Contingencies
Registration
Rights
The
holders of the Founder Shares and shares issued to EBC (“EBC Shares”), as well as the holders of any warrants the
Company’s Sponsor, officers, directors or their affiliates may be issued in payment of working capital loans made to the
Company (and all underlying securities), will be entitled to registration rights pursuant to an agreement to be signed prior to
or on the effective date of the offering. The holders of a majority of these securities are entitled to make up to two demands
that we register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights
at any time commencing three months prior to the date on which these shares of common stock are to be released from lock up. The
holders of a majority of the Founder Shares, EBC Shares, and warrants issued to the Sponsor, officers, directors or their affiliates
in payment of working capital loans made to the Company (or underlying securities) can elect to exercise these registration rights
at any time after consummation of the Business Combination. Notwithstanding anything to the contrary, EBC and Cantor may only
make a demand on one occasion and only during the five-year period beginning on the Effective Date of the registration statement
of which the prospectus forms a part. In addition, the holders have certain “piggy-back” registration rights with
respect to registration statements filed subsequent to consummation of the Business Combination; provided, however, that EBC and
Cantor may participate in a “piggy-back” registration only during the seven-year period beginning on the Effective
Date of the registration statement of which this prospectus forms a part. 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 date of Public Offering to purchase up to 2,025,000 additional
Units to cover over-allotments, if any, at the Public Offering price less the underwriting discounts and commissions. On November
8, 2021, the underwriters partially exercised this option and purchased an additional 2,000,000 Units and forfeited
the remaining 25,000 available.
The
underwriters received a cash underwriting discount of 2.0% of the gross proceeds of the Public Offering, or $2,700,000 (which
is capped at $2,700,000 with the remaining $400,000 deferred to the close of the Business Combination with the rest
of the deferred underwriting discount due to the underwriters’ partial over-allotment exercise).
The
underwriters will be entitled to a cash underwriting discount of 5.0% of the gross proceeds of the Public Offering, or $6,750,000 (or
up to $8,150,000, inclusive of the $400,000 deferral noted above, if the underwriters’ over-allotment is exercised
in full) upon consummation of the Business Combination.
The
underwriters agreed to reimburse the Company a portion of expenses related to the IPO. A total of $543,450 was reimbursed to the
Company by the underwriters in pursuant of this agreement.
Consulting
and Advisory Services Fee
The
Company engaged Cohen & Company Capital Markets (“CCM”), an affiliate of a passive member of the Sponsor, to provide
consulting and advisory services in connection with the Public Offering, for which it received an advisory fee equal to 0.6% of
the aggregate proceeds of the Public Offering, net of underwriter’s expenses. This fee was deducted from the underwriting
fees paid to Cantor as described above. Affiliates of CCM have and manage investment vehicles with a passive investment in the
Sponsor. CCM agreed to defer the portion of its fee resulting from exercise of the underwriters’ over-allotment option
until the consummation of our initial Business Combination. The Company has also engaged CCM as an advisor in connection with
our initial Business Combination for which it will earn an advisory fee of 1.5% of the proceeds of the Public Offering payable
at closing of the Business Combination, which will be deducted from the deferred underwriting fee paid to Cantor as described
above. CCM’s fees will be offset from the underwriting fees described above and will not result in any incremental
fees to the Company.
CCM
is engaged to represent the Company’s interests only and did not participate in the Public Offering as defined in FINRA
Rule 5110(j)(16); it is acting as an independent financial adviser as defined in FINRA Rule 5110(j)(9). As such, CCM did not act
as an underwriter in connection with the Public Offering, it did not identify or solicit potential investors in the Public Offering
or otherwise be involved in the distribution of the Public Offering.
Note
8 — Stockholders’ Equity (Deficit)
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of
$0.0001 and with such designations, voting and other rights and preferences as may be determined from time to time by the
Company’s board of directors. As of December 31, 2021 and December 31, 2020, there was no preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 50,000,000 shares of common stock with a par value
of $0.0001 per share. As of December 31, 2021 and December 31, 2020, there were 6,270,600 and 5,622,750 shares
of common stock issued and outstanding, respectively, including an aggregate of up to 708,750 shares are subject to forfeiture,
so that the Sponsor collectively owns shares equal to 35% of the shares issued in the Public Offering. On September 15,
2021, the Company effected an additional 1.4 for 1 dividend. On November 3, 2021, the Company effected an additional 1.08
for 1 dividend, and as a result, the Company’s initial stockholders hold 5,433,750 Founder Shares, which included
an aggregate of up to 708,750 shares subject to forfeiture to the extent that the underwriters’ over-allotment was
not exercised in full or in part. On November 8, 2021 the underwriter partially exercised their over-allotment option and purchased
an additional 2,000,000 Units out of the 2,025,000 available to them and forfeited the remainder. As a result, 8,750 Founder
Shares were forfeited resulting in aggregate Founder Shares outstanding of 5,425,000.
EBC
Shares — On October 12, 2020, the Company issued to the designees of EBC 100,000 EBC Shares for nominal
consideration. On March 2, 2021, the Company effected a 1.25 for 1 dividend resulting in 125,000 EBC Shares, 25,000 of
which EBC returned to the Company, at no cost, resulting in 100,000 EBC shares. On March 9, 2021, the Company issued
to EBC and its designees an additional 100,000 EBC Shares at a price of $0.0001 per share, resulting in 200,000 EBC
Shares being outstanding.
On
July 12, 2021, EBC returned 150,000 EBC Shares to the Company, at no cost, which were subsequently cancelled. This
return resulted in EBC shares outstanding of 50,000 pre-dividend. The number of EBC Shares outstanding increased to 70,000 after
giving effect to the stock dividend of 1.4 for 1 on September 15, 2021, which is what was outstanding as of September 30, 2021.
On November 3, 2021, the Company issued a stock dividend of 1.08 for 1, which resulted in 75,600 EBC Shares outstanding.
The
Company accounted for the EBC Shares as a charge directly to stockholder’s equity. The Company estimated the fair value
of representative shares to be $870.
The
holders of the EBC Shares have agreed not to transfer, assign or sell any such shares without our prior consent until the completion
of our initial Business Combination. In addition, the holders of the EBC Shares have agreed (i) to waive their conversion rights
(or right to participate in any tender offer) with respect to such shares in connection with the completion of our initial Business
Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if
we fail to complete our initial Business Combination within the Combination Period.
Public
Warrants — As of December 31, 2021 there were no Public Warrants issued or outstanding. The Public Warrants
will become exercisable 30 days after the completion of a Business Combination. No warrants will be exercisable for cash unless
the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of
the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration
statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified
period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants
on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on
a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption
or liquidation.
Redemption
of warrants
The
Company may redeem the Public Warrants:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per warrant; |
| ● | at
any time after the warrants become exercisable; |
| ● | if,
and only if, the reported last sale price of the common stock equals or exceeds $18.00
per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within a 30-trading day period commencing once the warrants become
exercisable and ending on the third business day prior to the notice of redemption to
the warrant holders; |
| ● | if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants |
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in
the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below,
the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event
will the Company be required to net cash settle the 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 warrants will not receive any
of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside
of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In
addition, if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection
with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per common stock (with
such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the
case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor
or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of
the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of its common
stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be
adjusted (to the nearest cent) to be equal to 115% of the greater of (i) Market Value or (ii) the price at which the Company issue
the additional shares of common stock or equity-linked securities.
Note
9 — Income Tax
The
Company’s net deferred tax assets are as follows:
|
|
December 31, 2021 |
|
December 31, 2020 |
|
|
As Restated |
|
|
Deferred tax asset |
|
|
|
|
Organizational costs/Start-up costs |
|
$ |
56,256 |
|
|
|
|
|
Federal net operating loss |
|
|
16,297 |
|
|
|
|
|
Total deferred tax asset |
|
|
72,553 |
|
|
|
— |
|
Valuation allowance |
|
|
(72,553 |
) |
|
|
— |
|
Deferred tax asset, net of allowance |
|
$ |
— |
|
|
|
|
|
The
income tax provision consists of the following:
| |
December 31,
2021
|
|
December 31, 2020 |
| |
As Restated | |
|
Federal | |
| |
|
Current | |
$ | — | | |
| | |
Deferred | |
| (72,553 | ) | |
| — | |
State | |
| | | |
| | |
Current | |
| — | | |
| | |
Deferred | |
| — | | |
| | |
Change in valuation allowance | |
| 72,553 | | |
| — | |
Income tax provision | |
$ | — | | |
| | |
The
Company’s federal net operating loss carryforward as of December 31, 2021 amounted to $77,604 and will be carried forward
indefinitely.
In
assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion
of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which temporary differences representing net future deductible amounts
become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and
tax planning strategies in making this assessment. After consideration of all of the information available, management believes
that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established
a full valuation allowance. For the year ended December 31, 2021, the change in the valuation allowance was $72,553.
A
reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows:
| |
December 31,
2021 | | |
December 31,
2020 | |
Statutory federal income
tax rate | |
$ | 21.00 | % | |
| 21.00 | % |
State taxes, net of federal tax benefit | |
| — | | |
| | |
Permanent book/tax differences and other | |
| — | | |
| (21.00 | )% |
Change in valuation
allowance | |
| (21.00 | )% | |
| | |
Income tax provision | |
$ | — | | |
| | |
The
Company files income tax returns in the U.S. federal jurisdiction, in various state and local jurisdictions and is subject to
examination by the various taxing authorities, since inception.
Note
10 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up through the date that the financial
statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.
On
February 15, 2022, the Company entered into a letter agreement (the “Agreement”) with Bruderman Advisory Group, LLC
(“Bruderman”), pursuant to which Bruderman is engaged to act as the Company’s advisor, on a nonexclusive basis,
in connection with the Company’s Business Combination. Upon the consummation of a Business Combination with an entity that
Bruderman introduced to the Company, the Company agreed to pay Bruderman 1% of the total consideration paid or transferred with
respect to the Business Combination. The Agreement may be terminated at any time; however, Bruderman is entitled to its 1% fee
if at any time prior to 12 months after the termination of the Agreement, the Company consummates the Business Combination with
an entity introduced by Bruderman or enters into a letter agreement to consummate a Business Combination with an entity introduced
by Bruderman that is later consummated.