Tigo Energy(TYGO) - 2022 Q4 - Annual Report

IPO and Trust Account - The Company completed its Initial Public Offering (IPO) on August 10, 2021, raising gross proceeds of $115.0 million from the sale of 11,500,000 units at an offering price of$10.00 per unit[11]. - A total of $116,725,000 was placed in a Trust Account, invested only in U.S. government securities, with a maturity of 185 days or less[13]. - The company intends to use cash from the IPO proceeds and private placements, along with potential new debt, for the initial business combination[38]. - Funds in the trust account have been held only in U.S. government treasury obligations or money market funds, with plans to liquidate these securities by August 5, 2023[88]. - The trust account may be subject to claims from creditors, which could reduce the per share redemption amount below$10.15[76]. - If the initial business combination is not completed within the required time period, public stockholders may receive approximately $10.15 per share upon liquidation[86]. - The company intends to hold funds in cash after liquidating securities in the trust account, which may reduce the amount available for public stockholders upon redemption or liquidation[90]. Business Combination and Strategy - The Company has until July 10, 2023, to complete its initial business combination; otherwise, it will redeem 100$93.4 million[14][24]. - The initial business combination must involve a target business with a fair market value of at least 80% of the trust account value, excluding taxes payable[47]. - The company may seek additional funds through private offerings of debt or equity securities in connection with the business combination[41]. - The target business candidates will be sourced from various unaffiliated sources, including investment bankers and private equity groups[42]. - The company is not prohibited from pursuing a business combination with an affiliated company, provided an independent valuation opinion is obtained[43]. - The company will conduct thorough due diligence on prospective target businesses, including financial reviews and management assessments[45]. - The management team aims to leverage its network to identify underperforming companies that could benefit from capital and strategic insight[28]. - The Company has identified business services, consumer, healthcare, technology, wellness, and sustainability sectors as target industries for potential acquisitions[10]. - The company has a disciplined strategy to generate attractive returns and create value for stockholders through effective management and operational improvements[26]. Merger Agreement - The Company entered into a Merger Agreement with Tigo Energy on December 5, 2022, which will result in Tigo Energy becoming a wholly owned subsidiary upon completion[16]. - The Merger Agreement includes a provision for the Sponsors to sell 1,645,000 shares of Common Stock and 424,000 Private Units to Tigo Energy for $2,300,000[19]. - The base purchase price for the merger with Tigo Energy is set at$600 million, payable through converting each outstanding share of Tigo Energy's common stock into the right to receive 60 million shares of the company's common stock[110]. - The base purchase price is subject to adjustment based on Tigo Energy's pre-money valuation, with increases if the valuation exceeds $500 million and decreases if it falls below that threshold[111]. Financial Performance - For the year ended December 31, 2022, the company reported a net loss of$178,218, a decrease from a net loss of $402,542 in 2021, reflecting a reduction of approximately 56$865,669, compared to $463,981 in 2021, indicating an increase of approximately 86$24,678,170, including approximately $538,943 of interest income[120]. - The company has not generated any revenues to date and does not expect to do so until after the completion of the business combination[113]. Governance and Management - The company has a history of raising over$75 billion for small-cap companies under the leadership of its Co-Chief Executive Officer[158]. - The Co-Chief Executive Officer has over 17 years of investment banking experience and has completed over 200 equity, convertible, and debt offerings[159]. - The Co-President has managed over 300 equity offerings and M&A transactions since joining the company[163]. - The board of directors consists of six directors, with independent directors including Molly Montgomery, Daniel M. Friedberg, Adam Rothstein, and Sam Chawla[176]. - The audit committee and compensation committee of the board are required to be comprised solely of independent directors as per Nasdaq rules[177]. - The company has established a code of conduct and ethics applicable to all executive officers, directors, and employees[189]. - The compensation committee is responsible for reviewing and approving the compensation of executive officers and has the authority to implement incentive compensation plans[195]. - The audit committee is tasked with monitoring the independence of the independent auditor and reviewing all related-party transactions[180][185]. Risks and Compliance - There is a risk that the initial business combination may be subject to U.S. foreign investment regulations, potentially limiting the pool of target businesses[80]. - The company has not independently verified the financial capability of initial stockholders to satisfy indemnity obligations related to claims against the trust account[72]. - If the company fails to comply with Delaware General Corporation Law procedures, stockholders could be liable for claims against the trust account[71]. - The company may face intense competition from other entities with similar business objectives, which could hinder its ability to negotiate a successful business combination[78]. - As of December 31, 2022, the company concluded that its disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[146]. - Management intends to implement remediation steps to improve disclosure controls and procedures, including enhancing the review process for complex securities[147]. - The company has identified the need for additional staff with requisite experience to improve accounting processes[149]. - Management assessed the effectiveness of internal control over financial reporting and determined it was not effective as of December 31, 2022[151].