Initial Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement Warrants, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).

The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.

The Company will provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata share of the aggregate amount then on deposit in the Trust Account (initially approximately $10.00 per 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).

If the Company is unable to complete a Business Combination within the Combination Period, the Company will redeem 100% of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, subject to applicable law and as further described in registration statement, and then seek to dissolve and liquidate.

The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their founder shares and Public Shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their founder shares and Public Shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (iii) waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete the initial Business Combination within the Combination Period, and (iv) not sell any of their founder shares or Public Shares to the Company in any tender offer the Company undertakes in connection with a proposed initial Business Combination.

The Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities of the Company. Therefore, the Company believes it is unlikely that its Sponsor would be able to satisfy those obligations.

On November 22, 2022, the Company filed a definitive proxy statement for a special meeting of stockholders (the “Meeting”), to, among other things, approve proposals to amend the Company’s charter and trust agreement to extend the date by which the Company would be required to consummate a business combination from January 20, 2023 to October 20, 2023 (the “Extension”). On December 20, 2022, the Extension was approved to extend the business combination period from January 20, 2023 to October 20, 2023. In connection with the Extension, holders of 24,069,772 shares of Class A common stock elected to redeem their shares for a total of $242,864,992. After the redemption the Company has outstanding 3,430,228 shares of Class A common stock subject to possible redemption.

In connection with the Extension, the Company has agreed to make monthly extension payments into the Trust Account in the amount of $275,000. During the three and six months ended June 30, 2023, the Company deposited $825,000 and $1,650,000, respectively, into the Trust Account.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Liquidity, Capital Resources and Going Concern

As of June 30, 2023, the Company had $201,539 in its operating bank account and working capital deficit of $15,812,741.

Prior to the completion of the IPO, the Company’s liquidity needs had been satisfied through a payment from the Sponsor of $25,000 (see Note 6) for the founder shares to cover certain offering costs and the loan under an unsecured promissory note from the Sponsor of $275,000 (see Note 6). The promissory note from the Sponsor was paid in full as of January 20, 2021. Subsequent to the consummation of the IPO and Private Placement, the Company’s liquidity needs have been satisfied through the proceeds from the consummation of the Private Placement not held in the Trust Account.

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). On December 8, 2021, the Company received $1,500,000 from the Sponsor in a Working Capital Loan. As of June 30, 2023, $730,130 is outstanding under the loan ($1,500,000 principal balance and $769,870 adjustment for fair value of the working capital loan as of June 30, 2023).

On January 5, 2023 and March 30, 2023, the Company issued unsecured convertible promissory notes (the “Convertible Promissory Notes - Shares”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $2,500,000 on each Convertible Promissory Notes - Shares from the Sponsor to pay fees and expenses and for other general corporate purposes, for a total available amount of $5,000,000. Any advances under the Convertible Notes – Shares shall be made at the sole discretion of the Sponsor. The Convertible Promissory Notes - Shares mature upon the earlier of (a) the satisfaction of all conditions set forth in Article 7 of the UEI Merger and Share Acquisition Agreement (as defined below) other than those conditions set forth in Article 7 of the UEI Merger and Share Acquisition Agreement that by their nature cannot be satisfied other than at the Closing (as defined in the UEI Merger and Share Acquisition Agreement) (such date, the “Pre-Closing Satisfaction Date”) and (b) the date that the winding up of the Company is effective. The Convertible Promissory Notes - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Notes - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Notes - Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to (i) portion of the principal amount of the Convertible Promissory Notes - Shares being converted divided by (ii) $2.50, rounded up to the nearest whole number; provided that the holder of the Convertible Promissory Notes - Shares shall not be entitled to receive more than 2,000,000 shares of common stock in the aggregate on account of (1) both Convertible Promissory Notes – Shares (i.e., 2,000,000 shares issuable in the aggregate in connection with both Convertible Promissory Notes – Shares) and (2) the conversion of any other note or other equity issuance made after March 30, 2023 in connection with the ongoing funding of the Company. As of June 30, 2023, $5,000,000 is outstanding under the Convertible Promissory Notes – Shares, no further borrowings are available under the Convertible Promissory Notes – Shares.

On April 28, 2023, the Company issued an unsecured convertible promissory note (the “Convertible Promissory Note 2 - Shares”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $4,000,000 from the Sponsor to pay fees and expenses and for other general corporate purposes. Any advances under the Convertible Promissory Note 2 – Shares shall be made at the sole discretion of the Sponsor. The Convertible Promissory Note 2 - Shares matures upon the earlier of (a) the Pre-Closing Satisfaction Date and (b) the date that the winding up of the Company is effective. The Convertible Promissory Note 2 - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Note 2 - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Note 2- Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to equal to (x) the portion of the principal amount of the promissory note being converted, divided by (y) the average closing price of the Class A Common Stock for the 30 consecutive Trading Days immediately preceding the Pre-Closing Satisfaction Date, rounded up to the nearest whole number. As of June 30, 2023, $4,000,000 is outstanding under the Convertible Promissory Note 2 – Shares, no further borrowings are available under the Convertible Promissory Note 2 – Shares.

On June 29, 2023, the Company issued a secured convertible promissory note (the “Secured Convertible Promissory Note – Shares,” and collectively with the Convertible Promissory Notes – Shares and the Convertible Promissory Note 2 – Shares, the “Convertible Promissory Notes – Shares – Related Party”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $2,000,000 from the Sponsor to pay fees and expenses and for other general corporate purposes. Any advances under the Secured Convertible Promissory Note - Shares shall be made at the sole discretion of the Sponsor. The Secured Convertible Promissory Note - Shares matures upon the earlier of (a) the Pre-Closing Satisfaction Date, (b) the date that the winding up of the Company is effective and (c) the one year anniversary of the issuance of the Secured Convertible Promissory Note - Shares. The Secured Convertible Promissory Note - Shares is secured by all of the assets of the Company except for the Trust Account, any funds, monies, or other property on deposit in the Trust Account, or any right, title, interest, or claim in or to any distribution from the Trust Account. The Secured Convertible Promissory Note - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Note 2 - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Note 2- Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to equal to (x) the portion of the principal amount of the promissory note being converted, divided by (y) the average closing price of the Class A Common Stock for the 30 consecutive Trading Days immediately preceding the Pre-Closing Satisfaction Date, rounded up to the nearest whole number. As of June 30, 2023, $500,000 has been borrowed against Secured Convertible Promissory Note - Shares, with $1,500,000 remaining available for borrowings.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by October 20, 2023, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after October 20, 2023.

Management plans to address this uncertainty through the Business Combination as discussed under Note 8. There is no assurance that the Company’s plans to consummate the Business Combination will be successful or successful within the Combination Period.

Additionally, due the recording of the change in fair value of the Convertible Promissory Notes – Shares – Related Party earnings per share was impacted. The impacts to earnings per share are shown below:

Public Warrants 

Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as discussed herein. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A 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 Company’s Sponsor or its affiliates, without taking into account any founder shares held by the Company’s Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (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 the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates the initial 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 higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

The warrants will become exercisable on the later of 12 months from the closing of the IPO or 30 days after the completion of its initial Business Combination and will expire five years after the completion of the Company’s initial Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.

Once the warrants become exercisable, the Company may call the Public Warrants for redemption: 

If the Company calls the warrants for redemption as described above, the management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis.” If the management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. 

Convertible Working Capital Loan

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period.

On December 8, 2021, the Company received $1,500,000 from the Sponsor in a Working Capital Loan. This Working Capital Loan was valued using the fair value method. The fair value of the note as of December 8, 2021 and December 31, 2021 was $1,500,000. The fair value of the note as of June 30, 2023 and December 31, 2022 was $730,130 and $1,409,181, respectively (see Note 7).

Convertible Promissory Notes – Shares - Related Party

On January 5, 2023 and March 30, 2023, the Company issued the Convertible Promissory Notes - Shares to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $2,500,000 on each Convertible Promissory Notes - Shares from the Sponsor to pay fees and expenses and for other general corporate purposes, for a total available amount of $5,000,000. Any advances under the Convertible Note shall be made at the sole discretion of the Sponsor. The Convertible Promissory Notes - Shares mature upon the earlier of (a) the satisfaction of all conditions set forth in Article 7 of the UEI Merger and Share Acquisition Agreement other than those conditions set forth in Article 7 of the UEI Merger and Share Acquisition Agreement that by their nature cannot be satisfied other than at the Closing (as defined in the UEI Merger and Share Acquisition Agreement) and (b) the date that the winding up of the Company is effective. The Convertible Promissory Notes - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Notes - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Notes - Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to (i) portion of the principal amount of the Convertible Promissory Notes - Shares being converted divided by (ii) $2.50, rounded up to the nearest whole number; provided that the holder of the Convertible Promissory Notes - Shares shall not be entitled to receive more than 2,000,000 shares of common stock in the aggregate on account of (1) both Convertible Promissory Notes – Shares (i.e., 2,000,000 shares issuable in the aggregate in connection with both Convertible Promissory Notes – Shares) and (2) the conversion of any other note or other equity issuance made after March 30, 2023 in connection with the ongoing funding of the Company. As such, the Company analyzed the Convertible Promissory Notes – Shares – Related Party under ASC 815 and results in no bifurcation of a derivative due to the conversion feature impacting equity. Additionally, there is a contingent beneficial conversion feature that would be recognized once the contingency is resolved. As of June 30, 2023, $5,000,000 is outstanding under the Convertible Promissory Notes – Shares, and no further borrowings are available under the Convertible Promissory Notes – Shares.

On April 28, 2023, the Company issued an unsecured convertible promissory note (the “Convertible Promissory Note 2 - Shares”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $4,000,000 from the Sponsor to pay fees and expenses and for other general corporate purposes. Any advances under the Convertible Promissory Note 2 – Shares shall be made at the sole discretion of the Sponsor. The Convertible Promissory Note 2 - Shares matures upon the earlier of (a) the Pre-Closing Satisfaction Date and (b) the date that the winding up of the Company is effective. The Convertible Promissory Note 2 - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Note 2 - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Note 2- Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to equal to (x) the portion of the principal amount of the promissory note being converted, divided by (y) the average closing price of the Class A Common Stock for the 30 consecutive Trading Days immediately preceding the Pre-Closing Satisfaction Date, rounded up to the nearest whole number. The Convertible Promissory Note 2 – Shares were analyzed under ASC 815 and does meet the scope exception under ASC 815, as such bifurcation was not required. As of June 30, 2023, $4,000,000 is outstanding under the Convertible Promissory Note 2 – Shares, no further borrowings are available under the Convertible Promissory Note 2 – Shares.

On June 29, 2023, the Company issued a secured convertible promissory note (the “Secured Convertible Promissory Note - Shares”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate maximum amount of $2,000,000 from the Sponsor to pay fees and expenses and for other general corporate purposes. Any advances under the Secured Convertible Promissory Note - Shares shall be made at the sole discretion of the Sponsor. The Secured Convertible Promissory Note - Shares matures upon the earlier of (a) the Pre-Closing Satisfaction Date, (b) the date that the winding up of the Company is effective and (c) the one year anniversary of the issuance of the Secured Convertible Promissory Note - Shares. The Secured Convertible Promissory Note - Shares is secured by all of the assets of the Company except for the Trust Account, any funds, monies, or other property on deposit in the Trust Account, or any right, title, interest, or claim in or to any distribution from the Trust Account. The Secured Convertible Promissory Note - Shares does not bear interest. Subject to the prior receipt of stockholder approval, and provided that the Company has not deposited an amount equal to the unpaid principal of the advances outstanding under the Convertible Promissory Note 2 - Shares to an account designated for the benefit of the Sponsor, then upon the occurrence of the Pre-Closing Satisfaction Date, the unpaid principal amount of advances under the Convertible Promissory Note 2- Shares will convert into a number of shares of Class A common stock at a conversion price per share equal to equal to (x) the portion of the principal amount of the promissory note being converted, divided by (y) the average closing price of the Class A Common Stock for the 30 consecutive Trading Days immediately preceding the Pre-Closing Satisfaction Date, rounded up to the nearest whole number. The Convertible Promissory Note 2 – Shares were analyzed under ASC 815 and does meet the scope exception under ASC 815, as such bifurcation was not required. As of June 30, 2023, $500,000 has been borrowed against Secured Convertible Promissory Note - Shares, with $1,500,000 remaining available for borrowings. 

Administrative Service Fee

The Company has agreed to pay its Sponsor, commencing on January 14, 2021, a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Company’s Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three and six months ended June 30, 2023 and 2022, the Company has incurred $30,000 and $60,000, and $30,000 and $60,000 for these services, respectively, of which $90,000 and $0 are recorded on the condensed balance sheets in accounts payable and accrued expenses, respectively.

Initial Measurement — Public Warrants

The estimated fair value of the Public Warrants on January 20, 2021 was determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model were assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company estimated the volatility of its common stock based on management’s understanding of the volatility associated with instruments of other similar entities. Significant increases (decreases) in the expected volatility in isolation would result in a significantly higher (lower) fair value measurement. The risk-free interest rate was based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the warrants. The expected life of the warrants was simulated based on management assumptions regarding the timing and likelihood of completing a business combination. The dividend rate was based on the historical rate, which the Company anticipated to remain at zero. Once the warrants become exercisable, the Company may redeem the outstanding warrants when the price per common stock equals or exceeds $18.00. The assumptions used in calculating the estimated fair values represented the Company’s best estimate. However, inherent uncertainties were involved. If factors or assumptions change, the estimated fair values could be materially different.

Subsequent Measurement — Public Warrants

The Public Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants until December 31, 2022 were classified as Level 1 due to the use of an observable market quote in an active market. At June 30, 2023, the Public Warrants were transferred to a Level 1 from a Level 2 due to sufficient trade volume.

As of June 30, 2023 and December 31, 2022, the aggregate value of Public Warrants was $907,500 and $3,850,000, respectively.

Initial Measurement – Private Placement Warrants

The estimated fair value of the Private Placement Warrants on January 20, 2021 is determined using Level 3 inputs. Inherent in a Monte-Carlo simulation model are assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its common stock based on management’s understanding of the volatility associated with instruments of other similar entities. Significant increases (decreases) in the expected volatility in isolation would result in a significantly higher (lower) fair value measurement. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the expected remaining life of the warrants. The expected life of the warrants is simulated based on management assumptions regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different. 

Subsequent Measurement – Private Placement Warrants

The key inputs into the Monte-Carlo simulation model for the Private Placement Warrants were as follows at June 30, 2023 and December 31, 2022:

The following tables set forth a summary of the changes in the fair value of the warrant liability for the six months ended June 30, 2023 and 2022:

Convertible Working Capital Loan

The fair value of the option to convert the Convertible Working Capital Loan into private warrants was valued utilizing a Monte-Carlo model that values the embedded conversion feature. Inherent in a Monte-Carlo simulation model are assumptions related to expected stock-price volatility (pre-merger and post-merger), expected term, dividend yield and risk-free interest rate. The Company estimates the volatility of its common stock based on management’s understanding of the volatility associated with instruments of other similar entities. Significant increases (decreases) in the expected volatility in isolation would result in a significantly higher (lower) fair value measurement. The risk-free interest rate is based on the U.S. Treasury Constant Maturity similar to the term to conversion. The term to conversion is simulated based on management assumptions regarding the timing and likelihood of completing a business combination. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The assumptions used in calculating the estimated fair values represent the Company’s best estimate. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.

The estimated fair value of the Convertible Working Capital Loan was based on the following significant inputs:

The following tables present the changes in the fair value of the Level 3 Convertible Working Capital Loan during the three and six months ended June 30, 2023 and 2022:

There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the three and six months ended June 30, 2023 and 2022 for the Convertible Working Capital Loan.

The UEI Merger and Share Acquisition Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur (together with the other agreements and transactions contemplated by the UEI Merger and Share Acquisition Agreement, the “Transactions”), following the Reorganization and the Subscription (each as defined below) (collectively, the “UEI Business Combination”):

Prior to the Closing, TRA will effect a reorganization of parts of its business (the “Reorganization”) in accordance with the UEI Merger and Share Acquisition Agreement. Pursuant to the Reorganization, among other matters, UERI will become a direct subsidiary of TRA, TRLEI will become a wholly owned direct subsidiary of UERI, and intercompany receivables (other than ordinary course trade receivables) due from TRLEI to TRA and certain of its affiliates will be contributed to UERI. The parties currently anticipate that the transaction will close prior to the resolution of all tax issues related to the Reorganization, which may result in UERI possessing only contractual rights over the shares of TRLEI for a period of time.

Prior to Closing, but after the redemption of certain shares of the Company, the Company will, as agent acting on behalf of its stockholders, subscribe for UERI common shares of UERI, at a price equal to their par value of 0.05 Philippine pesos, with the cash payment for such American depositary shares being deemed made by and on behalf of the applicable stockholders of the Company (the “Subscription”). In order to fund the cash payment on behalf the applicable stockholders, the Company will, prior to Closing, declare and pay a cash dividend on the shares of common stock of the Company in the amount of 0.05 Philippine pesos per share of common stock of the Company, which amount will either be paid by the Company to UERI in accordance with the Subscription Agreement or paid to holders of the Company’s shares of common stock who elect not to participate in the Subscription (but have not elected to have their shares redeemed by the Company).

The Transactions are subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (a) the absence of any order by a governmental authority of competent jurisdiction preventing the consummation of the Transactions, (b) the approval of the Merger, the Subscription and related matters by the stockholders of the Company, (c) the effectiveness of the registration statement filed by UERI with the SEC in connection with the Transactions, (d) the receipt of approval for listing of UERI’s common shares on NASDAQ, (e) the completion of the Reorganization, (f) the amendment of UERI’s organizational documents in accordance with the UEI Merger and Share Acquisition Agreement, and (g) the dividend to fund the Subscription shall have been declared, or alternative financing for the Subscription arranged.

The UEI Merger and Share Acquisition Agreement may be terminated at any time prior to the Closing (a) by mutual written consent of the parties, (b) by either the Company or the UEI Parties in certain other circumstances set forth in the UEI Merger and Share Acquisition Agreement, including, a breach by the other party or parties of their representations and warranties or covenants that would prevent the satisfaction of certain closing conditions, and (c) by either the Company or the UEI Parties (i) if any governmental authority shall have issued an order preventing consummation of the Transactions, (ii) in the event the Closing does not occur by July 1, 2022, and (iii) stockholders of the Company do not approve the Transactions as outlined in the UEI Merger and Share Acquisition Agreement. On June 28, 2022, the Company and TRA entered into a letter agreement that waived certain termination rights under the UEI Merger and Share Acquisition Agreement until October 1, 2022. On September 29, 2022, the Company and TRA entered into a letter agreement that waived certain termination rights under the UEI Merger and Share Acquisition Agreement until October 1, 2023.

On June 30, 2023, the Company received a notice of purported termination of the UEI Merger and Share Acquisition Agreement (the “Notice”) from the UEI Parties, which notice the Company maintains as baseless.

Refer to Form 8-K filings for more information on the proposed Business Combination.

Legal Proceedings

On February 2, 2023, we commenced the Delaware Action by filing the Complaint in the Delaware Court. Specifically, the Complaint seeks a grant of specific performance ordering the UEI Parties to specifically perform their obligations under the UEI Merger and Share Acquisition Agreement, including using reasonable best efforts to consummate the UEI Business Combination in accordance with the terms of the UEI Merger and Share Acquisition Agreement.

On February 20, 2023, the UEI Parties filed the Answer with affirmative defenses to the Complaint in the Delaware Action. The UEI Parties also asserted several counterclaims against the Company seeking declaratory relief for alleged breaches of the UEI Merger and Share Acquisition Agreement by the Company and recessionary damages. On March 3, 2023, the UEI Parties filed the Amended Counterclaims which, among other things, amends the prayer for relief set forth in the Answer to clarify that the UEI Parties seek an order terminating the UEI Merger and Share Acquisition Agreement. On March 9, 2023, the Company filed a response to the Amended Counterclaims, in which it asserted various affirmative defenses to the Amended Counterclaims. On April 24, 2023, the UEI Parties filed a motion to make additional amendments to their Amended Counterclaims, which amendments were granted by the Delaware Court on May 10, 2023, to add allegations that the Company materially breached section 6.16 of the Merger Agreement through failing to make reasonable best efforts to pursue a PIPE investment and Section 5.5 of the Merger Agreement through material omissions and misstatements in recent public filings, and that Company and the Sponsor fraudulently induced the UEI Parties into the October 15, 2021 Merger Agreement. Also, the Company Amended its Complaint on April 24, 2023 to clarify that it has an alternative claim for damages, in addition to its primary claim for specific performance of the merger agreement. On June 30, 2023, the UEI Parties purported to terminate the merger agreement. A trial was held from July 10-14, 2023, which will resolve the specific performance issue. The parties have filed post-trial briefing and await a decision. If that trial does not fully resolve all of the Parties’ claims, a second 1-2 day trial shall occur in September 2023 to address the alternative damages remedy.

We believe that our causes of action are meritorious, that the UEI Parties are obligated to perform under the UEI Merger and Share Acquisition Agreement until a decision in the Delaware Action is rendered, and that the Delaware Court will ultimately issue an order affirming the same. Further, we believe that we have meritorious defenses to the Amended Counterclaims and we have and will continue to vigorously contest them. Litigation, however, can be uncertain and there can be no assurance that either a judgment for one or more of the UEI Parties or any other outcome in the Delaware Action would not have a material adverse effect on the Company.

The Company’s initial stockholders have agreed not to transfer, assign or sell their founder shares until the earlier to occur of (A) one year after the completion of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the last reported sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for cash, securities or other property.

The shares of Class B common stock will automatically convert into shares of the Company’s Class A common stock at the time of its initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the IPO plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company).

Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, with each share of common stock entitling the holder to one vote.