8-K: Fortune Rise Acquisition Corporation Secures One-Month Extension with $100,000 Promissory Note

Fortune Rise Acquisition Corporation received a $100,000 loan from Water On Demand, Inc. to extend its deadline for completing a business combination by one month.

Summary

• Fortune Rise Acquisition Corporation (FRLA) has secured a one-month extension to complete its initial business combination, pushing the deadline to May 5, 2024.
• This extension was funded by a $100,000 deposit into the company's trust account by Water On Demand, Inc., a subsidiary of OriginClear, Inc. and the owner of FRLA's sponsor.
• The $100,000 was provided as a non-interest bearing loan, documented by a promissory note, which is repayable upon the earlier of the consummation of a business combination or the liquidation of FRLA.
• The promissory note can be converted into private shares of Class A common stock at a conversion price of $10.00 per share.
• This is the sixth of twelve possible one-month extensions available to FRLA under its governing documents.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the extension indicates a delay, it also provides more time to find a suitable target. The non-interest bearing loan is a positive, but the potential for liquidation is a concern.

Positives

• The one-month extension provides FRLA with additional time to pursue a business combination.
• The funding increases the pro rata portion of funds available in the trust account by $0.032 per share.
• The loan is non-interest bearing, reducing the financial burden on FRLA.

Negatives

• The need for an extension suggests that FRLA has not yet secured a suitable business combination target.
• The loan is repayable upon liquidation, which could be a negative outcome for the company.

Risks

• FRLA may not be able to complete a business combination within the extended timeframe.
• If a business combination is not completed, the company may be liquidated.
• The conversion of the note into shares could dilute existing shareholders.

Future Outlook

Fortune Rise Acquisition Corporation is focused on completing its initial business combination and is using the extension to advance these efforts. The company remains committed to building a technology company and generating shareholder value.

Management Comments

• Ryan Spick, CFO of FRLA, stated, 'OriginClears subsidiary, Water On Demand, Inc., which owns the Sponsor, has made the required deposit for the benefit of the stockholders of Fortune Rise Acquisition Corporation which provides a one-month extension to complete our initial business combination.'
• Ryan Spick also mentioned, 'These funds provide for an additional one-month extension which gives us additional time to advance our business combination efforts. Once the business combination is complete, we remain committed to building the next great technology company and generating significant shareholder value.'

Industry Context

This announcement is typical for SPACs (Special Purpose Acquisition Companies) that are nearing their deadline to complete a business combination. The extension and funding mechanism are common practices to allow more time to find a suitable target.

Comparison to Industry Standards

• The use of a promissory note for an extension is a standard practice in the SPAC industry.
• The one-month extension is within the typical range of extensions granted to SPACs.
• The conversion price of $10.00 per share is a common benchmark for SPAC transactions.
• Other SPACs such as Churchill Capital Corp IV and Social Capital Hedosophia Holdings Corp V have also used similar extension mechanisms when facing deadlines.

Related Party Transactions

• The promissory note was issued to Water On Demand, Inc., which is an affiliate of the company's sponsor.

Stakeholder Impact

• Shareholders benefit from the increased time to complete a business combination and the increased pro rata value of the trust account.
• The company's sponsor, Water On Demand, Inc., is providing financial support to extend the deadline.
• Potential business combination targets may be impacted by the extended timeline.

Next Steps

• Fortune Rise Acquisition Corporation will continue to search for a suitable business combination target.
• The company will work towards completing the business combination by the new deadline of May 5, 2024.

Key Dates

Keywords

business combination, SPAC, promissory note, extension, trust account, Water On Demand, Fortune Rise Acquisition Corporation, liquidation, conversion, loan