DEFM14A: ShoulderUp Technology Acquisition Corp. Aims to Merge with SEE ID, Inc., Pending Stockholder Approval

ShoulderUp Technology Acquisition Corp. is seeking stockholder approval to merge with SEE ID, Inc., a Nevada corporation specializing in IoT and AI-driven asset tracking and workflow management solutions.

Summary

• ShoulderUp Technology Acquisition Corp. (SUAC) is proposing a business combination with SEE ID, Inc., a company focused on IoT and AI-powered asset tracking.
• The merger will result in SUAC and SEE ID becoming wholly-owned subsidiaries of a new entity, CID HoldCo, Inc. (Holdings).
• SUAC stockholders will exchange their shares for Holdings Common Stock on a 1:1 basis, and warrant holders will receive warrants to purchase Holdings Common Stock at $11.50 per share.
• SEE ID stockholders will receive 13 million shares of Holdings Common Stock, subject to adjustments outlined in the Business Combination Agreement.
• Upon completion, former SUAC stockholders are expected to own approximately 48.58% and former SEE ID securityholders approximately 35.04% of the outstanding Holdings Common Stock, assuming no redemptions.
• The transaction is contingent on various approvals, including stockholder votes and Nasdaq listing of Holdings securities under the symbols DAIC and DAIC.W.
• Public Stockholders have the option to redeem their Public Shares for approximately $10.99 per share based on funds in the Trust Account as of January 10, 2025.

Sentiment

Score: 7

Explanation: The document is generally positive, outlining the benefits of the merger and the potential for growth. However, it also acknowledges risks and uncertainties, preventing a higher score.

Positives

• The merger aims to leverage SEE ID's IoT and AI technology for digital transformation in operations-intensive enterprises.
• Holdings is applying to list its Common Stock and Warrants on the Nasdaq Capital Market, potentially increasing liquidity.
• The Sponsor and directors have agreed to support the Business Combination, indicating confidence in the deal.
• A line of credit between $50 million and $100 million will be secured prior to the Business Combination.

Negatives

• SUAC stockholders face potential dilution upon completion of the Business Combination.
• The Initial Stockholders may experience a positive rate of return on their investment, even if public stockholders experience a negative rate of return.
• The Initial Stockholders may have more of an economic interest for SUAC to enter into an initial business combination on potentially less favorable terms.
• The Initial Stockholders may earn a positive rate of return on their investment even if the Class A Common Stock trades below the price initially paid for the Class A Common Stock in the IPO and public shareholders experience a negative rate of return following the completion of the Business Combination.

Risks

• The Business Combination is subject to stockholder approval and regulatory reviews.
• Redemption rights of Public Stockholders could reduce available cash and impact the capital structure.
• The unaudited pro forma financial information may not be representative of Holdings' actual results.
• The Nasdaq Listing Condition may not be satisfied or that Holdings will be able to comply with the continued listing standards of Nasdaq if it is listed.
• If not listed on the Nasdaq or other national securities exchange, the shares of Holdings Common Stock may become subject to the penny stock rules, and it would become more difficult to trade Holdings shares.
• The announcement of the proposed Business Combination could disrupt SEE IDs business.
• SUAC and SEE IDs directors have interests that are different from, or in addition to (and which may conflict with), the interests of the Public Stockholders.

Future Outlook

Upon completion of the Business Combination, Holdings will become a new public company and SUAC will become a wholly-owned subsidiary of Holdings.

Industry Context

The announcement reflects a trend of special purpose acquisition companies (SPACs) seeking merger targets in the technology sector, particularly those involved in digital transformation and IoT solutions.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does mention that SEE ID helps businesses digitally transform their operations using IoT and AI technology.
• This is a growing trend in many industries, as businesses look for ways to improve efficiency and productivity.
• Some comparable companies in the IoT and AI space include Zebra Technologies, Samsara, and HID Global.

Related Party Transactions

• The document mentions a Sponsor Support Agreement and Stockholder Support Agreement, indicating agreements with related parties to support the Business Combination.
• The document mentions that Sheldon Paul is a board member who is also an investor in SEE ID and the owner of a partner distribution company, Pope Technologies LLC.

Stakeholder Impact

• Shareholders of SUAC and SEE ID will become shareholders of Holdings.
• Employees of SEE ID will likely become employees of Holdings.
• Customers of SEE ID may benefit from the combined resources and capabilities of the merged entity.

Next Steps

• SUAC stockholders will vote on the Business Combination and related proposals at a Special Meeting on February 6, 2025.
• If approved, the Business Combination is expected to close soon after the Special Meeting, pending satisfaction of remaining conditions.
• Holdings will apply to list its Common Stock and Warrants on the Nasdaq Capital Market.

Key Dates

Keywords

Business Combination, Merger, SEE ID, ShoulderUp, Acquisition, Stockholders, Holdings, Redemption, Warrants, IoT, AI