Business Context and Reporting Period
This Form 8-K was filed by Deep Medicine Acquisition Corp. on July 18, 2022, reporting events dated July 12, 2022. The filing concerns a proposed business combination with Chijet Inc.; it does not contain operating results for TruGolf Holdings, Inc. or a company identified as TruGolf.
Chijet indirectly owns more than 85% of Shandong Baoya New Energy Vehicle Co., Ltd., an electric-vehicle manufacturer, and more than 64% of FAW Jilin Automobile Co., Ltd., a traditional fuel-vehicle manufacturer.
Key Transaction and Financial Terms
- Deep Medicine, Chijet, newly formed Chijet Motor Company, Inc. (“Pubco”), Chijet Motor (USA) Company, Inc. and Chijet’s shareholders entered into a definitive Business Combination Agreement.
- At closing, Deep Medicine and Chijet are expected to become wholly owned subsidiaries of Pubco through a merger and share exchange. Deep Medicine security holders are generally expected to receive economically equivalent Pubco securities.
- Initial transaction valuation is $2.55 billion, subject to adjustment. Exchange consideration is based on 0.851717 multiplied by the valuation, implying initial exchange consideration of approximately $2.172 billion, subject to the agreement’s terms and valuation adjustments.
- Following due diligence, if the revised valuation is at least $2.295 billion, the initial $2.55 billion valuation applies. If it is below that threshold, the parties may renegotiate; absent agreement, Deep Medicine may terminate or proceed using the $2.295 billion minimum valuation.
- Deep Medicine must have at least $5.0 million of net tangible assets at closing after redemptions and financing. Chijet and related parties must also ensure that Deep Medicine has at least $10.0 million of cash and cash equivalents at closing, net of unpaid expenses and liabilities.
- The filing provides no clear revenue, profit, cash-flow, margin, debt, or liquidity figures for Chijet, its subsidiaries, Deep Medicine, or the proposed combined company.
Material Changes Versus the Prior Comparable Period
The filing is a transaction announcement rather than a periodic financial report. It does not provide comparable-period financial statements or quantify changes in revenue, earnings, cash flow, margins, debt, or liquidity.
The material development is the execution of the definitive Business Combination Agreement, replacing the parties’ prior transaction-planning status with a contractual transaction subject to due diligence, stockholder approval, regulatory and listing conditions, financing and redemption outcomes, and other closing requirements.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- The Registration Statement on Form F-4, including the proxy statement/prospectus, had not yet been filed or declared effective as of the filing.
- Closing is subject to stockholder approval, effectiveness of the registration statement, Nasdaq approval, required governmental and antitrust clearances, absence of prohibitory orders or material adverse effects, satisfaction of minimum cash and net tangible asset thresholds, and other customary conditions.
- The agreement may be terminated if closing has not occurred by October 28, 2022, subject to possible extensions of up to six months. Chijet would fund required trust-account extension deposits, up to an aggregate purchase price of $2.6 million, through purchases of interests in Deep Medicine’s sponsor.
- Deep Medicine may terminate during the due diligence period if the revised valuation is below the minimum valuation and the parties do not agree on revised consideration, or if adverse facts or circumstances materially affect Chijet’s business or results.
- Deep Medicine’s sponsor agreed to support the transaction and vote its shares in favor. Sellers holding approximately 78% of Chijet’s capital stock are expected to enter six-month lock-up agreements, with an early release for 50% of covered shares if Pubco’s share price reaches $12.50 for 20 trading days in a 30-day period.
- Chijet agreed to bear up to $500,000 of Deep Medicine’s due-diligence advisory costs.
- Key risks include failure to close, excessive stockholder redemptions, insufficient financing, failure to meet Nasdaq listing standards, challenges in electric-vehicle and traditional-vehicle markets, revenue-recognition or contract risks, early-stage operations, COVID-19 effects, regulatory and legal risks, weak internal controls, competition, and failure to realize projected benefits.
- The filing contains forward-looking statements and expressly cautions investors not to rely on transaction valuation, projected performance, market opportunity, liquidity, or pro forma expectations as assurances of future results.
Most Important Facts for Investors to Verify
- Confirm the correct issuer and transaction target: the provided filing is for Deep Medicine Acquisition Corp. and Chijet, not TruGolf Holdings, Inc.
- Review the complete Business Combination Agreement and subsequent amendments, waivers, termination notices, and closing filings.
- Verify the revised valuation, final exchange consideration, post-transaction ownership, share count, dilution, and redemption levels.
- Confirm whether the $5.0 million net tangible asset and $10.0 million net cash conditions were satisfied.
- Review the Form F-4 and audited financial statements for Chijet, Baoya, FAW Jilin, Pubco, and the pro forma combined company when filed.
- Assess Chijet’s actual revenue, profitability, cash flow, debt, working-capital requirements, vehicle production, sales contracts, regulatory status, and internal controls.
- Confirm whether the transaction closed by the applicable outside date and whether Pubco securities received Nasdaq approval.