United States securities and exchange commission logo
April 12, 2024
Kyle Jason Kiser
Chief Executive Officer
CONX Corp.
5701 S. Santa Fe Dr.
Littleton, CO 80120
Re: CONX Corp.
Schedule TO-I
Filed April 1, 2024
File No. 005-92163
Dear Kyle Jason Kiser:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments by providing the requested
information or advise us as
soon as possible when you will respond. If you do not believe our
comments apply to your facts
and circumstances, please tell us why in your response.
After reviewing your
response to these comments, we may have additional comments.
Schedule TO-I filed April 1, 2024
Questions and Answers about the Offer, page 2
1. Please disclose the
sponsor and its affiliates' total potential ownership interest in the
combined company,
assuming exercise and conversion of all securities. This should also
address the
anti-dilutive provision, referenced on page 36. Please quantify the number and
value of securities the
sponsor will receive. In addition, disclose the ownership
percentages in the
company before and after the additional financing to highlight dilution
to public stockholders.
Please provide disclosure assuming varying level of redemptions
by the public
shareholders.
2. Please revise your
disclosure to show the potential impact of redemptions on the per share
value of the shares
owned by non-redeeming shareholders by including a sensitivity
analysis showing a
range of redemption scenarios, including minimum, maximum and
interim redemption
levels.
Kyle Jason Kiser
CONX Corp.
April 12, 2024
Page 2
3. Please disclose all possible sources and the extent of dilution that
shareholders who elect
not to redeem their shares may experience in connection with the
transaction. Provide
disclosure of the impact of each significant source of dilution,
including the amount of
equity held by founders, convertible securities, including warrants
retained by redeeming
shareholders, at each of the redemption levels detailed in your
sensitivity analysis,
including any needed assumptions.
4. Please quantify the value of warrants, based on recent trading prices,
that may be retained
by redeeming shareholders assuming maximum redemptions and identify
any material
resulting risks.
5. Please add disclosure in this section, and elsewhere as needed, that
the equity forward
transaction with Mr. Ergen is required to fund the purchase price of
the Transaction.
What if the conditions of the Offer are not satisfied?, page 3
6. We note your disclosure indicates that if you do not consummate the
transaction by April
29, 2024, you will not be in compliance with the NASDAQ listing
standards. However,
we note on pages 26-27, you indicate that you received notice of
non-compliance with the
minimum market value requirements and that you may be delisted for
that reason. Please
revise the disclosure regarding compliance with Nasdaq listing
requirements in this
section and throughout to clearly reflect the current lack of
compliance with the listing
standards, the listing standards that have or may result in
non-compliance, and whether
you would be able to extend the listing beyond April 29, 2024. In
addition, please clarify
the certain conditions to maintaining the listing through April
29, 2024. Lastly, clarify
whether you expect to meet the listing standards post asset
acquisition, as it does not
appear that this transaction will lead toward your compliance with
this listing standard.
What interests do our directors, executive officers and Sponsor have in the
Transaction?, page 5
7. Please disclose the aggregate dollar amount and describe the nature of
what the sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of securities held, loans extended, fees
due, and out-of-pocket
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company s officers and directors, if
material.
8. We note that the directors may continue with the company
post-Transaction. The
disclosure on page 41 reflects that all executive officers and directors
will remain
following closing of the Transaction. Please clearly identify all
executive officers and
FirstName LastNameKyle Jason Kiser
directors that will remain post Transaction. Please discuss any
compensation or consulting
Comapany NameCONX
arrangements Corp.
or agreements to be entered into post transaction and
quantify these
interests,
April 12, if known.
2024 Page 2
FirstName LastName
Kyle Jason Kiser
FirstName LastNameKyle Jason Kiser
CONX Corp.
Comapany
April NameCONX Corp.
12, 2024
April 312, 2024 Page 3
Page
FirstName LastName
9. Please clarify whether the Sponsor will receive additional securities
pursuant to the anti-
dilution adjustment referenced on page 36 based on the company s
additional financing
activities. If applicable, please quantify the number and value of
securities the sponsor
will receive.
Will there be a concurrent sale of securities?, page 6
10. We note your disclosure on page F-17 regarding the terms of the
preferred shares to be
issued. Please revise to disclose all material terms, including the
lack of voting rights, the
right to receive dividends, the conversion feature and the redemption
rights.
Is there a limit on the total number of shares...?, page 11
11. We note your disclosure on pages 11 and F-9 and Section 9.2(a) of your
Amended and
Restated Articles of Incorporation that the company is not able to
redeem shares if such
redemption would cause the net tangible assets to fall below
$5,000,001. However, on
page 12 and elsewhere, you assume that all of the shares are redeemed
and that the value
of the trust will be $0. Please reconcile such disclosures.
Risk Factors, page 12
12. We note the statement on page 12 that you should consider carefully
all of the risks
described in our Annual Report on Form 10-K for the year ended
December 31, 2023,
filed with the SEC on March 28, 2024, and in the other reports we file
with the SEC
before making a decision whether to tender your shares in the Offer.
We note that you
are only specifically incorporating by reference to the Form 10-K for
the financial
statements in Item 10 of Schedule TO. Please revise to incorporate by
reference the risk
factors section from the relevant reports or remove such statement.
CONX may waive one or more of the conditions to the Transaction., page 13
13. Please revise to clearly disclose the specific risks associated with
the waiver of conditions
to the Transaction.
Deutsche Bank Securities Inc. the underwriter in CONX's Initial Public
Offering, was to be
compensated..., page 20
14. We note your disclosure related to the waiver of the underwriting fee
of Deutsche Bank
Securities Inc. (DBSI) as your underwriter. Please revise to clearly
disclose that DBSI
resigned from its role with respect to the Transaction. Please
describe what relationship
existed between DBSI and your company after the close of the IPO,
including any
financial or merger-related advisory services conducted by DBSI. For
example, clarify
whether DBSI had any role in the identification or evaluation of
business combination
targets and whether DBSI was involved in the preparation of any
disclosure that is
included in this filing, or material underlying disclosure in this
filing. In addition, please
revise the disclosure on page 72 regarding the deferred underwriting
fees. Lastly, please
Kyle Jason Kiser
FirstName LastNameKyle Jason Kiser
CONX Corp.
Comapany
April NameCONX Corp.
12, 2024
April 412, 2024 Page 4
Page
FirstName LastName
provide us supplementally with any correspondence from DBSI regarding
the resignation,
including the letter you received from DBSI dated March 22, 2024.
15. Please provide us with a letter from DBSI stating whether it agrees
with the statements
made in this filing related to their resignation and, if not, stating
the respects in which they
do not agree. Please revise your disclosure accordingly to reflect
that you have discussed
the disclosure with DBSI and it either agrees or does not agree with
the conclusions and
the risks associated with such outcome. If DBSI does not respond,
please revise your
disclosure to indicate you have asked and not received a response and
disclose the risks to
investors.
CONX may redeem the warrants at a time that is not beneficial to warrant
holders, page 21
16. Clearly explain the steps, if any, the company will take to notify all
shareholders,
including beneficial owners, regarding when the warrants become
eligible for redemption.
Unanticipated changes in effective tax rates or adverse outcomes resulting from
examination of
our income or other tax returns ...., page 23
17. When discussing the excise tax, if applicable, please include in your
disclosure that the
excise tax could reduce the trust account funds available to pay
redemptions or that are
available to the combined company following the Transaction. Also
describe, if
applicable, the risk that if existing public investors elect to redeem
their shares such that
their redemptions would subject the company to the stock buyback
excise tax, the
remaining shareholders that did not elect to redeem may economically
bear the impact of
the excise tax.
Information About CONX Following the Transaction, page 40
18. We note your disclosure on page 40 that you anticipate to grow
through acquisition
opportunities and that the Company is currently involved in
ongoing discussions
regarding potential acquisitions with the objective of becoming a
diversified operating
entity focused on the future of communications and connectivity.
Please expand your
disclosure, including to address the timing of any such acquisitions
and whether and how
long the company intends to continue to own the Property. Please also
revise your risk
factor disclosure to address any material risk that you may change
your current business
plan for the company and seek to undertake potential acquisitions with
other operating
entities focused on communications and connectivity. Please similarly
expand your cover
page and summary disclosures.
Background of the Transaction, page 48
19. We note your disclosure that your management has considered other
targets since the IPO.
Please disclose the other targets considered by management for a
potential business
combination, including a description of any letters of intent or
confidentiality agreements
entered into with potential target companies, and explain how the
company ultimately
Kyle Jason Kiser
CONX Corp.
April 12, 2024
Page 5
determined that it would be best to acquire a property instead of
entering into a
combination with another business.
20. Please provide more specificity regarding Mr. Kiser's initial
conversations regarding a
potential acquisition of the property, including how the property was
identified as a
potential acquisition and who identified it as a target. Clearly
disclose when the initial
conversations occurred and the specifics of such conversations.
21. When discussing the various meetings in this section, please clearly
disclose the
individuals present, rather than refer to discussions among the
parties or meetings of the
Transaction Committee. Clearly disclose all meetings involving Mr.
Kiser and Mr. Ergen.
Please discuss in greater detail the negotiations of the terms of the
agreement.
Anticipated Accounting Treatment, page 52
22. We note your disclosure that the purchase of the Property in the
Transaction is intended to
be accounted for as an asset acquisition. In addition, consistent with
the accounting
requirements for transactions among entities under common control, the
Property
will initially be recorded at Seller s historical carrying value.
Please expand your
disclosures to detail the relationship between the Company, Charles
Ergen and EchoStar
Corporation prior to the Transaction that supports the common control
determination for
accounting purposes. Your expanded disclosures should include the
basis for your
conclusion. Reference is made to the guidance outlined within ASC
805-50-15-6.
Unaudited Pro Forma Condensed Financial Information, page 76
23. Please expand your disclosures in your description of adjustment (AA)
to your unaudited
pro forma combined statement of operations to disclose the historical
carrying value and
depreciable life of the property.
24. We note your adjustment (FF) reflects the incremental interest income
at a 5% interest
rate of return generated from the cash held by the Company, after
taking into
consideration the funds received from the issuance of the Company s
Series A Preferred
Stock, payment of the Purchase Price for the Property and other
Transaction related
expenditures. Please tell us how the Company determined the 5%
interest income in
arriving at the pro forma adjustment and tell us the basis in Article
11 of Regulation S-X
that the Company is relying on to include the pro forma impact of
interest income.
25. Notwithstanding our prior comment, please tell us why you continue to
reflect the interest
earned on investments held in the trust account as interest income when
the cash held
within
FirstName the Trust hasJason
LastNameKyle been reclassified.
Kiser Please clarify.
Comapany
26. NameCONX
Please Corp.
expand your disclosure to further describe the calculation of
the combined 24%
tax2024
April 12, rate. Page 5
FirstName LastName
Kyle Jason Kiser
FirstName LastNameKyle Jason Kiser
CONX Corp.
Comapany
April NameCONX Corp.
12, 2024
April 612, 2024 Page 6
Page
FirstName LastName
General
27. Please advise why this tender offer is not subject to Exchange Act
Rule 13e-3. In the
alternative, please file and disseminate a Schedule 13E-3.
28. We note, in your Form S-1, on page 7, you state that if you seek to
enter into a business
combination with an affiliate, you will obtain an opinion from an
independent investment
banking firm or a valuation or appraisal firm. We also note that the
transaction is
conditioned upon the company obtaining such fairness opinion; however,
none has been
obtained to date. Please clarify whether this is a waivable condition.
Please also tell us
how you intend to inform investors about the result of the opinion
that you stated would
be provided. Further, please clarify what reports have been provided
to you by BDO, as
referenced on page 48.
29. We note your charter waives the corporate opportunities doctrine.
Please address this
potential conflict of interest and whether it impacted your search for
an acquisition target.
30. Please add a conflicts of interest section, which should highlight all
material interests in
the transaction held by the sponsor and the company s officers and
directors. This could
include fiduciary or contractual obligations to other entities as well
as any interest in, or
affiliation with, the asset purchase. In addition, please clarify how
the board considered
those conflicts in negotiating and recommending the business
combination.
We remind you that the filing persons are responsible for the accuracy
and adequacy of
their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
Please contact Ameen Hamady at 202-551-3891 or Wilson Lee at
202-551-3468 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Perry Hindin at 202-551-3444 with questions regarding tender offer
rules and
schedules. Please contact Stacie Gorman at 202-551-3585 or Pam Howell at
202-551-3357 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of
Mergers & Acquisitions
cc: Mario Schollmeyer, Esq.