The once-hot practice of private companies going public via a reverse merger with a blank check company, commonly known as a SPAC, helped a wave of OC tech companies reach Wall Street between 2019 and 2023, raising hundreds of millions in funding in the process.
Results have been mixed, as the companies did raise hundreds of millions of dollars. Yet, they all faced heavy stock declines, corporate upheavals and other issues in turbulent business times.
The latest example came on Sept. 3, when Indie Semiconductor in Aliso Viejo said salaries of several top executives were significantly cut as the company let go of about 50 employees, according to regulatory filings.
While a SPAC, also known as special-purpose acquisition company, is an easier method to get onto Wall Street than a typical initial public offering, such companies are also known to favor early investors and face more skepticism among large institutional investors.
The Business Journal on this page and 48 examined the outcomes of seven companies that took the SPAC route and noted another two seem hesitant to take the risky plunge.
Allied Esports Entertainment Games Ran out of Time
Allied Esports Entertainment Inc., once an Irvine-based company that ran venues and live events for online gaming enthusiasts, saw major growth possibilities for the competitive side of the industry.
Allied (Nasdaq: AESE) went public in 2019 at around $10 a share, following a reverse merger with Black Ridge Acquisition Corp., a special purpose acquisition company.
It was one of the first such Orange County businesses to use a SPAC vehicle to tap the public markets. Its valuation was around $200 million at the time the reverse merger was announced.
By 2022, The company’s shares had fallen to around $1.73. The long-term effects of the pandemic caught up with the company, which relied in large part on gamers getting together in groups.
The company saw a period of corporate unrest and a series of executive changes, including a headquarters move to New York.
CEO Frank Ng, who headed the company when it went public, resigned in 2021. His successor, Libing (Claire) Wu, announced her departure a few months later in 2022. That year, it announced strategic review and changed its name to Allied Gaming & Entertainment Inc. (Nasdaq: AGAE).
In August, the company, which now resides in New York, announced second quarter revenue climbed 11% to $2.6 million as it reported an adjusted loss of $1.7 million. The company said it has $95.2 million in cash and restricted cash. Its current CEO is Yinghua Chen.
It traded at $1.34 and a $50.4 million market cap.
EON Reality: Not all Planned SPACs Go Through
EON Reality in Irvine abandoned plans for a public listing last November 2023, blaming the financial environment at the time.
The 25-year-old SaaS company takes users deep into the realms of extended reality.
It is the creator of what it calls the Knowledge Metaverse and whose augmented reality and virtual reality software is used by customers in a variety of educational and business applications.
The SPAC deal had been planned with Florida-based Arogo Capital Acquisition
Corp. (Nasdaq: AOGO) and had targeted a new management once the shares were publicly traded.
Homebuying App SPAC Deal May Be in Limbo
Real Messenger, a mobile app creator linking real estate agents, buyers and sellers with AI-driven data around the world, has said it plans to go for public trading on the Nasdaq. Real Messenger is looking for a combination with a special purpose acquisition company (SPAC), called Nova Vision Acquisition Corp. (Nasdaq: NOVV), and based in Singapore.
Costa Mesa-based Real says it intends to connect the global real estate community and scale its reach and business across the globe, under the direction of co-founder and CEO Thomas Ma.
The merger completion date reportedly had been pushed back to July 31.
“Real Messenger to become a publicly traded company on Nasdaq via Combination with Nova Vision Acquisition Corp.,” Real Messenger said on its website as of Sept. 3.
No date was specified
