ChampionsGate Acquisition Corp Commitments Disclosure
Note 6 — Commitments and Contingencies
Underwriter Registration Rights
The holders of the insider shares, Private Placement Units (including securities contained therein) and Units (including securities contained therein) that may be issued on conversion of Working Capital Loans or extension loans will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the IPO requiring the Company to register such securities for resale. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of the Company’s initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriter of the IPO a 45-day option to purchase up to an additional 975,000 Units solely to cover over-allotments, if any. The underwriters exercised the over-allotment option.
The underwriter was paid a cash underwriting discount of $0.10 per Unit, or $747,500 at the closing of the IPO. In addition, the Company issued 112,125 Class A ordinary shares to the underwriter at the closing of the IPO.
In conjunction with the IPO, the Company issued to the underwriter 112,125 Class A ordinary shares for no consideration. The fair value of the Representative Shares accounted for as compensation under ASC 718 is included in the offering costs. The estimated fair value of the Representative Shares as of the IPO date totaled $293,020, or $2.61 per share.
Additionally, the underwriter will be entitled to a cash underwriting discount of $0.20 per Unit to be paid in cash, or $1,495,000 for deferred underwriting commissions to be paid upon the completion of initial Business Combination. If the Company does not complete its initial Business Combination and subsequently liquidate, the trustee and underwriter has agreed that (i) it will forfeit any rights or claims to its deferred underwriting discounts and commissions then in the trust account upon liquidation, and (ii) the deferred underwriters’ discounts and commissions will be distributed on a pro rata basis, including interest earned on the funds held in the trust account and not previously released to the Company to pay its taxes or for working capital purposes (less up to $100,000 of interest to pay dissolution expenses).
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.