Pono Capital Three, Inc.

Pono Capital Three, Inc.

Nov 10, 2022 by sam.beattie

PROPOSED BUSINESS COMBINATION: Horizon Aircraft Ltd

ENTERPRISE VALUE: $tbd million
ANTICIPATED SYMBOL: tbd

Pono Capital Three, Inc. proposes to combine with Horizon Aircraft Ltd.

Horizon Aircraft is an aerospace engineering company that has developed an eVTOL with the capability to operate similarly to conventional aircraft for the majority of its mission. The company emphasizes safety, performance, and utility in its designs. Their Cavorite X7 eVTOL aims to cater to a diverse range of initial applications.


SUBSEQUENT EVENT – 1/4/24 – LINK

  • On December 27, 2023, Pono signed a Subscription Agreement for a $2,000,000 investment by an investor to purchase 200,000 Class A ordinary shares at $10 each.
    • The capital raised is for the Business Combination, with the sale’s closing contingent on its substantial completion.

TRANSACTION

  • The transaction values Horizon Aircraft at $96 million, which is expected to result in a combined pro forma equity value of approximately $216 million before expenses, assuming no redemptions in the Business Combination.
  • A Forward Purchase Agreement with Meteora Capital will be utilized in this transaction.
  • It is currently expected that the transaction will close in the fourth quarter of 2023 or the first quarter of 2024, assuming such closing conditions are met.

p3 overview


SPAC FUNDING

OTC Prepaid Forward Transaction

  • A Forward Purchase Agreement with Meteora Capital will be utilized in this transaction.
    • Pursuant to the Forward Purchase Agreement, the Seller plans to buy up to 9.9% (“Maximum Amount”) of Pono’s Class A shares.
      • This occurs after the Business Combination’s close, alongside the Closing via the Seller’s FPA Funding Amount PIPE Subscription Agreement.
      • This excludes shares bought separately (“Recycled Shares”).
      • The Seller won’t exceed 9.9% ownership, unless discretion waives this.
      • Forward Purchase Agreement share count reduces upon “Optional Early Termination.”
    • Forward Purchase Agreement requires Seller to pay Counterparty 10.0% of Recycled Shares’ Initial Price.
      • Seller pays half on Prepayment Date, rest on SEC registration or OET Date.
      • Seller can sell Shares anytime, no Early Termination Obligation until sales cover 100% of Prepayment Shortfall.
      • Sale is Shortfall Sale with notice or Optional Early Termination with OET Notice, at Seller’s discretion.
    • Forward Purchase Agreement gives Seller cash (the “Prepayment Amount”).
      • This is (x) Number of Shares from Pricing Date Notice times (ii) Pono’s Initial Price, minus (y) Prepayment Shortfall.
    • Counterparty pays Seller Prepayment Amount from Trust Account, held by Continental Stock Transfer & Trust Company.
      • Payment within (a) one local business day after Closing Date, or (b) Trust Account disbursement for Business Combination.
      • If from Additional Shares per FPA Funding Amount PIPE Subscription Agreement, subtract from proceeds, reducing purchase price.
      • Additional Shares count for Forward Purchase Agreement and Prepayment Amount.
    • Post-Closing, the Reset Price (the “Reset Price”) starts as Initial Price.
      • Bi-weekly reset after 30 days from Business Combination close, to lowest of
        • (a) current Reset Price,
        • (b) Initial Price,
        • (c) VWAP of prior two weeks’ Shares.
      • Reset Price not < $6.00, via Dilutive Offering Reset on Dilutive Offering.
    • Cash Settlement Payment Date: tenth local business day after valuation period ending on Valuation Date (determined by clause (c)).
      • Seller pays Counterparty cash: (1) Number of Shares on Valuation Date * (2) closing price on prior trading day.
    • Otherwise, Seller pays Counterparty: (1) (A) Number of Shares on Valuation Date – Unregistered Shares, * (B) VWAP over Valuation Period – (2) if Settlement Amount Adjustment < to-be-paid cash, use it.
      • Settlement Amount Adjustment = (1) Maximum Number of Shares on Valuation Date * (2) $3.00/share, netted from Settlement Amount. If estimated Adjustment > Settlement Amount, Counterparty pays Seller in Pono Common Shares or cash if previously chosen.
      • If Settlement Amount > Adjustment, net from Settlement Amount; if not, no payment liability.
    • Seller waives Recycled Shares’ redemption rights in Business Combination and under Pono’s Amended and Restated Memorandum.
      • Waiver may cut redeemed Pono Common Shares, altering Business Combination’s perceived strength.
    • Beyond Prepayment Amount, Counterparty tells agent to send Seller an amount on Prepayment Date: (x) 300,000 * (y) Initial Price, for Share Consideration Shares purchase.
      • These won’t count in Number of Shares, and Seller + Share Consideration Shares free from obligations upon Confirmation.

FPA Funding Amount PIPE Subscription Agreements

  • As per FPA Funding Subscription Agreement, Seller subscribes to buy from Pono on Closing Date, $10.00/share, up to Maximum Amount – Recycled Shares from Forward Purchase Agreements.
    • On December 27, 2023, Pono signed a Subscription Agreement for a $2,000,000 investment by an investor to purchase 200,000 Class A ordinary shares at $10 each. – LINK

LOCK-UP

  • Company and Sponsor
    • 6 months following the Closing Date or when the share price equals or exceeds $12.00 for 20/30 trading days at least 150 days after the business combination.

NOTABLE CONDITIONS TO CLOSING

  • After redemptions, the SPAC has at least $5M in net assets.

NOTABLE CONDITIONS TO TERMINATION

  • By either party if the Closing does not occur by February 14, 2024, subject to extension by Pono in connection with an Extension of the time period for it to close a business combination transaction

ADVISORS

  • Company
    • Dorsey & Whitney LLP is serving as U.S. legal counsel.
    • Gowling WLG (Canada) LLP is serving as Canadian legal counsel.
    • Roth Capital Partners is acting as Capital Markets Advisor to Horizon Aircraft.
  • SPAC
    • Nelson Mullins Riley & Scarborough LLP is serving as U.S. legal counsel.
    • Fang and Associates is serving as Canadian legal counsel.
    • EF Hutton LLC is serving as the Capital Markets Advisor in the transaction.

MANAGEMENT & BOARD


Executive Officers

Davin Kazama, 46
Chief Executive Officer and Director

Mr. Kazama is an entrepreneur with a wealth of experience in the fields of finance, real estate development, financial advising, and tax-efficient investment strategies. He is a seasoned professional in raising capital from angel investors and venture capitalists alike. Since 2012, Mr. Kazama has been the Founder and Manager of Driven PV LLC, which develops and manages clean energy systems. In this position, he educates and consults parties on clean energy products and benefits of such products, including tax incentives and business structuring. He also manages relationships with investors and offtakes, oversees maintenance of the company, and performs accounting responsibilities. From 2011 to 2013, Mr. Kazama served as an Advisor to Kai Medical, Inc. In these roles, he was responsible for raising angel and venture capital investment, managing relationships with the investor base, advising investors on tax-efficient strategies, and preparing financial reports. From 2007 to 2010, Mr. Kazama served as Chief Operating Officer (“COO”) of Kai Medical, Inc., an award-winning developer of state-of-the-art medical technology. As the Founder and Manager of Kai Clothing LLC from 2004 to 2009, Mr. Kazama established numerous strategic partnerships with some of Hawaii’s most reputable companies and ultimately negotiated the sale of the company in 2009. Mr. Kazama holds a Bachelor of Business Administration degree from the University of Puget Sound (1998), an Executive Master of Business Administration degree from the University of Hawaii at Manoa (2003), and a Master of Liberal Arts (ALM) in Extension Studies in Finance at Harvard University (2022).


Gary Miyashiro, 54
Chief Financial Officer

Mr. Miyashiro is a skilled Certified Public Accountant (“CPA”) with over 30 years of experience. Since January 2011, Mr. Miyashiro has served as a President at MC Group Hawaii, Inc., Manoa Consulting Group’s successor, where he performs professional services to the public in the areas of assurance, taxation, and accounting. He also served as a Member of Manoa Consulting Group, LLC from November 2002 to December 2010, where Mr. Miyashiro where he performed the same functions. From May 2001 to October 2002, Mr. Miyashiro served as CFO and Treasurer of Island Title Corporation, during which he directed all financial operations and maintained the internal control structure. From March 1999 to April 2001, Mr. Miyashiro then served as Vice President of GE Capital Hawaii, Inc., where he was responsible for planning, organizing, and directing the company’s financial reporting, accounting, and tax operations. From August 1990 to March 1999, Mr. Miyashiro began his career with Grant Thornton LLP where he performed and coordinated financial statement attest services, supervised audits, performed multiple-level consolidations, tax accruals, and presentation of financial statements. Mr. Miyashiro holds a Bachelor of Business Administration degree from the University of Hawaii at Manoa. He is a member of the American Institute of Certified Public Accountants, the Hawaii Association of Public Accountants, the Hawaii Society of Public Accountants, the National Society of Accountants, and the State of Hawaii Board of Public Accountancy.



Board of Directors

Dustin Shindo, 49
Chairman of the Board of Directors

Mr. Shindo is an entrepreneur, executive, technologist, and a seasoned advisor with more than 25 years of industry experience. Mr. Shindo currently serves as the management member of our sponsor. Mr. Shindo also currently serves as Chief Executive Officer of Pono Capital Corp (NASDAQ: PONO) and the managing member of Pono Capital Corp’s sponsor, Mehana Equity LLC. Mr. Shindo has also been retained for a number of consulting positions since July 2014 for companies working in the health care, travel, technology, construction, and non-profit industries through Mehana LLC. Recently, Mr. Shindo started Joynable Corporation, a software company. Mr. Shindo is also the Vice President and director of Perfect Game Hawaii, a non-profit entity supporting baseball. Mr. Shindo served as the Chief Executive Officer and co-founder of Junify Corporation from September 2016 to June 2022, a Company operating in California and Japan to offer zero trust network access software (software defined border) to help companies better secure their cloud resources. From December 2012 to December 2018, Mr. Shindo served as the Chief Executive Officer of Pono Health based in California, Washington, and Hawaii, where he provided consulting, data management, analytics, and software development services. Pono Health was the primary entity of Pono Corporation, founded in December 2012. Mr. Shindo managed healthcare data for individuals in Hawaii and for clinics in Washington, Oregon and Arizona. Mr. Shindo also developed analytics platform used to calculate gaps in care, cost savings, and other health metrics. From March 2001 to March 2010, Mr. Shindo served as the Chief Executive Officer of Hoku Scientific based in Honolulu, Hawaii, where he led the company through an IPO on the NASDAQ Global Market and signed customer contracts totaling USD 2+ billion. From December 1995 to August 1997, Mr. Shindo served as the President of Mehana Brewing Company based in Hilo, Hawaii. In June 1995, Mr. Shindo received his Bachelor of Art’s degree in Accounting/Finance/Marketing at University of Washington based in Seattle, Washington. In May 1999, Mr. Shindo received his Master’s in Business Administration at Darden Graduate School of Business Administration, University of Virginia based in Charlottesville, Virginia. In August 2015, Mr. Shindo completed the SEP program at Stanford Graduate School of Business, Stanford University.


Kotaro Chiba, 48
Independent Director Nominee

Kotaro Chiba has agreed to serve as an independent director. Mr. Chiba currently serves as an Independent Director of Pono Capital Corp (NASDAQ: PONO) and Pono Capital Two, Inc. (NASDAQ: PTWO). Mr. Chiba is also the founder and General Partner of Chiba Dojo Fund, a venture capital based fund in Tokyo focusing its investing on Internet and IOT related start-ups since September 2019. Before launching the Chiba Dojo Fund, Mr. Chiba founded and continues to serve as the General Partner of the Drone Fund since in June 2017. The Drone Fund is a venture capital-based fund in Tokyo focusing its investment on drones and air mobility start-ups. The Drone Fund aims to create a drone and air-mobility enabled society. One of the Drone Fund’s portfolio companies went public on the Tokyo Mothers Market in December 2019—the first drone company to make an IPO in Japan. As an angel investor, Mr. Chiba has invested in more than 60 startups and 40 VC funds in Internet markets and other fields. Mr. Chiba also currently serves as Director of various mobility and technology companies, including: Aeronext since April 2017, A.L.I. Technologies, Inc. since December 2017, Prodrone Co. Ltd. since October 2020, teTra aviation since May 2020, and VFR since October 2021. Prior to that, Mr. Chiba was the co-founder, Executive Vice President and director from January 2009 to July 2016 with COLOPL Inc., which focused on mobile gaming services on smartphone applications as well as VR services and location data analysis consulting services, research service dedicated to smartphones. In 2012, he helped lead the company’s listing on the Tokyo Stock Exchange (Mothers) and then in 2014 led the company to a US$4 billion IPO on the Tokyo Exchange market (first section). Prior to that, Mr. Chiba was the founder and director from January 2000 to March 2007 for K Laboratory Inc. (now KLab Inc.) that develops mobile games and online games. Before joining KLab Inc., Mr. Chiba was a mobile web media planner from April 1997 to December 1999 for Recruit Co. Ltd., which is Japan’s largest recruitment company and provides services such as job advertising, temporary staffing, sales promotion, and IT solution. Since April 2019, Mr. Chiba has been a guest Professor at Keio University, a research-oriented campus located in the city of Fujisawa, Kanagawa Prefecture, Japan where he teaches students to become technology innovators. Mr. Chiba is Keio University, SFC Campus graduate, in March 1997, with a Bachelor of Arts in Environment and Information Studies. He is also the first domestic customer of Honda Jet in Japan and holds a private pilot license (FAA Japan).


Mike Sayama, 68
Independent Director Nominee

Dr. Mike Sayama has agreed to serve as an independent director. Dr. Sayama was formerly the Executive Director of Community First since it was established in July 2016 until January 2021. As the founding executive director, he was responsible for operations, developing a strategic plan for an accountable health community in East Hawaii, community relations, and fund raising. From January 2021 to June 2021 he served as the Director of Strategy to facilitate the transition to a new management team. From October 2013 to December 2018, Dr. Sayama served as a Vice President at Pono Health and was Director of Learning Health Homes, a project where he was responsible for managing the East Hawaii Independent Physicians Association and implementing a data platform integrating health plan, hospital, and physician data. Dr. Sayama also facilitated the reorganization of EHI and development of its strategic direction. Community First, a 501(c) 3 non-profit, which serves as a neutral forum for healthcare stakeholders in East Hawaii, grew out of the Learning Health Homes Initiative. From August 1997 to October 2013, Dr. Sayama served as a Vice President of the Hawaii Medical Service Association, first in Health Benefits Management and then in Customer Relations. In the first position, he streamlined preauthorization and appeal processes, including the elimination of preauthorization for inpatient admissions without increase in inpatient utilization. In his second position he established call centers in Hilo which stabilized the call center work force and improved the timeliness and accuracy of customer service. From April 2001 to April 2005, Dr. Sayama was a Director on the City Bank Board, and from April 2005 to April 2009, was a Director on the Boards of Central Pacific Bank and Central Pacific Financial Corporation. He currently serves on the board of Pono Capital Corp.Regarding education: In May 1975, he received his Bachelor of Arts degree in Psychology from Yale University, and in August 1979, his Master of Arts degree in Clinical Psychology from University of Michigan. In August 1982, Dr. Sayama received his Ph.D. degree in Clinical Psychology from University of Michigan. He is the author of several books on psychotherapy and Zen Buddhism.His community service includes having been a Director on the Bay Clinic Board (the Federally Qualified Health Center in East Hawaii) and currently serving as the Abbot of Chozen-ji, International Zen Dojo.


Trisha Nomura, 43
Independent Director Nominee and Chairwoman of the Audit Committee

Trisha Nomura has agreed to serve as an independent director and Chairwoman of our audit committee. Ms. Nomura currently serves as the CFO of Pono Capital Corp (NASDAQ: PONO) and as an independent director of Pono Capital Two, Inc. (NASDAQ: PTWO). Since July 2018, Ms. Nomura has owned a consulting firm, Ascend Consulting, LLC. Prior to opening her own firm, Ms. Nomura worked in both public accounting and private industry. Ms. Nomura was the Chief Operating Officer of HiHR from July 2015 to December 2016, and the Vice President of Strategic Services from May 2014 to July 2015. Ms. Nomura also served as the Chief People Officer of ProService Hawaii from January 2017 to June 2018. Ms. Nomura began volunteering with the HSCPA since 2010 through the YCPA Squad, has been the Treasurer of Kaneohe Little League since 2013, and is a member of the AICPA, where she was selected to attend the Leadership Academy, has served as an at-large Council member and is now proudly serving on the Association Board of Directors. Ms. Nomura is a CPA, not in public practice, and a CGMA. She is a graduate of Creighton University, where she obtained her Bachelor of Science in Business Administration in accounting, and of the University of Hawaii at Manoa, where she earned her Master of Accountancy degree.