BWAC Better World Acquisition Corporation

Item 1. Business.

Overview

We are a Delaware blank check company incorporated on August 5, 2020, formed for the purpose of effecting an initial business combination. Our efforts to identify a prospective target business are not limited to a particular industry or geographic region although we are focused on target businesses in the healthy living industries that benefit from strong ESG profiles in North America and Europe.

Initial Public Offering

On November 17, 2020, we consummated our IPO of 11,000,000 units. Each unit consists of one share of common stock and one redeemable warrant of the Company, with each whole warrant entitling the holder thereof to purchase one share of Common Stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $110,000,000. 

Simultaneously with the closing of the IPO, we completed the private sale of an aggregate of 4,800,000 private placement warrants to our sponsor and EarlyBirdCapital (3,975,000 private placement warrants to our sponsor and 825,000 to EarlyBirdCapital) at a purchase price of $1.00 per private placement warrant, generating gross proceeds of $4,800,000.

In connection with the IPO, the underwriters were granted a 45-day option from the date of our IPO prospectus to purchase up to 1,650,000 additional units to cover over-allotments, if any. On November 19, 2020, the underwriters purchased an additional 1,618,600 units pursuant to the partial exercise of the Over-Allotment Option, and cancelled the remainder of the Over-Allotment Option. The additional units were sold at an offering price of $10.00 per unit, generating aggregate additional gross proceeds of $16,186,000 to us. In connection with the cancellation of the remainder of the Over-Allotment Option, we cancelled an aggregate of 7,850 shares of common stock issued to the sponsor prior to the IPO. Simultaneously with the consummation of the Over-Allotment Option, we completed the private sale of an additional 485,580 private placement warrants to our sponsor and EarlyBirdCapital (402,121 private placement warrants to our sponsor and 83,459 to EarlyBirdCapital), generating gross proceeds to us of $485,580.

A total of $127,447,860, comprised of $122,162,280 of the proceeds from the IPO and $5,285,580 of the proceeds from the sale of the private placement warrants, was initially deposited in a trust account maintained by Continental, acting as trustee.

We originally had up to 12 months from the closing of our IPO, or until November 17, 2021, to consummate an initial business combination. However, by resolution of our board as requested by our sponsor, we extended the period of time to consummate a business combination two times, each by an additional three months, for a total of up to 18 months, or until May 17, 2022. On May 12, 2022, our stockholders approved the First Charter Extension, which extended the date by which we must consummate our initial business combination from May 17, 2022 to August 17, 2022. On August 15, 2022, our stockholders approved the Second Charter Extension, which extended the date by which we must consummate our initial business combination from August 17, 2022 to February 17, 2023. On February 8, 2023, our stockholders approved the Third Charter Extension, which extended the date by which we must consummate our initial business combination from February 17, 2023 to August 17, 2023. For more information regarding the extensions, see “Effecting an Initial Business Combination” below.

It is the job of our sponsor and management team to complete our initial business combination. Our management team is led by Rosemary L. Ripley, our Chief Executive Officer, and Peter S.H. Grubstein, our Chief Financial Officer. We must complete our initial business combination by August 17, 2023, which is 33 months from the closing of our IPO. If our initial business combination is not consummated by August 17, 2023, then our existence will terminate, and we will distribute all amounts in the trust account.

However, we may further extend the deadline by which we must consummate our initial business combination. Such an extension requires the approval from our public stockholders to amend our charter, and who will be provided the opportunity to at that time to redeem all or a portion of their shares (which would likely have a material adverse effect on the funds held in our trust account and may result in other adverse effects on us, such as our ability to maintain our listing on Nasdaq). Our sponsor may also explore transactions under which it would sell its interest in us to another management team.

Heritage Business Combination

Heritage Business Combination Agreement

On December 9, 2022, the Company announced the execution of the Heritage Business Combination Agreement with Heritage, Pubco, the Merger Subs, our sponsor, in the capacity as the representative for the stockholders of the Company and Pubco (other than the former Heritage stockholders), and the Holder Representative for a proposed business combination among the parties. Pursuant to the Heritage Business Combination Agreement, Pubco changed its name to Heritage Distilling Group, Inc. and will serve as the parent company of each of the Company and Heritage following the consummation of the Heritage Business Combination.

Pursuant to the Heritage Business Combination Agreement, subject to the terms and conditions set forth therein, at the Effective Time (as defined in the Heritage Business Combination Agreement), (i) SPAC Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, and, in connection therewith, (A) each share of the Company’s common stock issued and outstanding immediately prior to the Effective Time will be cancelled in exchange for the right of the holder thereof to receive, with respect to each share of the Company’s common stock that is not redeemed or converted in the redemption in connection with the closing of the Heritage Business Combination, one share of common stock of Pubco (“Pubco Common Stock”) and one CVR (as defined below) (subject to the holders of founder shares and representative shares waiving their right to receive CVRs for such shares pursuant to the CVR Funding and Waiver Letter (as defined below)), and (B) Pubco will assume all of the outstanding warrants of the Company and each such warrant will become a warrant to purchase the same number of shares of Pubco Common Stock at the same exercise price during the same exercise period and otherwise on the same terms as the warrant being assumed; (ii) Heritage Merger Sub will merge with and into Heritage, with Heritage continuing as the surviving entity, and, in connection therewith, (A) the shares of capital stock of Heritage issued and outstanding immediately prior to the Effective Time will be cancelled in exchange for the right of the holders thereof to receive shares of Pubco Common Stock as set forth in the Heritage Business Combination Agreement, (B) holders of certain Heritage unsecured convertible promissory notes will receive shares of Pubco Common Stock separate from the Stockholder Merger Consideration (as defined in the Heritage Business Combination Agreement), (C) Pubco will assume certain Heritage warrants (the “Heritage Financing/Interim Warrants”) and each Heritage Financing/Interim Warrant will become a warrant to purchase shares of Pubco Common Stock, with the number of shares and exercise price thereof equitably adjusted in accordance with the Heritage Business Combination Agreement, (D) certain Heritage warrants (the “Contributed Warrants”) will be contributed to Pubco and exchanged for the right to receive such number of shares of Pubco Common Stock as such holder of a Contributed Warrant would have received pursuant to the Heritage Business Combination Agreement if such Contributed Warrant had been exercised immediately prior to the Effective Time for the number of shares of common stock of Heritage (“Heritage common stock”) set forth in that certain Contribution Agreement, dated December 8, 2022, by and among Heritage and the warrant holders party thereto, (E) each award of restricted stock units based on shares of Heritage common stock granted under the Heritage Distilling Company, Inc. 2018 Stock Incentive Plan and the Heritage Distilling Holding Company, Inc. 2019 Stock Incentive Plan (“Restricted Stock Unit Award”) outstanding immediately prior to the Effective Time, as amended in accordance with the Heritage Business Combination Agreement will be assumed by Pubco, with the number of shares underlying such Restricted Stock Unit Award to be adjusted in accordance with the Heritage Business Combination Agreement and the RSU Award Amendments, and (F) all other Company Convertible Securities (as defined in the Heritage Business Combination Agreement) will be terminated; and (iii) as a result of the Mergers, the Company and Heritage each will become wholly owned subsidiaries of Pubco, and Pubco will become a publicly traded company.

The aggregate merger consideration to be paid pursuant to the Heritage Business Combination Agreement to Heritage Securityholders will be an amount equal to $77,500,000, subject to adjustments for Heritage’s closing debt and certain transaction bonuses, if any (the “Participant Consideration”). The Stockholder Merger Consideration to be payable to the Heritage stockholders will be allocated among the Heritage stockholders pro rata based on the number of shares of Heritage common stock owned by such Heritage stockholder. 

Contingent Value Rights

At the Heritage Closing, each public stockholder that did not redeem their shares of our common stock in connection with the Heritage Transactions will receive one contingent value right (“CVR”) in the SPAC Merger in addition to one share of Pubco Common Stock. At the Heritage Closing, our Sponsor will place 1,000,000 shares of Pubco Common Stock (the “Founder CVR Escrow Shares”), and certain Heritage security holders will place 3,000,000 shares of Pubco Common Stock from the Participant Consideration (less the number of RSU CVR Shares (as defined in the Heritage Business Combination Agreement) attributable to Restricted Stock Unit Awards that also will support the CVRs) (the “Heritage CVR Escrow Shares”) into escrow, for an aggregate of 4,000,000 shares of Pubco Common Stock to support the CVRs, pursuant to a contingent value rights agreement (the “CVR Agreement”) to be entered into prior to the Heritage Closing, by and among the Holder Representative (on behalf of such Heritage security holders), Pubco, our sponsor and Continental, as rights agent.

Upon the date that is 18 months from Heritage Closing (which date may be extended to 24 months following the Heritage Closing at the option of our sponsor), CVR holders will be entitled to receive a number of escrowed shares (and earnings thereon other than ordinary dividends) designed to provide the CVR holders with a simple annual rate of return of 10% on the redemption price for their common stock of the Company based on the price of the Pubco Common Stock as of such 18- or 24-month anniversary and any amounts that they have received with respect to their shares of Pubco Common Stock through such time, including if the stock price drops below the price in the Redemption, but solely to the extent of the escrowed shares and earnings thereon other than ordinary dividends, and up to a maximum of the equivalent of two shares of Pubco Common Stock for each CVR. The number of shares to be released to the CVR holders will be allocated from the Heritage security holders’ and our sponsor’s escrowed shares on a pro-rata basis, and any escrowed shares not released to CVR holders by the end of the CVR term will be released to the contributing Heritage security holders and our sponsor on a pro-rata basis.

Earnout

Certain security holders of Heritage, including holders of Restricted Stock Unit Awards (the “Heritage Earnout Participants”), will have the contingent right to receive to up to an aggregate of 3,000,000 additional shares of Pubco Common Stock (the “Earnout Shares”) as contingent consideration after the Heritage Closing based on Pubco’s net revenue performance for the years 2023, 2024 and 2025 and stock price performance during the three year period following the Heritage Closing (the “Earnout Period”), as follows:

In the event of a Change of Control (as defined in the Heritage Business Combination Agreement) during the Earnout Period, the Heritage Earnout Participants will be entitled to receive all Earnout Shares with respect to the Earnout Year in which such Change of Control is consummated plus all Earnout Shares with respect to each Earnout Year subsequent to the Earnout Year in which the Change of Control was consummated.

At the Heritage Closing, our sponsor will also contribute 500,000 of its founder shares (the “Sponsor Escrow Shares”) into an escrow account (the “Sponsor Escrow Account”), which shares will be released as set forth below based on Pubco’s achievement of the earnout milestones set forth above (with any Sponsor Escrow Shares remaining in escrow at the end of the Earnout Period to be forfeited) (the “Sponsor Earnout”):

In addition, all of the Sponsor Escrow Shares will vest, no longer be subject to forfeiture and be released from the Sponsor Escrow Account to our sponsor upon the first to occur of certain “Triggering Events” described in the Sponsor Earnout Letter.

Heritage Ancillary Documents

Lock-Up Agreements

Simultaneously with the execution and delivery of the Heritage Business Combination Agreement, directors, officers and certain significant security holders of Heritage entered into a lock-up agreement with Pubco, the Company, and Heritage (the “Lock-Up Agreements”). The Heritage Business Combination Agreement includes a closing condition requiring certain additional significant security holders of Heritage to enter into Lock-Up Agreements prior to the Heritage Closing. Pursuant to the Lock-Up Agreements, the Heritage security holders agreed not to, during the period commencing from the Heritage Closing and ending on the 12-month anniversary of the Heritage Closing (subject to early release if Pubco consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party): (i) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any restricted securities, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such restricted securities, or (iii) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (i) or (ii) above is to be settled by delivery of the restricted securities or other securities, in cash or otherwise (in each case, subject to certain limited permitted transfers, provided that the transferred shares will continue to be subject to the Lock-Up Agreement). Notwithstanding the foregoing, 50% of the restricted securities will be released in the event that the closing price of Pubco Common Stock on Nasdaq (or other principal stock exchange or quotation service on which such shares then trade) equals or exceeds $12.50 per share for any 20 out of 30 consecutive trading days.

Voting Agreements

Simultaneously with the execution and delivery of the Heritage Business Combination Agreement, the Company and Heritage entered into voting agreements (collectively, the “Voting Agreements”) with directors, officers and certain Heritage significant security holders required to approve the Heritage Transactions. Under the Voting Agreements, each such Heritage security holder party thereto agreed, among other matters, to vote all of such Heritage security holder’s shares of Heritage in favor of the Heritage Business Combination Agreement and the Heritage Transactions, and to otherwise take (or not take, as applicable) certain other actions in support of the Heritage Business Combination Agreement and the Heritage Transactions and the other matters to be submitted to the Heritage security holders for approval in connection with the Heritage Transactions, in the manner and subject to the conditions set forth in the Voting Agreements, and provide a proxy to Heritage to vote such shares accordingly in the event that such security holder fails to perform or otherwise comply with the covenants, agreements or other obligations set forth in the Voting Agreement. The Voting Agreements prevent transfers of the Heritage shares held by such Heritage security holder party thereto between the date of the Voting Agreement and the date of the Heritage Closing, except for certain permitted transfers where the recipient also agrees to comply with the terms of the Voting Agreement.

Non-Competition Agreements

Simultaneously with the execution and delivery of the Heritage Business Combination Agreement, directors, officers and certain significant Heritage security holders entered into non-competition and non-solicitation agreements (the “Non-Competition Agreements”) in favor of Heritage, the Company and Pubco and their direct and indirect subsidiaries and their respective present and future successors and direct and indirect subsidiaries (“Covered Parties”), to be effective as of the Heritage Closing. Under the Non-Competition Agreements, the signatory thereto agrees not to compete with the Covered Parties during the two-year period following the Heritage Closing and, during such two-year restricted period, not to solicit employees or customers of such entities. The Non-Competition Agreements also contain customary confidentiality and non-disparagement provisions.

Heritage Registration Rights Agreement

At or prior to the Heritage Closing, certain Heritage security holders will enter into a registration rights agreement (the “Heritage Registration Rights Agreement”) with Pubco and the Company, pursuant to which, among other matters, Pubco will agree to undertake certain registration obligations in accordance with the Securities Act and such security holders will be granted customary demand and piggyback registration rights.

Founder Registration Rights Agreement Amendment

At or prior to the Heritage Closing, Pubco, the Company and our sponsor will enter into an amendment to the registration rights agreement (the “Founder Registration Rights Agreement Amendment”) entered into by the Company and our sponsor at the time of the IPO (the “Founder Registration Rights Agreement”). Under the Founder Registration Rights Agreement Amendment, the Founder Registration Rights Agreement will be amended to, among other things, add Pubco as a party and to reflect the issuance of Pubco Common Stock and warrants pursuant to the Heritage Business Combination Agreement, and to reconcile with the provisions of the Heritage Registration Rights Agreement, including making the registration rights of the Heritage security holders and our sponsor pari passu with respect to any underwriting cutbacks.

CVR Agreement

The public stockholders who do not redeem their shares of the Company’s common stock in connection with the Heritage Transactions will receive one CVR in the Heritage Business Combination in addition to one share of Pubco Common Stock. At the Heritage Closing, our sponsor will place the 1,000,000 Founder CVR Escrow Shares and certain Heritage security holders will place 3,000,000 Heritage CVR Escrow Shares (less the number of RSU CVR Shares attributable to Restricted Stock Unit Awards that also will support the CVRs) into escrow, for an aggregate of up to 4,000,000 shares of Pubco Common Stock to support the CVR, pursuant to the CVR Agreement. Upon the date that is 18 months from Heritage Closing (which date may be extended to 24 months following the Heritage Closing at the option of our sponsor), CVR holders will be entitled to receive a number of escrowed shares (and earnings thereon other than ordinary dividends) designed to provide the CVR holders with a simple annual rate of return of 10% on the redemption price for their common stock of the Company based on the price of the Pubco Common Stock as of such 18- or 24-month anniversary and any amounts that they have received with respect to their shares of Pubco Common Stock through such time, including if the stock price drops below the price in the Redemption, but solely to the extent of the escrowed shares and earnings thereon other than ordinary dividends, and up to a maximum of the equivalent of two shares of Pubco Common Stock for each CVR. The number of shares to be released to the CVR holders will be allocated from the Heritage security holders’ and our sponsor’s escrowed shares on a pro-rata basis, and any escrowed shares not released to CVR holders by the end of the CVR term will be released to the contributing Heritage security holders and our sponsor on a pro-rata basis.

CVR Funding and Waiver Letter

Simultaneously with the execution and delivery of the Heritage Business Combination Agreement, our sponsor, EarlyBirdCapital, the Company, Heritage and Pubco entered into a letter agreement (the “CVR Funding and Waiver Letter”), pursuant to which (i) our sponsor agreed at the Heritage Closing to deposit into escrow an aggregate of 1,000,000 Founder CVR Escrow Shares, with such Founder CVR Escrow Shares (together with the Heritage CVR Escrow Shares) to be held in escrow in accordance with the terms and conditions of the Heritage Business Combination Agreement and the CVR Escrow Agreement and the CVR Agreement, and (ii) our sponsor and EarlyBirdCapital have agreed to waive any rights to receive any CVRs for or with respect to their founder shares and representative shares.

Sponsor Earnout Letter

At the Heritage Closing, our sponsor will contribute the 500,000 Sponsor Escrow Shares into the Sponsor Escrow Account. All of the Sponsor Escrow Shares will vest, no longer be subject to forfeiture and be released from the Sponsor Escrow Account to our sponsor upon the first to occur of certain “Triggering Events” described in the sponsor earnout letter agreement to be entered into by and among the Company, Pubco, Heritage and our sponsor prior to the Heritage Closing (the “Sponsor Earnout Letter”).

Other than as specifically discussed, this Report does not assume the closing of the Heritage Business Combination. For more information about the Heritage Business Combination, see the Heritage Registration Statement and the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2022.

Our Company

We believe our management team, together with N*GEN, an affiliate of our sponsor, are well suited to identify businesses that benefit from strong ESG profiles and have the potential to generate attractive risk-adjusted returns for our stockholders.

We are seeking to identify and acquire a business that could benefit from a strategically experienced owner with extensive investment experience in the healthy consumer and smart cities sectors, and that presents potential for an attractive risk-adjusted return profile. The global wellness economy was a $4.4 trillion market in 2020, growing at a compound annual rate of 9.9% through 2025. Personal care, beauty and food products accounted for approximately $1.9 trillion of that total. Globally, organic foods and beverages are expected to grow at a compound annual growth rate of over 14.7% from 2020 to 2027, reaching nearly $500 billion by 2027. Consumers are seeking healthier, cleaner, more sustainable products and ingredients in the U.S. and globally. According to a study by NYU Stern and IRI, products marketed as sustainable drove over 50% of packaged goods market growth across all channels and categories from 2013-2018, despite representing only a 16.6% market share. This growth was over 5.6 times faster than conventional products and accounted for $114 billion in sales in 2018.

In part due to the impacts of Covid-19, U.S. organic food sales grew 13% to a record high in 2020. Due to the pandemic, changes to how people live, eat, and consume that were already underway accelerated dramatically. Incumbent businesses are reacting to address shifts in consumer tastes and the changing landscape. Many of these shifts will continue to change the ways we live and work, reflecting an acceleration of trends in which members of our management team have been investing for over 10 years.

A smarter city makes the lives of its inhabitants safer, more convenient, and more comfortable. According to the 2010 Census, U.S. cities are home to nearly 63% of the population but comprise under 4% of the total land area of the United States. While this density can lead to the cherished dynamism of urban areas, it also creates a myriad of issues like pollution, traffic, disease, and food & energy insecurity. Adoption of green technologies is addressing these problems and forging the city of the future. According to Grand View Research, the global Smart City market reached almost $1.1 trillion in 2021 and is forecasted to grow at a compound annual rate of 24.2% from 2022 to 2030. 

Importantly, economics and cost are propelling the diffusion of these new Smart City technologies. According to the National Renewable Energy Laboratory (“NREL”), costs of utility scale lithium-ion battery storage systems fell 72% from 2015 to 2019 with an additional 42% cost reduction through 2030. Solar energy costs fell 89% from 2009 to 2019, leading to a total installed capacity of 760 gigawatts as of 2020. This is enough to power over 120 million homes.

Our sponsor, BWA Holdings LLC, is an entity owned by members of our management and is affiliated with N*GEN. Rosemary L. Ripley, our CEO, and Peter S.H. Grubstein, our CFO, have worked together at N*GEN since 2007. Shay Murphy joined N*GEN in 2015. Founded in 2001, N*GEN has raised over $500 million in a number of venture capital investment vehicles that it currently manages. Ms. Ripley and Mr. Grubstein are both Managing Members of N*GEN. Ms. Ripley brings years of private equity, strategy and M&A experience in the consumer products industry. Mr. Grubstein has deep operating and investing experience in the manufacturing and distribution businesses and in the sustainability sectors. Both individuals are experienced operating and investment professionals, under whose leadership N*GEN has distinguished itself by being a market innovator and leader in ESG and impact investing and making numerous direct investments in healthier consumer sectors, energy efficiency, urban farming and smart cities, and is known in the industry both for its track record of selecting companies utilizing proprietary research and the value that it adds to its portfolio companies in scaling their growth. As a result, N*GEN has developed deep industry relationships across its sectors.

We believe the reputation and expertise of our management team in the healthy living industry make us a desirable partner for potential business combination targets. The breadth and depth of our investing experience have afforded us with insight on potential candidates in multiple sectors within the healthy living sector.

As growth equity investors, we seek to back world class entrepreneurs and invest in innovative B2B and B2C companies offering differentiated, healthier, and more efficient solutions. We are looking for innovation-driven, growth companies that capitalize on next generation consumer behavior and challenges that we believe will ultimately become the innovation engines of their industries, including those in the next generation consumer, health and wellness, and enabling technologies sectors.

We are especially focusing on sectors being transformed by massive change, which we believe creates enormous opportunities for younger companies to capture market share by utilizing new business models, routes to market and cleaner ingredients. Specifically, the acquisition opportunities we are pursuing include companies in the healthy consumer and smart cities sectors that are working to develop new and creative services and solutions for the next generation consumer. Our management team seeks to collaborate with experienced entrepreneurs and invest in high growth companies to create a healthier, smarter, and cleaner future.

Historically, N*GEN has sourced its transactions using proprietary research and targeted sectors growing faster than the overall economy. N*GEN focuses on differentiated businesses that demonstrate strong, sustainable profitable growth. N*GEN has honed its investment process over the years and leveraged its extensive network of contacts including advisors, senior professionals in select industries, private equity principals, investment bankers, other financial sponsors and owners of private businesses.

Covid-19 has further accelerated changes in how people live and interact with the world, leading people to seek healthier, more connected, and more sustainable lifestyles. We expect our business combination target to be able to take advantage of the current trends toward increased spending on health and wellness as well as smarter homes and work environments. On the commercial side, security, mobility and greater municipal autonomy are fueling growth in local food supply systems, health, infrastructure, communications, and energy security/efficiency programs.

Business Strategy

Our acquisition and value creation strategy is to identify, acquire and build a company in the healthy living/ESG sector that complements the experience of our management team, benefiting from our strategic and operational expertise. After the initial business combination, we may pursue additional acquisitions with a focus on generating attractive risk adjusted returns for our stockholders. We seek to leverage our management team’s network of potential proprietary and public transaction sources where we believe a combination of our relationships, knowledge and experience could effect a positive transformation or augmentation of existing businesses to improve their overall value.

We utilize a research-driven process to generate significant deal flow that we believe is enhanced by the network and industry experience of our management team.

Over the course of their careers, the members of our management team and their affiliates have developed a broad network of contacts and corporate relationships that we believe will serve as a useful source of acquisition opportunities. This network has been developed through our management team’s:

We expect these networks will continue to provide our management team with a robust flow of acquisition opportunities, and supplement our internally derived deal flow. In addition, target business candidates may be brought to our attention from various unaffiliated sources, which may include investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises.

Acquisition Criteria

Consistent with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities, including the Heritage Business Combination, but we may decide to enter into our initial business combination with a target business that only meets some but not all of these criteria and guidelines. We intend to acquire companies that we believe:

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant.

Our Acquisition Process

In evaluating a prospective target business, such as Heritage, we conduct thorough due diligence that encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We utilize our operational and capital allocation experience. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. While Heritage is not an affiliate of our sponsor, officers, or directors, in the event we do not consummate the Heritage Business Combination and seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of view.

Members of our management team and our independent directors indirectly own founder shares and/or private placement warrants and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.

Initial Business Combination

Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.

Corporate Information

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following November 17, 2025, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by nonaffiliates exceeds $700 million as of the prior June 30^th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. 

Competitive Strengths

Alternative Path to Becoming Public

We believe our structure as a public company makes us an attractive business combination partner to prospective target businesses, such as Heritage, that desire to become a publicly listed company. A merger with us will offer a target business an alternative process to a public listing rather than the traditional initial public offering process. We believe that target businesses may favor this alternative, which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering. Furthermore, once a proposed business combination, such as the Heritage Business Combination, is approved by our stockholders and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management. With public company corporate governance standards, a target business may become attractive to the public investors.

Strong and Stable Financial Position with Flexibility.

With funds in the trust account of approximately $31.8 million following the Third Charter Extension, which is available to use for an initial business combination assuming no redemptions (in connection with stockholder votes on either, or both, of the proposal to approve our initial business combination or a proposal to amend our charter to extend the date by which we must consummate our initial business combination), we can offer a target business, such as Heritage, a variety of options such as providing the owners of a target business with shares in a public company and a public means to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. See “Heritage Business Combination” above for more information regarding the consideration in the Heritage Business Combination.

Effecting an Initial Business Combination

We are not presently engaged in, and we will not engage in, any substantive commercial business until we consummate our initial business combination. We will utilize cash derived from the proceeds of our IPO and the sale of the private placement warrants, our capital stock, debt or a combination of these in effecting an initial business combination. An initial business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various federal and state securities laws. In the alternative, we may seek to consummate an initial business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.

We originally had up to 12 months from the closing of our IPO, or until November 17, 2021, to consummate an initial business combination. However, by resolution of our board as requested by our sponsor, we extended the period of time to consummate an initial business combination two times, each by an additional three months, for a total of up to 18 months, or until May 17, 2022. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement entered into between us and Continental, in order for the time available for us to consummate our initial business combination to be extended, our sponsor deposited into the trust account $1,261,860 (or $0.10 per unit, for an aggregate of $2,523,720), for each three month extension.

On November 9, 2021, our board of directors approved the extension of the date by which we have to consummate an initial business combination from November 17, 2021 to February 17, 2022. In connection with the extension, our sponsor deposited into the trust account $0.10 for each of the 12,618,600 shares issued in the IPO, for a total of $1,261,860. We issued to our sponsor the Sponsor Note in the principal amount of $1,261,860. On February 17, 2022, our sponsor deposited an additional $1,261,860 (representing $0.10 per public share) into our trust account. This second deposit allowed us to extend the date by which we have to complete our initial business combination from February 17, 2022 to May 17, 2022. In connection with the deposit, we amended and restated the Sponsor Note to increase the principal amount from $1,262,860 to $2,523,720.

On May 12, 2022, we held a special meeting of stockholders at which our stockholders approved an amendment to our amended and restated certificate of incorporation to extend the date by which we must consummate our initial business combination from May 17, 2022 to August 17, 2022. In connection with the First Charter Extension, on May 17, 2022, we amended and restated the Sponsor Note in its entirety to increase the principal amount thereunder from $2,523,720 to $3,223,720. At the time of the First Charter Extension, we also deposited an additional $500,000 borrowed under the Sponsor Note into the trust account.

On August 15, 2022, we held a special meeting of stockholders at which our stockholders approved a second amendment to our amended and restated certificate of incorporation, as amended, to extend the date by which we must consummate our initial business combination from August 17, 2022 to February 17, 2023. In connection with the Second Charter Extension, on August 17, 2022, we amended and restated the Sponsor Note in its entirety to increase the principal amount thereunder from $3,223,720 to $3,683,720. At the time of the Second Charter Extension, we deposited an additional $360,000 borrowed under the Sponsor Note into the trust account. Commencing on November 17, 2022, we also deposited an additional $120,000 borrowed under the Sponsor Note for each of the three remaining calendar months of the Second Charter Extension.

On December 31, 2022, we amended and restated the Sponsor Note in its entirety to increase the principal amount thereunder from $3,683,720 to $4,323,720. The Sponsor Note is payable by us upon the earlier of the consummation of the initial business combination or our liquidation on or before February 17, 2023. Up to $1,500,000 of loans under the Sponsor Note may be convertible into private placement warrants at a price of $1.00 per private placement warrant at the option of our sponsor.

On February 8, 2023, we held a special meeting of stockholders at which our stockholders approved a third amendment to our amended and restated certificate of incorporation, as amended, to extend the date by which we must consummate our initial business combination from February 17, 2023 to August 17, 2023. At the time of the Third Charter Extension, we deposited $120,000 borrowed under the Additional Extension Note into the trust account. For each additional month of Third Charter Extension needed to consummate an initial business combination, $120,000 borrowed under the Additional Extension Note will be deposited into the trust account. The Additional Extension Note is payable by us upon the earlier of the consummation of the initial business combination or our liquidation on or before August 17, 2023.

For more information regarding the Heritage Business Combination, please see “Heritage Business Combination” above.

Sources of Target Businesses

Our principal means of identifying potential target businesses is through the extensive contacts and relationships of our sponsor, initial stockholders, officers and directors. While our officers and directors are not required to commit any specific amount of time in identifying or performing due diligence on potential target businesses, our officers and directors believe that the relationships they have developed over their careers and their access to our sponsor’s contacts and resources have generated, and will continue to generate, a number of potential business combination opportunities that will warrant further investigation. Target business candidates may be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis, since many of these sources will have read this Report and know what types of businesses we are targeting.

Our officers and directors must present to us all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account at the time of the agreement to enter into the initial business combination, subject to any pre-existing fiduciary or contractual obligations. We may engage the services of professional firms or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our sponsor, initial stockholders, officers, directors or their respective affiliates be paid any compensation prior to, or for any services they render in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is) other than the $10,000 per month administrative fee, the payment of consulting, success or finder fees in connection with the consummation of our initial business combination and reimbursement of any out-of-pocket expenses. Our audit committee reviews and approves all reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates, with any interested director abstaining from such review and approval.

While Heritage is not an affiliate of our sponsor, officers, or directors, in the event we do not consummate the Heritage Business Combination and seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we have no present intention to enter into a business combination with a target business that is affiliated with any of our officers, directors or sponsor. However, we are not restricted from entering into any such transactions and may do so if (i) such transaction is approved by a majority of our disinterested independent directors and (ii) we obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, that the business combination is fair to our unaffiliated stockholders from a financial point of view.

Selection of a Target Business and Structuring of an Initial Business Combination

Subject to our management team’s pre-existing fiduciary obligations and the limitations that a target business have a fair market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination, as described below in more detail, and that we must acquire a controlling interest in the target business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following:

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, including Heritage, we conduct an extensive due diligence review which encompasses, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which is made available to us. This due diligence review is conducted either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third parties.

The time and costs required to select and evaluate a target business and to structure and complete the initial business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete an initial business combination.

Fair Market Value of Target Business

Nasdaq listing rules require that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination. Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% fair market value test.

We currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination where we merge directly with the target business or a newly formed subsidiary or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of trust account balance test.

The fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with our analysis of the fair market value of the target business, as well as the basis for our determinations. If our board of directors is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an investment banking firm as to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.

Lack of Business Diversification

We may seek to effect an initial business combination with more than one target business, although we expect to complete our business combination with just one business. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating an initial business combination with only a single entity, our lack of diversification may:

If we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.

Limited Ability to Evaluate the Target Business’ Management

Although we closely scrutinize the management of a prospective target business, including the management of Heritage, when evaluating the desirability of effecting a business combination with that business and plan to continue to do so if the Heritage Business Combination is not consummated and we seek other initial business combination opportunities, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition, we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following an initial business combination cannot presently be stated with certainty. While it is possible that some of our officers or directors will remain associated with us in some capacity following an initial business combination, including the Heritage Business Combination in which our Chairman and Chief Executive Officer Rosemary L. Ripley is expected to serve as a director of the post-combination company, it is unlikely that they will devote their full-time efforts to our affairs subsequent to an initial business combination. Moreover, they would only be able to remain with us after the consummation of an initial business combination if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the initial business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render to us after the consummation of the business combination. While the personal and financial interests of our key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with us after the consummation of an initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular target business.

Following an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Stockholders May Not Have the Ability to Approve an Initial Business Combination

In connection with any proposed initial business combination, we will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose (as is the case in the Heritage Business Combination) at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) if the Heritage Business Combination is not consummated, provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether we will seek stockholder approval of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. Whether we seek stockholder approval or engage in a tender offer, we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon consummation of such business combination and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination. We have no specified maximum percentage threshold for conversions in our amended and restated certificate of incorporation and even those public stockholders who vote in favor of our initial business combination have the right to convert their public shares. As a result, this may make it easier for us to consummate our initial business combination.

We chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act. However, if we seek to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets immediately prior to or upon consummation and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may therefore have to wait up to 33 months, or until August 17, 2023, from the closing of our IPO in order to be  able to receive a pro rata share of the trust account. We may further extend the deadline by which we must consummate our initial business combination. Such an extension requires the approval of our public stockholders to amend our charter, and who will be provided the opportunity to at that time to redeem all or a portion of their shares (which would likely to have a material adverse effect on the funds held in our trust account and may result in other adverse effects on us, such as our ability to maintain our listing on Nasdaq).

Our sponsor, initial stockholders, officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed initial business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial business combination.

None of our officers, directors, sponsor, initial stockholders or their affiliates has indicated any intention to purchase units or shares of common stock in our IPO or from persons in the open market or in private transactions. However, if we hold a meeting to approve a proposed initial business combination and a significant number of stockholders vote, or indicate an intention to vote, against such proposed initial business combination or that they wish to convert their shares, our officers, directors, sponsor, initial stockholders or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote and reduce the number of conversions. Notwithstanding the foregoing, our officers, directors, sponsor, initial stockholders and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.

Conversion Rights

At any meeting called to approve an initial business combination, including the Heritage Business Combination, public stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, less any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the opportunity to sell their shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid.

Our sponsor, initial stockholders and our officers and directors do not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly, whether acquired prior to our IPO or purchased by them in our IPO or in the aftermarket. Additionally, the holders of the representative shares do not have conversion rights with respect to the representative shares.

We may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either (i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using DWAC System, at the holder’s option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve the initial business combination.

There is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker a nominal amount and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking to exercise conversion rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated this may result in an increased cost to stockholders.

Any proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would have from the time the stockholder received our proxy statement up until the vote on the proposal to approve the initial business combination to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific facts of each transaction. However, as the delivery process can be accomplished by the stockholder, whether or not he is a record holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average investor. However, we cannot assure you of this fact.

Any request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed initial business combination or the expiration of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an election of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).

If the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public holders.

If the Heritage Business Combination is not completed, we may continue to try to complete a business combination with a different target by August 17, 2023.

Liquidation if No Initial Business Combination

Our amended and restated certificate of incorporation, as amended, provides that we have only up to 33 months from the closing of our IPO, or until August 17, 2023, to complete an initial business combination. If we have not completed the Heritage Business Combination or another initial business combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest not previously released to us but net of taxes payable, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Our sponsor, initial stockholders, officers and directors have agreed that they will not propose any amendment to our amended and restated certificate of incorporation that would affect our public stockholders’ ability to convert or sell their shares to us in connection with a business combination as described herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination within up to 33 months from the closing of our IPO, or until August 17, 2023, unless we provide our public stockholders with the opportunity to convert their shares of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest not previously released to us but net of taxes payable, divided by the number of then outstanding public shares. This redemption right will apply in the event of the approval of any such amendment, whether proposed by our sponsor, initial stockholders, executive officers, directors or any other person. 

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public shares in the event we do not complete our initial business combination within the required time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. It is our intention to redeem our public shares as soon as reasonably possible following the 33-month period from the closing of our IPO, or by August 17, 2023, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial business combination within the required time period is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

Because we will not be complying with Section 280 of the DGCL, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.

We are required to seek to have all third parties (including any vendors or other entities we engage after our IPO) and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, Marcum and the underwriters of our IPO will not execute agreements with us waiving such claims to the monies held in the trust account. Furthermore, there is no guarantee that other vendors, service providers and prospective target businesses will execute such agreements. Nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.10 per share by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but we cannot assure you that it will be able to satisfy its indemnification obligations if it is required to do so. We have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we believe it is unlikely that our sponsor will be able to satisfy its indemnification obligations if it is required to do so. Additionally, the agreement our sponsor entered into specifically provides for two exceptions to the indemnity it has given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims for indemnification by the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $10.10 due to claims or potential claims of creditors. 

We anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after the 33-month period from the closing of our IPO and anticipate it will take no more than 10 business days to effectuate such distribution. The holders of the founder shares have waived their rights to participate in any liquidation distribution from the trust account with respect to such shares. There will be no distribution from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our sponsor has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses. 

If we are unable to complete an initial business combination and expend all of the net proceeds of our IPO, other than the proceeds deposited in the trust account, as of the Third Charter Extension the per-share redemption price would be approximately $10.60. As discussed above, the proceeds deposited in the trust account could become subject to claims of our creditors that are in preference to the claims of public stockholders.

Our public stockholders will be entitled to receive funds from the trust account only in the event of our failure to complete an initial business combination within the required time period, if the stockholders seek to have us convert or purchase their respective shares upon an initial business combination that is actually completed by us or upon certain amendments to our amended and restated certificate of incorporation prior to consummating an initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public stockholders at least $10.60 per share. 

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after August 17, 2023, or 33 months from the closing of our IPO, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. 

Amended and Restated Certificate of Incorporation

Our amended and restated certificate of incorporation contains certain requirements and restrictions relating to our IPO that will apply to us until the consummation of our initial business combination. These provisions cannot be amended without the approval of a majority of our stockholders. If we seek to amend any provisions of our amended and restated certificate of incorporation that would affect our public stockholders’ ability to convert or sell their shares to us in connection with an initial business combination as described herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business combination within 33 months from the closing of our IPO, or by August 17, 2023, we will provide dissenting public stockholders with the opportunity to convert their public shares in connection with any such vote. This conversion right will apply in the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or any other person. Our sponsor, officers and directors have agreed to waive any conversion rights with respect to any founder shares and any public shares they may hold in connection with any vote to amend our amended and restated certificate of incorporation. Specifically, our amended and restated certificate of incorporation provides, among other things, that: 

Competition

In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of our IPO, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources.

The following also may not be viewed favorably by certain target businesses:

Any of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately held entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.

If we succeed in effecting an initial business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to an initial business combination, we will have the resources or ability to compete effectively.

Employees

We have three executive officers. These individuals are not obligated to devote any specific number of hours to our matters and devote only as much time as they deem necessary to our affairs. The amount of time they devote in any time period varies based on the stage of the business combination process we are in. Accordingly, once a suitable target business to acquire has been located, such as Heritage, management may spend more time investigating such target business and negotiating and processing the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees prior to the consummation of an initial business combination.

Periodic Reporting and Audited Financial Statements

Our units, common stock and warrants are registered under the Exchange Act, and we have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, this Report contains financial statements audited and reported on by our independent registered public accountants.

We will provide stockholders with audited financial statements of the prospective target business as part of any proxy solicitation materials or tender offer documents sent to stockholders to assist them in assessing the target business. These financial statements will need to be prepared in accordance with or reconciled to GAAP or international financial reporting standards as promulgated by the International Accounting Standards Board. We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have the necessary financial statements. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business.

We are required to evaluate our internal control procedures for the fiscal year ending December 31, 2022, as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.