Item 1. Business.
Overview
We are a blank check company
incorporated as a Delaware corporation and formed for the purpose of effecting an initial business combination. Since our initial public
offering, we have focused our search for an initial business combination on businesses that may provide significant opportunities for
attractive investor returns. While we may pursue an initial business combination target in any stage of its corporate evolution or in
any industry or sector, since our initial public offering, we have primarily focused our search on companies in technology and financial
sectors with an enterprise value of approximately $250 million to $750 million, although we may find a deal below or above that
range, including but not limited to firms with a nexus to Japan. Our management team has had significant success sourcing, acquiring,
growing and monetizing these types of companies. We believe this experience makes us well suited to identify, source, negotiate and execute
an initial business combination with the ultimate goal of pursuing attractive risk-adjusted returns for our shareholders.
Initial Public Offering
On February 11, 2021, we consummated
our initial public offering of 12,500,500 units. Each unit consists of one share of Class A common stock and one-half of one redeemable
warrant of the Company, with each warrant entitling the holder thereof to purchase one share of Class A Common Stock for $11.50 per whole
share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $125,005,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 4,250,100 private placement warrants to our sponsor at
a purchase price of $1.00 per private placement warrant, generating gross proceeds of $4,250,100. The issuance of the private placement
warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
A total of $125,005,000, comprised
of $122,504,900 of the proceeds from the initial public offering and $2,500,100 of the proceeds of the sale of the private placement warrants
was placed in the trust account maintained by Continental, acting as trustee.
We must complete our initial
business combination by February 11, 2023, 24 months from the closing of our initial public offering. If our initial business combination
is not consummated by February 11, 2023, then our existence will terminate, and we will distribute all amounts in the trust account.
Business Strategy
Our management team is led
by Michael L. Lerch (our Chairman) and Richard Chisholm (our Chief Executive Officer), who have worked together for over 15 years and
hold, respectively, the Chief Investment Officer and Chief Executive Officer positions at Evolution Capital Management LLC (“ECM”),
a U.S. based investment manager that is a member of the Evolution Financial Group (“Evolution”). Evolution operates an integrated
group of global financial services businesses.
Our business strategy has been
and will continue to be to leverage the management team’s and Evolution’s investment program to identify and complete our
initial business combination with a company that has compelling potential for value creation for shareholders. Key elements of the investment
program include:
Long Track Record of Senior
Leadership Supported by a Proven Organization. The management team and Evolution have led successful investments
in both US and non-US public and private companies across a broad range of sectors including, but not limited to technology, finance,
and real estate. We believe that combining the management team’s expertise with support from Evolution is a key differentiator for
the identification, structuring, and execution of the initial business combination.
Dynamic Sourcing Network
and Leading Industry Relationships. In finding a suitable target company, the management team has utilized
and will continue to utilize the in-house sourcing professionals of Evolution as well as an expansive network of well-established external
relationships with agents, advisors, and investment banks. We believe this approach provides us with a significant and unique pipeline
of opportunities.
Significant Investing Experience. We
believe the management team’s and Evolution’s extensive track record of profitable investments fits well with the goal of
identifying an attractive target for our initial business combination. We believe that our management team’s and Evolution’s
patient and disciplined approach that seeks to create value through aligning stakeholders allows us to quickly effect a value-enhancing acquisition.
Management Practices. The
management team and Evolution aim to promote sustainable corporate growth, increase of corporate value, and enhance earnings power and
capital efficiency. The management team and Evolution will align with and support the broad direction of corporate strategy of the combined
business and will establish an environment where appropriate risk-taking by the senior management is supported. We believe that our
management emphasis on stakeholder alignment and disciplined risk taking will drive shareholder value and benefit not only management
but also employees, customers, business partners, creditors and the communities in which we operate.
Execution and Structuring
Capability. The management team and Evolution have substantial experience in executing transactions across
expansionary and recessionary market cycles utilizing a variety of transaction structures that we believe will help us to minimize risk
and to position potential business combination target for success. Furthermore, the management team and Evolution have extensive experience
negotiating and executing transaction documentation which will prove invaluable in consummating the initial business combination. We believe
that the management team’s and Evolution’s combined expertise and reputation make us well situated to source, evaluate, structure
and complete a successful initial business combination.
Business Combination Criteria
Our business combination criteria
are not limited to a particular industry or geographic sector, however, given the experience of our management team and board, since our
initial public offering, we have primarily focused our search on companies in the technology and financial sectors with an enterprise
value of approximately $250 million to $750 million, although we may find a deal below or above that range, including but not
limited to firms with a nexus to Japan.
We have identified the following
general criteria and guidelines that we believe are consistent with our acquisition philosophy and our management’s experience,
and that we believe are important in evaluating prospective business combination opportunities. We have used and will continue to use
these criteria and guidelines to evaluate business combination opportunities, but we may decide to consummate our initial business combination
with a target business that does not meet one or more of these criteria and guidelines.
| ● | Strong
management. We are seeking companies with strong management teams already in place. We will spend significant
time understanding a company’s leadership and culture and align our executive team in a complimentary manner; |
| ● | Benefit
from Capital Markets. We are seeking companies with a management team that has the ambition to
take advantage of the improved liquidity and additional capital that can come from a successful listing in the United States. The access
to the capital markets could allow the company’s business to accelerate its growth and build its capital profile; |
| ● | Sourced
Through our Proprietary Channels. We are not participating in broadly marketed processes, but rather
aim to leverage our extensive network to source our business combination; |
| ● | Favourable
Industry Outlook. We are seeking to identify companies with a target business where the end user
markets of such target business’ products or services have a promising growth outlook; |
| ● | Middle-Market Businesses. We
are seeking companies with a total enterprise value between $250 million to $750 million, although we may find a deal below or above
that range. We believe there are a considerable number of potential target businesses within this valuation range that can benefit from
new capital for scalable operations to generate substantial revenue and earnings growth; |
| ● | Defensible
business niche. We are seeking to identify companies that have a leading or niche market position
and that demonstrate advantages when compared to their competitors, which may help to create barriers to entry against new competitors.
We anticipate that these barriers to entry will enhance the ability of these businesses or assets to generate strong returns; |
| ● | Evolution’s
Ability to Add Value. We are seeking companies that operate within Evolution’s or our operating
partners’ areas of expertise, and for whom Evolution may provide capital structure solutions, through either capital infusions,
creative and/or unique structures or recapitalizations in order to optimize the company’s balance sheet and increase equity value; |
| ● | Performance
Catalysts. We are seeking to identify companies that have clearly identifiable opportunities to
execute on growth initiatives following the initial business combination; |
| ● | Lower
valuation relative to publicly traded peers. We are seeking companies that are valued in the private
market significantly lower than their publicly traded peers. We believe that this valuation differential will facilitate the initial
business combination negotiation by allowing the opportunity for liquidity and multiple expansion for the targets’ current shareholders,
while at the same time allowing meaningful upside for our stockholders post-business combination; and |
| ● | Benefit
from Being a Public Company. We are seeking companies that can inherently benefit from a public
listing in the United States. These inherent benefits include acquisition currency, greater visibility and branding among customers,
enhanced access to debt and equity capital markets, and potential access to the world’s largest investors. |
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 team may deem relevant. In the event
that we find an opportunity that has characteristics more compelling to us than the characteristics described above, we would pursue such
opportunity.
Competitive Strengths
The sourcing, valuation, diligence
and execution capabilities of Messrs. Lerch and Chisholm, and Evolution, provide us with a significant pipeline of opportunities from
which to evaluate and select a business that will benefit from our expertise. We may also have the benefit of using our sponsor as our
lead financial advisor on our business combinations and other transactions. Our competitive strengths include the following:
| ● | Strong
Management Team and Sponsorship. We are leveraging the extensive experience of our management team and
Evolution’s investment team in sourcing and structuring acquisitions, financings and advisory transactions across a variety of
economic cycles. We believe Evolution’s investment team’s ability to self-originate, effectively diligence, and thoughtfully
structure transactions enable us to identify high quality businesses with great potential. We believe we benefit from the long tenure
and experience of our management team and Evolution’s investment team’s track record in investment banking, corporate finance,
and investment management. |
| ● | Proprietary
Sourcing Channels and Leading Industry Relationships. We believe the capabilities and connections associated
with our management team, in combination with those of Evolution, provide us with a differentiated pipeline of acquisition opportunities
that would be difficult for other participants in the market to replicate. These sourcing capabilities are further bolstered by our management
team and Evolution’s reputation and deep industry relationships. |
| ● | Investing
Experience. We believe our management’s deep experience investing in private and public markets,
combined with the Evolution’s track record of identifying and sourcing transactions positions us well to appropriately evaluate
potential business combinations and to select one that will be well received by the public markets. |
| ● | Execution
and Structuring Capability. We believe that the expertise of our management team and Evolution’s
resources will allow us to identify, structure and complete a business combination that will present an attractive investment thesis
for the public markets. These types of transactions are typically complex and require creativity, industry knowledge, expertise, rigorous
due diligence, and extensive negotiation and documentation. We believe that by focusing our investment activities on these types of transactions,
we will identify investment opportunities that have attractive risk/reward profiles based on their valuations and structural characteristics. |
| ● | Expertise
in Regulated Industries. Many of the potential acquisition targets we consider may operate within a closely
regulated industry. We believe that the experience of our management team and Evolution with closely regulated financial industries is
advantageous when evaluating certain acquisition targets. |
| ● | Status
as a Public Company. We believe our structure makes us an attractive business combination partner to prospective
target businesses. As an existing public company, we offer a target business an alternative to the traditional initial public offering
through a merger or other business combination with us. In this situation, the owners of the target business would exchange their shares
of stock, shares or other equity interests in the target business for our shares. Once public, we believe the target business would have
greater access to capital, an elevated profile among potential new customers and vendors, and additional means to attract and retain
talented employees. |
Our Acquisition, Investment and Post-Closing
Process
In evaluating prospective business
combinations, we conduct a thorough due diligence review process that encompasses, among other things: an analysis of overall industry
and competitive conditions, a review of historical financial and operating data, meetings with incumbent management and employees, interaction
with third-parties who are industry experts, on-site inspection of facilities and assets, discussion with customers and suppliers,
legal and other reviews as we deem appropriate. We utilize the expertise of our management team and our sponsor’s and its affiliates’
resources in analyzing and evaluating operating plans, financial projections and determining the appropriate return expectations given
the risk profile of the target business as well as the suitability of the target to become a public company.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors, subject to certain
approvals and consents. In the event we 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 firm that commonly renders fairness opinions that our initial business combination is fair to us from a financial
point of view.
Our Business Combination Process
Members of our management team
directly and indirectly own our founder shares, common stock and/or private placement warrants following our initial public offering,
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 were to be
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 believe, however, that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our
ability to complete our initial business combination, as we believe any such opportunities presented would be smaller than what we are
interested in, in different fields than what we would be interested in, or to entities that are not themselves in the business of engaging
in business combinations. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without
violating another legal obligation.
Our officers and directors
may become an officer or director of another special purpose acquisition company with a class of securities intended to be registered
under the Exchange Act even before we have entered into a definitive agreement regarding our initial business combination.
Our Management Team
Members of our management team
are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary to
our affairs and will continue to do so until we have completed our initial business combination. The amount of time that any member of
our management team devotes in any time period will vary based on whether a target business has been selected for our initial business
combination and the current stage of the business combination process. We believe our management team’s operating and transaction
experience and relationships with companies provide us with a substantial number of potential business combination targets. Over the course
of their careers, the members of our management team have developed a broad network of contacts and corporate relationships in many industries.
This network has grown through the activities of our management team sourcing, acquiring and financing businesses, our management team’s
relationships with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
Status as a Public Company
We believe our structure make
us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative to
the traditional initial public offering through a merger or other business combination with us. Following an initial business combination,
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 target business can further benefit by augmenting its
profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction with
us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A
common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock and cash, allowing us
to tailor the consideration to the specific needs of the sellers.
Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and
cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering process
takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses
in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not
be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial business combination is completed, 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, which could delay
or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure
and our management team’s backgrounds will make us an attractive business partner, some potential target businesses may view our
status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed
initial business combination, negatively.
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 independent registered public accounting firm attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our
periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following February 11, 2026, the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion,
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that
is held by non-affiliates exceeds $700 million as of the prior June 30th, 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.
Additionally, we are
a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We
will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million
as of the prior June 30th.
Financial Position
With funds available for an
initial business combination initially in the amount of approximately $120,629,825, assuming no redemptions and after payment of $4,375,175
of deferred underwriting fees, we offer a target business a variety of options such as creating a liquidity event for its owners, providing
capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio.
Because we are able to complete 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 allows us to tailor the consideration to be paid to the target business
to fit its needs and desires.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial public offering. We intend to effectuate our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants, the
proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop
agreements which we may enter into following the consummation of our initial public offering or otherwise), shares issued to the owners
of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete
our initial business combination with a company or business that may be financially unstable or in its early stages of development or
growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination
is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital. We may seek to raise additional funds through a private offering
of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial
business combination using the proceeds of such offering rather than using the amounts raised in our initial public offering and held
in the trust account. In addition, we may target businesses larger than we could acquire with the net proceeds of our initial public offering
and the sale of the private placement warrants, and may as a result be required to seek additional financing to complete such proposed
initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously
with the completion of our initial business combination. In the case of an initial business combination funded with assets other than
the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination would disclose the
terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on
our ability to raise funds privately or through loans in connection with our initial business combination.
Sources of Target Businesses
Target business candidates
are brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses
are brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources introduce
us to target businesses in which they think we may be interested 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, as well as our sponsor and their affiliates, also
bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we receive a number of proprietary
deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers
and directors and our sponsor and their respective industry and business contacts as well as their affiliates. We may engage the services
of professional firms or other individuals that specialize in business acquisitions on any formal basis, in which event we may pay a finder’s
fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the
transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to
us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management
determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which
case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing
officers or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement,
consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services
rendered for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type
of transaction that it is). Although none of our sponsor, executive officers or directors, or any of their respective affiliates, will
be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combination target in connection
with a contemplated initial business combination, we do not have a policy that prohibits our sponsor, executive officers or directors,
or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. We
pay our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support and to reimburse our
sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination. Some
of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our
initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an initial business combination candidate.
We are not prohibited from
pursuing an initial business combination with an initial business combination target that is affiliated with our sponsor, officers or
directors or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event that we complete our initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or from another independent entity that commonly renders valuation opinions that such an initial business combination is
fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Potential target companies
may have had prior discussions with other blank check companies, bankers in the industry and/or other professional advisors including
blank check companies with which our executive officers or board of directors were affiliated. We may pursue transactions with such potential
targets (i) if such other blank check companies are no longer pursuing transactions with such potential targets, (ii) if we
become aware that such potential targets are interested in a potential initial business combination with us and (iii) if we believe
such transactions would be attractive to our stockholders. If any of our officers or directors becomes aware of an initial business combination
opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations,
he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination
opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take
priority over their duties to us.
Selection of a Target Business and Structuring
of our Initial Business Combination
Nasdaq rules require that we
must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held
in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at
the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of our initial
business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial
community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation
based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently
determine the fair market value of our initial business combination, 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. While we
consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our
initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target
or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to
Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We do not intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management
will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will
not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
We anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which
our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or
(ii) in such a way so that the post-transaction company owns or acquires 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. However, we will only complete an initial
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 initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination. 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
would 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
taken into account for purposes of Nasdaq’s 80% fair market value test. If the initial business combination involves more than one
target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat the
target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as
applicable.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of
time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. In addition, we are focusing our search for an initial business combination in a single industry. By completing
our initial business combination with only a single entity, our lack of diversification may:
| ● | subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination, and |
| ● | cause
us to depend on the marketing and sale of a single product or limited number of products or services. |
Limited Ability to Evaluate the Target’s
Management Team
Although we closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business’ management may not prove to be correct. In addition, the future management may
not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our
management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of
the members of our management team will remain with the combined company will be made at the time of our initial business combination.
While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.
Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations
of the particular target business.
We cannot assure you that any
of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
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 additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve
Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval
is currently required under Delaware law for each such transaction.
Type of Transaction |
|
Whether
Stockholder
Approval is
Required |
Purchase of assets |
|
No |
Purchase of stock of target not involving a merger with the company |
|
No |
Merger of target into a subsidiary of the company |
|
No |
Merger of the company with a target |
|
Yes |
Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
| ● | we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common
stock then outstanding; |
| ● | any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively
have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or |
| ● | the
issuance or potential issuance of common stock will result in our undergoing a change of control. |
Permitted Purchases of our Securities
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase shares or public
warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may
purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they
engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not
disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that
such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant
to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None
of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of
our initial business combination.
The purpose of any such purchases
of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement
would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been
possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock or warrants
may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain
the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors
and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted
by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor,
officers, directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling
stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial
business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination.
Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under
the Exchange Act and the other federal securities laws.
Any purchases by our sponsor,
officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only
be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for
manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their
affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the
Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such
purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon
Completion of our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as
of two business days prior to the consummation of the initial business combination including interest earned on the funds held in the
trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to
the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public share.
The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting
commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify
itself in order to validly redeem its shares. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection
with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) by
means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination or conduct
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 require us to seek stockholder approval under the law or stock exchange listing requirement.
Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial business combination
with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder
vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant to the tender
offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder
approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required
to comply with such rules.
If a stockholder vote is not
required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
| ● | conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
| ● | file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. |
Upon the public announcement
of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to
comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, we will not redeem any public shares unless our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval
of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and |
| ● | file
proxy materials with the SEC. |
In the event that we seek stockholder
approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of
outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the
company entitled to vote at such meeting. Our initial stockholders count toward this quorum and pursuant to the letter agreement, our
sponsor, officers and directors have agreed to vote their founder shares and any public shares purchased during or after our initial public
offering (including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of
seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of
our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares,
we would need only 4,687,688, or 37.5%, of the 12,500,500 public shares sold in our initial public offering to be voted in favor of an
initial business combination (assuming all outstanding shares are voted and our sponsor, officers and directors do not purchase any public
shares) in order to have our initial business combination approved. We will give approximately 30 days (but not less than 10 days
nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial
business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely
that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of
whether they vote for or against the proposed transaction.
Our amended and restated certificate
of incorporation provides that we may not redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. For example, the proposed initial business combination may
require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all shares
of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to
the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial
business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the
holders thereof.
Limitation on Redemption upon Completion
of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an
aggregate of 1,875,075, or 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.”
Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
initial business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold
in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us
or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent, we believe we will limit
the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination,
particularly in connection with an initial business combination with a target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection
with Redemption Rights
We may require our public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either
tender their certificates to our transfer agent prior to the meeting held to approve a proposed initial business combination by a date
set forth in the proxy materials mailed to such holders or to deliver their shares to the transfer agent electronically using the DWAC
System, at the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our
initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly,
a public stockholder would have from the time we send out our proxy materials until the date set forth in such proxy materials to tender
its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on
to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption
rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of
when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder was
seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact such
stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an
“option window” after the completion of the initial business combination during which he or she could monitor the price of
the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open
market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders
were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion
of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery
prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is
approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore, if a holder of a public
share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date
not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial proposed initial
business combination is not completed, we may continue to try to complete an initial business combination with a different target until
February 11, 2023.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated certificate
of incorporation provides that we will have until February 11, 2023 to complete our initial business combination. If we are unable to
complete our initial business combination by February 11, 2023, 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 the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), 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 liquidating 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 each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail
to complete our initial business combination by February 11, 2023.
Our sponsor, officers
and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination by February
11, 2023. However, if our sponsor, officers or directors acquire public shares in or after our initial public offering, they will be entitled
to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination
by February 11, 2023.
Our sponsor, officers and directors
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by February 11, 2023 or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their
shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released
to us to pay our taxes divided by the number of then outstanding public shares. However, we may not redeem our public shares unless our
net tangible assets are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after
payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If
this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible
asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
If we do not consummate our
initial business combination by the deadline set forth in our amended and restated certificate of incorporation, we expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining
out of the approximately $400,000 of proceeds held outside the trust account, immediately following our initial public offering, although
we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds
held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses
associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required
to pay taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount
of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of
the net proceeds of our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the
trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received
by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become
subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you
that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b)
of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made
in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our
remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient
to pay or provide for all creditors’ claims.
Although we will seek to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from
bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other
similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect
to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will
only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management
is unable to find a service provider willing to execute a waiver. KPMG LLP, our independent registered public accounting firm, and the
underwriters of the offering will not execute agreements with us waiving such claims to the monies held in the trust account.
In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce
the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public
share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions
in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. However, 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 cannot assure you that our sponsor would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
In the event that the proceeds
in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the
independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. We have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor
would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the
per-share redemption price will not be less than $10.00 per public share.
We will seek to reduce the
possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
We will have access to up to approximately $1,000,000 with which to pay any such potential claims. In the event that we liquidate and
it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust
account could be liable for claims made by creditors.
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 our public shares in the event
we do not complete our initial business combination by February 11, 2023 may be considered a liquidating 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.
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of our initial public offering, is not considered a liquidating
distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal
proceedings that a party may bring or due to other circumstances that are currently unknown), 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 liquidating distribution. If we are unable to complete our initial business combination by February 11,
2023, 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 the public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us
to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), 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
liquidating 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 each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our
intention to redeem our public shares as soon as reasonably possible following February 11, 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.
Because we will not be complying
with Section 280, 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
10 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. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result
of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result
in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that
the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case
net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of
our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed
waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such
third-party claims.
If we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that 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 $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that 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 some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or may have acted in bad faith, 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.
Our public stockholders will
be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business
combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions
of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to offer redemption
rights in connection with any proposed initial business combination or to redeem 100% of our public shares if we do not complete our initial
business combination by February 11, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination
by February 11, 2023, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to
or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we have encountered competition from other entities having a business
objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses
seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human
and other resources than we do. Our ability to acquire larger target businesses is limited by our available financial resources. This
inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation
to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for
our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably
by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial
business combination.
Employees
We currently have three officers.
These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time
as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they devote in any
time period varies based on the stage of the initial business combination process we are in. We do not intend to have any full-time employees
prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
Our units, Class A common
stock and warrants are registered under the Exchange Act and 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, our annual reports will contain 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 the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared
in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets
we may conduct an initial business combination with because some targets may be unable to provide such statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial
statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in
accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation
will be material.
We are required to evaluate
our internal control procedures for the fiscal year ending December 31, 2021 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 business combination. We have
filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the
Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention
of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following February 11, 2026, the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion,
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common
stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which
we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.