Item 1. Business.
Overview
We are a blank check company
incorporated in Delaware for the purpose of effecting our initial business combination.
While we may pursue an initial
business combination target in any business, industry or geographical location, we focus our search on targets operating in the technology-focused areas
including software, mobile and IoT applications, digital and energy transformation, cloud and cyber communications as well as high bandwidth
services, including LTE, remote sensing and 5G communications.
Initial Public Offering
On January 14, 2022, we consummated
our initial public offering of 17,250,000 units, including 2,250,000 additional units issued pursuant to the full exercise of the underwriters’
over-allotment option. Each unit consists of one share of one Class A common stock, and one-half of one redeemable warrant of the Company,
with each whole 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 $172,500,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 8,037,500 warrants to our sponsor at a purchase price
of $1.00 per private placement warrant, generating gross proceeds of $8,037,500.
A total of $175,950,000, comprised
of $169,050,000 of the proceeds from the initial public offering and $6,900,000 of the proceeds of the sale of the private placement warrants
was placed in the trust account maintained by Continental, acting as trustee.
It is the job of our sponsor
and management team to complete our initial business combination. Our management team is led by Scott Crist, our Chairman and Chief Executive
Officer, and R. Greg Smith, our Chief Financial Director and director, who have many years of experience in technology entrepreneurship,
venture capital, private equity, and investment banking. We must complete our initial business combination by April 14, 2023, 15 months
from the closing of our initial public offering. If our initial business combination is not consummated by April 14, 2023, then our existence
will terminate, and we will distribute all amounts in the trust account. However, if we anticipate that we may not be able to consummate our initial business combination by April 14,
2023, we may, by resolution of our board if requested by our sponsor, extend the period of time to consummate a business combination by
an additional three months (for a total of up to 18 months to complete a business combination until July
14, 2023), subject to the sponsor depositing into the trust account, upon five days advance notice prior to the applicable deadline, $1,725,000
($0.10 per unit), for the available three month extension. Our public shareholders will not be afforded an opportunity to vote on our
extension of time to consummate an initial business combination from 15 months to 18 months described above or to redeem their shares
in connection with such extension.
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, we have
focused and will continue to focus our search on industrial technology companies with an enterprise value of approximately $200 million
to $900 million. Management believes that this relative size of target opportunities will enable the Company to pursue companies
that are the most attractive from a return standpoint and are less pursued by larger, more established sources of capital.
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.
| ● | Large and Compelling Growth Market. We
are focused on investments in industry segments that we believe demonstrate attractive long-term growth prospects and reasonable
overall size or potential. We view growth as an important driver of value and will seek companies whose growth potential can generate
meaningful upside. |
| ● | Attractive, Inherently Profitable Business With High Operating
Leverage. We seek to invest in companies that we believe possess not only established business models and
sustainable competitive advantages, but also have inherently profitable unit economics. |
| ● | Strong Management Teams. We
seek to acquire a business that has an experienced management team with a proven track record for producing rapid growth and with an
ability to clearly and confidently articulate the business and market opportunities to public market investors. As such, we will spend
significant time assessing a company’s leadership and personnel and evaluating what we can do to augment and/or upgrade the team
over time as needed. |
| ● | Opportunity for Operational Improvements. We
seek to identify businesses that we believe are stable but at an inflection point and would benefit from our ability to drive improvements
in the target’s processes, go-to-market strategy, product or service offering, sales and marketing efforts, geographical presence
and/or leadership team. |
| ● | Differentiated Products or Services. We
evaluate metrics such as recurring revenues, product life cycle, cohort consistency, pricing per product or customer, cross-sell success
and churn rates to focus on businesses whose products or services are differentiated or where we see an opportunity to create value by
implementing best practices. |
| ● | Limited Technology Risk. We
seek to invest in companies that have established market-tested products or service offerings, and do not lend themselves to erratic
technology risks. |
| ● | Appropriate Valuations. We
seek target companies for our initial business combination based on disciplined valuation-centric metrics. Management has significant
negotiating and operating experience and recognizes the initial valuation is an important component of the ultimate rate of return. |
| ● | Benefit From Being a Public Company. We
intend to pursue a business combination with a company that we believe will benefit from being publicly traded and can effectively utilize
the broader access to capital and public profile that are associated with being a publicly traded company. |
| ● | Leading Industry Position and Competitive Market Advantage. We
focus our search on one or more businesses based in the market and within industries that we believe have strong fundamentals, favorable
prospects and a high likelihood of generating strong risk-adjusted returns for our stockholders. We seek to acquire a business whose
products utilize a proprietary or patented technology, have dominate market position in a specific geographic or technological niche,
or have some other form of distinct competitive advantage. The factors we consider include management’s credentials, growth prospects,
competitive dynamics, level of industry consolidation, need for capital investment, intellectual property, barriers to entry, and merger
terms. |
| ● | Potential to Grow, Including Through Further Acquisition
Opportunities. We seek to acquire a business which has the potential to supplement its organic growth
with a pipeline of potentially actionable acquisitions. We expect to work with the ongoing management team to develop the business strategy
around geographic expansion, new products, high-return capital expenditure projects and acquisitions, as well as creating and maintaining
the optimal capital structure for growth. |
| ● | High Organic Revenue Growth, Attractive Gross Margins,
Prudent Debt. We seek to acquire a business that has the ability to grow rapidly across various market conditions
and in varying economic cycles and the near-term potential to generate significant increases in revenue as well as strong and sustainable
operating margins. To provide reliable guidance, we also seek to acquire a business that has strong visibility on forward financial performance
and straightforward operating metrics. |
| ● | Sourced on a Proprietary Basis. We
do not expect to participate in broadly marketed processes, but rather will leverage our extensive network to source a proprietary initial
business combination. Notwithstanding the foregoing, we would consider participating in a process that is focused primarily on special
purpose acquisition companies, where we would not compete with a conventional initial public offering or private equity acquisition,
or at the tail end of a process when other alternatives have been eliminated, on the strength of our prior experience in closing business
combinations or because our company is most appropriately sized to the target. |
| ● | Preparedness for the Process and Public Markets. We
seek to acquire a business that has or can put in place prior to the closing of a business combination the governance, financial systems
and controls required in the public markets. |
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 and Advantages
We believe that our management
team is well positioned to consummate an initial business combination due to its combination of operating and investing expertise. We
believe that the most likely business combination targets will be those companies at a strategic inflection point, such as rapidly growing
companies stepping out from the control of private equity or venture capital owners, family-owned businesses seeking some liquidity,
or business units being carved out from larger conglomerates. In these scenarios in particular, we believe the experience our management
team brings in successfully scaling companies, especially those in the public markets, will be looked upon favorably by both the target
company as well as public stockholders.
Specifically, we believe our
competitive strengths to be the following:
| ● | Experienced Management Team. Our
management team and strategic advisors have a substantial investment track record and advisory experience, significant knowledge of international
energy and technology markets, access to proprietary deal flow, and strong relationships with business leaders and entrepreneurs in the
industrial production, technology, and telecommunications industries. We believe their backgrounds allow us access to proprietary investment
opportunities and position us to successfully complete an initial business combination. In addition, our Chairman and Chief Executive
Officer has prior experience in entrepreneurship, venture capital, public offerings, and acquisition led growth strategies across multiple
industries but with a focus in the energy, industrial, technology and telecommunications space. |
| ● | Flexible Structure. With a
public market for our common stock and approximately $175.95 million in trust after our initial public offering, we have flexibility
to be able to offer a target business a variety of options in structuring a transaction and funding future growth. Flexibility in using
our capital stock, debt, cash or a mixture of the foregoing, allows us to work with a target company to accommodate their needs. |
| ● | Public Company Status. We believe
our status as a public company makes us an attractive transaction partner to prospective target businesses. As a public company, we believe
the target business would benefit from greater access to capital to fund future growth initiatives, further means of creating incentive
and compensation plans for management that are closely aligned with stockholder’s interests, and increased recognition and awareness
potentially benefitting sales and recruiting. |
| ● | Established Deal Sourcing Network and Personal Contacts. We
intend to maximize our pipeline of potential target investments by proactively approaching our extensive network of contacts, including
private equity and venture capital sponsors, family offices, executives of public and private companies, merger and acquisition advisory
firms, investment banks, capital markets desks, lenders and other financial intermediaries. We believe the prior investment experience
and track record of our team, including our Chairman and Chief Executive Officer’s prior involvement in successful investments,
will give us a competitive advantage when sourcing potential initial business combination opportunities. Existing relationships with
private equity and venture capital firms, and those through investment bankers are likely to provide us with potential combination targets. |
| ● | Deal-making and Capital Markets Experience through
all Market Cycles. Our management team and strategic advisors consist of seasoned dealmakers with experience
in a wide variety of industries, structures and market conditions, as well as experienced equity and debt capital markets professionals.
Most have worked in the industrial technology markets globally, as principal investors and as advisors, through different market cycles.
Our management team and strategic advisors intend to apply the same disciplined approach to acquire a business that they have used in
connection with their current advisory services and principal investment activities. |
| ● | Experience with Complex Transactions. Members
of our management team and strategic advisors have a track record of completing transactions that involve an element of complexity not
well-served by a competitive auction process and on educating counterparties about the benefits of the special purpose acquisition
company structure and process. We believe that our management team and strategic advisors’ experience with complex situations requiring
creative solutions is expected to lead to less competitive transactions. Members of our management team and strategic advisors also have
a history of leveraging their relationship networks for due diligence and to develop a unique perspective and comfort with the issues
faced in such complex opportunities. |
| ● | Public Company Operating Expertise. Our
team has over 60 cumulative years of experience as either executive officers or directors of private and publicly traded companies, have
the ability to shepherd targets through the “going public” process, and to navigate the ongoing challenges of operating as
a public company. We anticipate that one or more members of our management team or board, would remain on the board of the company post
business combination. In addition, some of the potential acquisition targets we consider may operate within a closely regulated industry.
We believe that the expertise within our management team around closely regulated energy and telecommunications industries will be advantageous
when evaluating certain acquisition targets. |
| ● | Investment Expertise. Our management
team has extensive experience in identifying, evaluating, structuring, acquiring, and investing in privately held companies. Collectively,
the members of our management team alone have been involved with or led multiple acquisitions and investments. |
| ● | Broad Sector Focused Expertise. Our
management team brings deep expertise in a wide range of sub-sectors within our target industries. We believe that our diverse range
of expertise increases our chances of identifying a business combination target where we have the expertise to appropriately diligence
the investment and to provide value post business combination. Specifically, members of our management team have experience operating,
investing or serving on boards of companies in the following sub-sectors: oil & gas upstream, downstream and production, renewable
and transition fuels, refineries, terminals and network integration. |
Initial Business Combination
We have until April 14, 2023 to consummate an initial business combination.
However, if we anticipate that we may not be able to consummate our initial business combination by April 14, 2023, we may, by resolution
of our board if requested by our sponsor, extend the period of time to consummate a business combination by an additional three months
(or until July 14, 2023) to complete a business combination, subject to the sponsor depositing additional funds into the trust account,
upon five days advance notice prior to the deadline, $1,725,000 ($0.10 per unit), for the available three month extension. Any such payments
would be made in the form of non-interest bearing loans. If we complete our initial business combination, we will, at the option
of our sponsor, repay such loaned amounts out of the proceeds of the trust account released to us or convert a portion or all of the total
loan amount into units at a price of $10.00 per unit, which units will be identical to the private units. If we do not complete a business
combination, we will repay such loans only from funds held outside of the trust account. Our stockholders will not be entitled to vote
or redeem their shares in connection with any such extension. However, our stockholders will be entitled to vote and redeem their shares
in connection with a stockholder meeting held to approve an initial business combination or in a tender offer undertaken in connection
with such an initial business combination if we propose such a business combination during any three-month extension period. If we
are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more than
ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account,
including a pro rata portion of any interest earned on the funds held in the trust account and not previously released to us to pay our
taxes, and then seek to dissolve and liquidate. However, we may not be able to distribute such amounts as a result of claims of creditors
which may take priority over the claims of our public stockholders. In the event of our dissolution and liquidation, the private units
will expire and will be worthless.
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. Our board of directors will make the
determination as to the fair market value of our initial business combination. 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 that is a member of FINRA or an independent accounting firm 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 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, or for other reasons. 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% of net assets test. If the initial business combination involves more than one target
business, the 80% of net assets 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.
Our Business Combination Process
In evaluating prospective
business combinations, we conduct a thorough due diligence review process that encompasses, among other things, a review of historical
and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities
and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor or our officers or directors. 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 that is a member of FINRA or
an independent accounting firm that our initial business combination is fair to our company from a financial point of view.
Our officers and directors
indirectly own founder shares and/or private placement warrants following our initial public offering. Because of this ownership, our
sponsor and our officers and directors 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. 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 Management Team
Members of our management
team 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 that any member of our management
team will devote 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 will 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 various 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 as
a public company makes 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 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 January 14, 2026, (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 in the amount of $175,971,022 as of April 4, 2022, after payment of $6,900,000 of deferred underwriting fees
and before fees and expenses associated with our initial business combination, 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 will
allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps
to secure third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial business combination. 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 (including pursuant to forward purchase agreements
or backstop agreements 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 held in the trust
account. In addition, we intend to 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. At this time, we are not a
party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities
or otherwise.
Sources of Target Businesses
Target business candidates
may be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources
may also 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 our prospectus in connection with our initial public offering or this Report and know what types of businesses we are targeting.
Our officers and directors, as well as our sponsor and their affiliates, may 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 expect to 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 affiliates. 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, 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). 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 pay our sponsor a total of $10,000 per month for office space, utilities and secretarial
and administrative support and will 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 we seek to 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 which is a member of FINRA or an independent accounting firm 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.
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 that is a member of FINRA or an independent accounting firm 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. 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.
In any case, we will only
complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or
otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses,
the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into
account for purposes of Nasdaq’s 80% of net assets test.
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 endeavors 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.
In evaluating a prospective
business target, we conduct a thorough due diligence review, which encompasses, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and
other information that will be made available to us.
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 warrant holders 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 franchise and income taxes, divided by the number of then outstanding public
shares, subject to the limitations described herein. As of April 4, 2022, the amount in the trust account was approximately $10.20 per
public share, without taking into account any interest earned on such funds or additional funds, if any, deposited into the trust account
in connection with extensions of the period of time to consummate a business combination (as described in more detail in this Report).
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. 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, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in an
amount that would cause our net tangible assets to be less than $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 will 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 need only 6,468,751, or 37.5%, of the 17,250,000 public shares sold in our initial public offering to be voted in favor of an initial
business combination (assuming all outstanding shares are voted) in order to have our initial business combination approved. We intend
to 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 quorums 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 in no event will we redeem our public shares in an amount that would cause our net tangible assets to be
less than $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 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 a Tender Offer or 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 date set forth in the tender offer documents or proxy materials
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the
event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using the DWAC System, at the holder’s
option. The tender offer or proxy materials, as applicable, 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 tender offer materials until the close of the tender offer period, or up
to two days prior to the vote on the initial business combination if we distribute proxy materials, as applicable, 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 tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. 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 by April
14, 2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination).
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated certificate
of incorporation provides that we will have only 15 months from the closing of our initial public offering, or until April 14, 2023,
(or until July 14, 2023 if we extend the period of time to consummate a business combination) to complete our initial business combination.
If we are unable to complete our initial business combination by April 14, 2023 (or by July 14, 2023 if we extend the period of time to
consummate a business combination), 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 franchise and income taxes (less up to $50,000 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 April 14, 2023 (or by July 14, 2023 if we extend the period of time
to consummate a business combination).
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 April 14,
2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination). 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 April 14, 2023 (or by July 14, 2023
if we extend the period of time to consummate a business combination).
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 April 14, 2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination)
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 franchise and income taxes divided
by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible
assets to be less than $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 $987,740 of proceeds held outside the trust account as of April 4, 2022, 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 franchise and income 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 franchise and income 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 $50,000 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 $10.20. 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 $10.20. 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 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. Marcum, 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) $10.20 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 $10.20 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) $10.20 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 $10.20 per public share.
We have sought and will continue
to 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. As of April 4, 2022, we have access to up to approximately $1,522,500 from the proceeds of our initial public
offering with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently
estimated to be no more than approximately $50,000). 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. As of April 4, 2022, the amount held outside the trust account was $987,740.
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 April 14, 2023 (or by July 14, 2023 if we extend the period of time to consummate
a business combination) 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 by April 14, 2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination),
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 April 14, 2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination), 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 franchise
and income taxes (less up to $50,000 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 April 14, 2023 (or July 14, 2023 if we extend the period
of time to consummate a business combination) 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) $10.20 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 $10.20 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 redeem 100% of
our public shares if we do not complete our initial business combination by April 14, 2023 (or by July 14, 2023 if we extend the period
of time to consummate a business combination) 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 April 14, 2023 (or by July 14, 2023 if we extend the period of time to consummate a business combination),
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 may encounter intense 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 will be 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 rights, warrants and unit purchase option, 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 two 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 whether a target business has been selected for our initial business combination and the stage of the
initial business combination process we are in. We have no full-time employees and 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 as a result, 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, our annual reports,
including this Report, 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 will be 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 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 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.