Item
1. Business
Introduction
We
are a recently organized blank check company incorporated on February 11, 2021, as a Delaware corporation formed for the purpose of effecting
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or
more businesses, which we refer to throughout this report as our initial business combination. While we may pursue an initial business
combination target in any stage of its corporate evolution or in any industry or sector, we are focusing our search on the space economy,
transport and technology industries.
On
October 8, 2021, the Company consummated the Initial Public Offering (the “Public Offering” or “IPO”) of 8,625,000
units at $10.00 per unit (the “Units”), including the full exercise of the underwriters’ over-allotment of 1,125,000
units, generating gross proceeds to the Company of $86,250,000.
Simultaneously
with the consummation of the IPO, the Company consummated the private placement of 4,518,750 warrants (the “Private Placement Warrants”)
to the Sponsor, at a price of $1.00 per Private Placement Warrant in a private placement, generating gross proceeds to the Company of
$4,518,750.
Transaction
costs amounted to $5,174,429 consisting of $1,725,000 of underwriting commissions, $3,018,750 of deferred underwriting commissions, and
$430,679 of other offering costs, and was all charged to stockholders’ equity.
Following
the closing of the IPO on October 8, 2021, $87,543,750 ($10.15 per Unit) from the net proceeds of the sale of the Units in the IPO and
the sale of the Private Placement Warrants was deposited into a trust account (the “Trust Account”), located in the United
States with Continental Stock Transfer & Trust Company acting as trustee, and will invest only in U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury
obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay
its tax obligations and up to $100,000 of interest that may be used for the Company’s dissolution expenses, the proceeds from the
Initial Public Offering and the sale of the placement warrants held in the Trust Account will not be released from the Trust Account
until the earliest to occur of: (a) the completion of the initial Business Combination, (b) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend the Company’s certificate of incorporation (i) to modify the substance
or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or certain amendments
to the Company’s charter prior thereto or to redeem 100% of the public shares if the Company does not complete its initial Business
Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the IPO at the election
of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with the
Company’s amended and restated certificate of incorporation) or (ii) with respect to any other provision relating to stockholders’
rights or pre-Business Combination activity, and (c) the redemption of the public shares if the Company is unable to complete its initial
Business Combination within 12 months from the closing of the Initial Public Offering (or up to 18 months from the closing of the IPO
at the election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance
with the Company’s amended and restated certificate of incorporation), subject to applicable law. The proceeds deposited in the
Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims
of the Company’s public stockholders.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of the initial Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business
Combination or conduct a tender offer will be made by the Company, solely in its 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 the Company to seek stockholder approval
under applicable law or stock exchange listing requirements. The stockholders will be entitled to redeem all or a portion of their public
shares upon the completion of the 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 the Company to pay its taxes, divided by the number of then
outstanding public shares, subject to the limitations described herein. The amount in the Trust Account is $10.15 per public share, however,
there is no guarantee that investors will receive $10.15 per share upon redemption. The per-share amount the Company will distribute
to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the
underwriters.
The
Company will have only 12 months from the closing of the IPO (or up to 18 months from the closing of the IPO at the election of the Company
subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with the Company’s
amended and restated certificate of incorporation) to complete the initial Business Combination (the “Combination Period”).
However, if the Company is unable to complete the initial Business Combination within the Combination Period (and the Company’s
stockholders have not approved an amendment to the Company’s charter extending this time period), the Company 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 the Company to pay its taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
The
Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they have agreed to (i) waive
their redemption rights with respect to any founder shares and public shares held by them in connection with the completion of the initial
Business Combination, (ii) waive their redemption rights with respect to any founder shares and public shares held by them in connection
with a stockholder vote to approve an amendment to the Company’s certificate of incorporation (A) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with the initial Business Combination or certain amendments to the
Company’s charter prior thereto or to redeem 100% of the public shares if the Company does not complete its initial Business Combination
within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity, (iii) waive their rights to liquidating distributions from the Trust Account with respect to any founder shares
held by them if the Company fails to complete its initial Business Combination within the Combination Period, although they will be entitled
to liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete its
initial Business Combination within the prescribed time frame, and (iv) vote any founder shares held by them and any public shares purchased
during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of the initial
Business Combination.
The
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products
sold to the Company, or a prospective target business with which the Company has 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) $10.15
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 $10.15 per public 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 the Company’s
indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act. However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently
verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets
are securities of the Company. Therefore, the Company cannot assure you that the Sponsor would be able to satisfy those obligations.
None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
Business
Strategy
Our
acquisition strategy will be to capitalize on the strengths of our management team to allow us to identify businesses that have the capacity
for cash flow creation, opportunity for operational improvement, robust company fundamentals, and qualified and driven management teams.
Our deal sourcing process will leverage our management team’s business knowledge, industry expertise and deep network of relationships
that we expect will provide us with a pipeline of acquisition candidates. Moreover, we anticipate other pipeline acquisition candidates
to be introduced to us through various unaffiliated sources, including venture capital funds, private equity funds, leveraged buyout
funds, investment bankers, management buyout funds, and other members of the financial community, as well as attorneys and accountants.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors,
or completing the 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 a target that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, would obtain an opinion from an independent accounting firm, or independent investment banking
firm that our 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.
Our
efforts to identify a potential target business will be focused on the space economy, technology and transport industries.
Competitive
Advantages
We
intend to capitalize on the following competitive advantages in our pursuit of a target company:
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Leadership
of an Experienced Management Team. Our management team is led by Ms. Patricia Trompeter,
who has over 20 years of experience in the financial and equity investment industry. She
has completed over $17 billion of acquisitions, including transactions in the aircraft leasing
industry. She has established a strong network of investment institutions and business connections,
which we believe can help us to identify attractive targets and negotiate a transaction that
benefits our shareholders.
Our
Chief Financial Officer, Paul Haber has over twenty-five years of experience in corporate finance and capital markets. Mr. Haber
has worked on the acquisition of over fifteen public companies during his career. Mr. Haber has sat on numerous boards over the year,
typically as the chair of the audit committee. |
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Status
as a Publicly Listed Acquisition Company. We believe our structure will make us an attractive business combination partner
to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional
initial public offering process. We believe that some target businesses will favor this alternative, which we believe is less expensive,
while offering greater certainty of execution, than the traditional initial public offering process. During an initial public offering,
there are typically underwriting fees and marketing expenses, which would be costlier than a business combination with us. Furthermore,
once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target
business will have effectively become public, whereas an initial public offering is always subject to the underwriter’s ability
to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe
our 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. This can offer further benefits by augmenting a company’s
profile among potential new customers and vendors and aid in attracting talented management staffs. |
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Established
Deal Sourcing Network. We believe the strong track record of our management team will provide access to quality initial business
combination partners. In addition, through our management team, we believe we have contacts and sources from which to generate acquisition
opportunities and possibly seek complementary follow-on business arrangements. These contacts and sources include those in government,
private and public companies, private equity and venture capital funds, investment bankers, attorneys and accountants. Our directors
include individuals with extensive high level experience in the space industry. |
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Strong
Financial Position and Flexibility. With the funds held in our trust account, we can offer a target business a variety of
options to facilitate a business combination and fund future expansion and growth of its business. Because we are able to consummate
a business combination using the cash proceeds from this offering, our share capital, debt or a combination of the foregoing, we
have the flexibility to use an efficient structure allowing us to tailor the consideration to be paid to the target business to address
the needs of the parties. However, if a business combination requires us to use substantially all of our cash to pay for the purchase
price, we may need to arrange third party financing to help fund our business combination. Since we have no specific business combination
under consideration, we have not taken any steps to secure third party financing. |
Industry
Opportunity
While
we may acquire a business in any industry, our focus will be in the space economy, transport and technology industries. We believe that
our target industry is attractive for a number of reasons:
The
space industry is emerging as one of the most lucrative industries globally. The space industry refers to economic activities related
to manufacturing components that go into the earth’s orbit and beyond. Much of the current and projected demand relates to the
projected launch of satellites in order to meet the growing demand for additional data capacity. According to Research and Markets, the
space industry is valued at US$360 billion in 2018, and is projected to grow at a CAGR of 5.6% to a value of US$558 billion by 2026.
The United States is the largest spender in the domain followed by China, the EU, India, Russia and Japan.
Acquisition
Criteria
The
focus of our management team is to create shareholder value by leveraging its experience to improve the efficiency of the business while
implementing strategies to grow revenue and profits organically and/or through acquisitions. Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. While we intend
to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these criteria and guidelines should we
see fit to do so:
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Strong
Growth Potential. As a result of the space economy and related services’ strong growth over the past several
decades, there are a large number of small domestic and regional companies with principal business operations which are serving the
ever-increasing emerging needs of the economy. While such companies have performed relatively well, we believe the vast majority
of these companies suffer from a lack of insightful strategy, capital for growth, operational efficiency and a succession strategy.
In addition, we intend to target businesses in North America that have historically demonstrated revenue growth and possess favorable
future growth characteristics, combined with a durable business model that is resistant to macroeconomic volatility. We will seek
target businesses for which we can provide strategic advice, access to sufficient capital and effective operational expertise, to
grow the business. |
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Unique
Market Position. We intend to seek target businesses with a unique or niche position across an industry or businesses that
have leading competitive technology, unique brand equity and/or product competences. In particular, we intend to seek businesses
that may be at a point of achieving high growth and require additional expertise or capital to help drive their further expansion. |
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Benefit
from Capital Markets. We intend to seek to acquire a target with an experienced operating management team that may lack experience
with the capital markets but that has the ambition to take advantage of the improved liquidity and additional capital that can come
from a successful listing on the NASDAQ. The access to the capital markets could allow such a target business to accelerate its growth
and build capital profile. |
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Middle-Market
Businesses. We intend to seek target businesses with a total enterprise value between $100 million and $300 million. We believe
there are a considerable number of potential target businesses within this valuation range that can benefit from new capital for scalable
operations to generate substantial revenue and earnings growth. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
may deem relevant.
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. 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 or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair
market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally,
pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We
anticipate structuring our initial business combination 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. We may, however, structure our initial
business combination such 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 prior owners of the target business, the target management team or stockholders or
for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of
the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be
required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the
business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the
target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number
of new shares in exchange for all of the outstanding capital stock, shares or other equity interests 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 issued and outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% fair market value test. If the business combination involves more than one target business, the 80% fair market
value test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as our
initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational,
legal and other information which 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.
Sourcing
of Potential Initial Business Combination Targets
Certain
members of our management team have spent significant portions of their careers working with businesses or government agencies involving
the space economy, transport and technology industries and have developed a wide network of professional services contacts and business
relationships in those industries. The members of our board of directors also have significant executive management and public company
experience with space economy, transport and technology related companies and bring additional relationships that further broaden our
industry network.
This
network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network
of contacts and relationships of our management team will provide us with an important source of acquisition opportunities. In addition,
we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises.
Members
of our management team and our independent directors will directly or indirectly own founder shares and/or placement warrants following
this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate
business with which to effectuate our initial business combination. The low price that the members of the Company’s management
team paid for the founder shares creates an incentive whereby the Company’s officers and directors could potentially make a substantial
profit even if the Company selects an acquisition target that subsequently declines in value and is unprofitable for public investors.
In the event the Company does not consummate a business combination within 12 months from the closing of this offering (or up to 18 months
from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or as extended by the
Company’s stockholders in accordance with our amended and restated certificate of incorporation), the founder shares and warrants
will expire worthless which could create an incentive for the Company’s officers and directors to complete a transaction even if
the Company selects an acquisition target that subsequently declines in value and is unprofitable for public investors. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our
initial business combination.
In
addition, 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
to such entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially
affect our ability to complete our initial business combination.
In
addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours
or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such
companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However,
we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters, but they devote as much of their time
as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any member of
our management team devotes in any time period varies 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 provides us with a substantial number of potential business combination targets. Over the course of
their careers, the members of our management team have developed a broad network of contacts and corporate relationships in many industries.
This network has grown through the activities of our management team sourcing, acquiring and financing businesses, our management team’s
relationships with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to prospective target businesses. As a publicly listed
company, we will offer a target business an alternative to the traditional initial public offering. We believe that target businesses
will favor this alternative, which we believe is less expensive, while offering greater certainty of execution than the traditional initial
public offering. During an initial public offering, there are typically expenses incurred in marketing, which would be costlier than
a business combination with us. Furthermore, once a proposed business combination is approved by our shareholders (if applicable) and
the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always
subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent the offering
from occurring. Once public, we believe the target business would have greater access to capital and additional means of creating management
incentives that are better aligned with shareholders’ interests than it would as a private company. It can offer further benefits
by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management staffs.
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 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 common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior
June 30th.
Financial
Position
With
funds available for an initial business combination initially in the amount $84,525,000 after payment of $3,018,750 of deferred underwriting
fees, before fees and expenses associated with our initial business combination (other than deferred underwriting fees), we offer a target
business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the
most efficient combination that 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 for an indefinite period of time following this offering. We
intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the placement warrants,
the proceeds of the sale of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter
into following the consummation of this 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
this offering and the sale of the 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 applicable law or stock exchange requirements, 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.
We
have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination
target. From the period commencing with our formation through the date of our offering prospectus, there have been no communications
or discussions between any of our officers, directors or our sponsor and any of their potential contacts or relationships regarding a
potential initial business combination. Additionally, we have not engaged or retained any agent or other representative to identify or
locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact
a target business. Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of
the target business with which we may ultimately complete our initial business combination. Although our management will assess the risks
inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying
all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do
nothing to control or reduce the chances that those risks will adversely impact a target business.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers
and investment professionals, 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 offering
prospectus 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 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. While we do not presently anticipate engaging the services of professional
firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals
in the future, 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 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 except as set forth herein. We have agreed to pay Astro Aerospace Ltd., an affiliate of our sponsor, a total
of $10,000 per month for office space, utilities and secretarial and administrative support and to reimburse our sponsor for any out-of-pocket
expenses related to identifying, investigating and completing an initial business combination. Some of our officers and directors may
enter into employment or consulting agreements with the post-transaction company following our initial business combination. The presence
or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination
candidate.
We
are not prohibited from pursuing an initial business combination with a 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 a target that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that such an initial business combination is fair to our company from a financial point
of view. We are not required to obtain such an opinion in any other context.
As
more fully discussed in the section of our offering prospectus entitled “Management — Conflicts of Interest,” if any
of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any
entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market
value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted
by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses
or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able
to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value
of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular
target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. 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 virtually have 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% fair market value test. There is no basis for investors in this offering to evaluate
the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass, 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 intend to focus 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:
|
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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 |
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|
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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 intend to 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 applicable law or applicable stock exchange listing requirements, 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:
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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 (other than in a public offering); |
|
|
|
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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 stock or voting power of
5% or more; or |
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|
|
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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 public 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
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 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 or their affiliates will only purchase public 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. We expect that
any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject
to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account as of two business days prior to the consummation of the initial business combination including interest earned on
the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public
shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.15
per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred
underwriting commissions we will pay to the underwriters. 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 public 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 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
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 certificate of incorporation:
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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 |
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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 present and entitled to vote at the meeting to approve the initial business combination when a quorum is present 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 any founder shares held by them and any public shares acquired during or after
this offering (including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes
of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of
our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares,
we would need 539,064 or 6.25%, of the 8,625,000 public shares sold in this offering to be voted in favor of an initial
business combination (assuming only the minimum number of shares representing a quorum are voted) in order to have our initial business
combination approved (assuming the over-allotment option is not exercised, that the initial stockholders do not purchase any units in
this offering or units or shares in the after-market). 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.
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 certificate of incorporation:
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● |
conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. |
Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, we will not redeem any public shares unless our net tangible assets will be at
least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender
more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Our
certificate of incorporation will provide that we may not redeem our public shares unless our net tangible assets are at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and
commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash
requirement which may be contained in the agreement relating to our initial business combination. For example, the proposed initial business
combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for
working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the
terms of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the
initial business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to
the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide
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 this 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. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold
in this offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt
to block our ability to complete our initial business combination, particularly in connection with an initial business combination with
a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be
restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination.
Tendering
Stock Certificates in Connection with Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent up to two business days prior to the vote on
the proposal to approve the initial business combination, or to deliver their shares to the transfer agent electronically using the Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders
to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two days prior to the vote on the initial business
combination 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 special purpose acquisition 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 of the stockholder meeting. Furthermore, if a holder
of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the
applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares
will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until 12 months from the closing of the Offering (or up to 18 months from the closing of this offering at the
election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance
with our amended and restated certificate of incorporation).
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 12 months from the closing of the Offering to complete
our initial business combination (or up to 18 months from the closing of this offering at the election of the Company subject to satisfaction
of certain conditions or as extended by the Company’s stockholders in accordance with our amended and restated certificate of incorporation).
If we are unable to complete our initial business combination within such 12-month period (or up to 18-month period), we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and
our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above 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 within
the 12-month time period (or up to 18-month period).
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
within 12 months from the closing of this offering (or up to 18 months from the closing of this offering at the election of the Company
subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with our amended and restated
certificate of incorporation). However, if our sponsor, officers or directors acquire public shares in or after this 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 within 12 months from the closing of this offering (or up to 18 months from the closing of this offering at the
election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance
with our amended and restated certificate of incorporation).
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not complete
our initial business combination within 12 months from the closing of this offering (or up to 18 months from the closing of this offering
at the election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance
with our amended and restated certificate of incorporation) or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to
pay our taxes divided by the number of then outstanding public shares. However, we may not redeem our public shares unless our net tangible
assets are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this
optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible
asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
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 $560,000 proceeds held outside the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in
the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated
with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay
taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs
and expenses.
If
we were to expend all of the net proceeds of this offering and the sale of the 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 $10.15. 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 $10.15. Under Section
281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments
to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds
sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that
they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses
to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such
third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where
we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. Marcum LLP, our independent registered
public accounting firm, and the underwriters of the offering, will not execute agreements with us waiving such claims to the monies held
in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us,
or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or
business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.15 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
$10.15 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 this 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) $10.15 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 $10.15 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not
be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities
under the Securities Act. We will have access to up to approximately $430,853 from the proceeds of this offering and the sale of the
placement warrants 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 $100,000). 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. In the event that our offering expenses exceed our estimate of $500,000, we may fund such excess with funds from the
funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease
by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $500,000, the amount of
funds we intend to be held outside the trust account would increase by a corresponding amount.
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 within 12 months from the closing of this offering (or up to
18 months from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or as extended
by the Company’s stockholders in accordance with our amended and restated certificate of incorporation) may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to
ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 12 months from the closing of this offering (or up to 18 months from the closing
of this offering at the election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders
in accordance with our amended and restated certificate of incorporation), 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 within 12 months from the closing of this offering
(or up to 18 months from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or
as extended by the Company’s stockholders in accordance with our amended and restated certificate of incorporation), we will: (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up
to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above 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 our 12th month (or up to 18th month
from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or as extended by the
Company’s stockholders in accordance with our amended and restated certificate of incorporation) 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) $10.15 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 this 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 $10.15 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 certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or certain amendments to our charter prior thereto or to redeem 100% of our public
shares if we do not complete our initial business combination within 12 months from the closing of this offering (or up to 18 months
from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or as extended by the
Company’s stockholders in accordance with our amended and restated certificate of incorporation) 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 within 12 months from the closing of this offering (or up to 18 months
from the closing of this offering at the election of the Company subject to satisfaction of certain conditions or as extended by the
Company’s stockholders in accordance with our amended and restated certificate of incorporation), 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 certificate of incorporation,
like all provisions of our certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective
similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous
potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain
sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
●
our obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent to shareholders
in connection with such business combination may delay or prevent the completion of a transaction;
●
our obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business combination;
●
Nasdaq may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our securities
following a business combination;
●
our outstanding warrants and the potential future dilution they represent;
●
our obligation to pay the deferred underwriting discounts and commissions to Hutton upon consummation of our initial business combination;
●
our obligation to either repay or issue units upon conversion of up to $1,125,000 of working capital loans that may be made to us by
our initial shareholders, officers, directors or their affiliates;
●
our obligation to register the resale of the insider shares, as well as the placement warrants (and underlying securities) and any securities
issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital loans; and
●
the impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending on
developments involving us prior to the consummation of a business combination.
Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes,
however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive
advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth
potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target
business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.
Employees
We
have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend to
devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based
on whether a target business has been selected for the business combination and the stage of the business combination process the company
is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such target
business and negotiating and processing the business combination (and consequently spend more time to our affairs) than they would prior
to locating a suitable target business. We presently expect our executive officers to devote such amount of time as they reasonably believe
is necessary to our business (which could range from only a few hours a week while we are trying to locate a potential target business
to a majority of their time as we move into serious negotiations with a target business for a business combination). We do not intend
to have any full time employees prior to the consummation of a business combination.
Periodic
Reporting and Financial Information
We
have registered our units, common stock and warrants under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance
with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent
registered public accountants. These filings are available to the public via the Internet at the SEC’s website located at http://www.sec.gov.
You may request a copy of our filings with the SEC (excluding exhibits) at no cost by writing or telephoning us at the following address
or telephone number:
Parsec
Capital Acquisitions Corp.
320
W. Main Street
Lewisville,
TX 75057
Telephone:
(203) 524-6524
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, US 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 US 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.
Item
1A. Risk Factors
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this report, including the financial statements, before making a decision to invest in our units.
If any of the following events occur, our business, financial condition and operating results may be materially and adversely affected.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors
described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business.
Risks
Relating to Business Operations, Our Search for, and Consummation of or Inability to Consummate, a Business Combination
We
are a newly formed company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to
achieve our business objective.
We
are a newly formed company with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining
financing through the public offering of our securities. Since we do not have an operating history, you will have no basis upon which
to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any substantive
discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any
revenues until, at the earliest, after the consummation of a business combination.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination.
We
will either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders
may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or don’t vote
at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide
our public stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a
stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes
payable), in each case subject to the limitations described elsewhere in our offering prospectus. Accordingly, it is possible that we
will consummate our initial business combination even if holders of a majority of our public shares do not approve of the business combination
we consummate. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
For instance, Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us
to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration
in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our
outstanding shares, we would seek stockholder approval of such business combination instead of conducting a tender offer.
Since
we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently
ascertain the merits or risks of the industry or business in which we may ultimately operate.
We
may pursue an acquisition opportunity in any business industry or sector we choose. Accordingly, there is no current basis for you to
evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may
ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development
stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination
with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that
industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot
assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment
in our units will not ultimately prove to be less favorable to our investors in our initial public offering than a direct investment,
if an opportunity were available, in a target business.
The
ability of our stockholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us to effectuate
the most desirable business combination or optimize our capital structure.
If
our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many
stockholders may exercise conversion rights or seek to sell their shares to us in a tender offer, we may either need to reserve part
of the trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business
combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher
percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity
financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business
combination available to us.
In
connection with any vote to approve a business combination, we will offer each public stockholder the option to vote in favor of a proposed
business combination and still seek conversion of his, her or its shares.
In
connection with any vote to approve a business combination, we will offer each public stockholder (but not our sponsor, officers or directors)
the right to have his, her or its shares of common stock converted to cash (subject to the limitations described elsewhere in our offering
prospectus) regardless of whether such stockholder votes for or against such proposed business combination or does not vote at all. The
ability to seek conversion while voting in favor of our proposed business combination may make it more likely that we will consummate
a business combination.
Our
ability to identify a target and to consummate an initial business combination may be adversely affected by economic
uncertainty and volatility in the financial markets, including as a result of the military conflict in Ukraine.
In
late February 2022, Russian military forces invaded Ukraine, significantly amplifying already existing geopolitical tensions among
Russia, Ukraine, Europe, NATO and the West. Russia’s invasion, the responses of countries and political bodies to Russia’s
actions, and the potential for wider conflict may increase financial market volatility and could have severe adverse effects on regional
and global economic markets, including the markets for certain securities and commodities. Following Russia’s actions, various
countries, including the United States, Canada, the United Kingdom, Germany, and France, as well as the European Union, issued broad-ranging
economic sanctions against Russia. The sanctions consist of the prohibition of trading in certain Russian securities and engaging in
certain private transactions, the prohibition of doing business with certain Russian corporate entities, large financial institutions,
officials and oligarchs, and the freezing of Russian assets. The sanctions include a commitment by certain countries and the European
Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT”,
the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining
the impact of the sanctions. A number of large corporations and U.S. states have also announced plans to divest interests or otherwise
curtail business dealings with certain Russian businesses.
The
imposition of the current sanctions (and potential imposition of further sanctions in response to continued Russian military activity)
and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, including but not
limited to, the financial, energy, metals and mining, engineering, and defense and defense-related materials sectors. Such actions also
may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble. In response to sanctions, the Russian
Central Bank raised its interest rates and banned sales of local securities by foreigners. Russia may take additional counter measures
or retaliatory actions, which may further impair the value and liquidity of Russian securities. Such actions could, for example, include
restricting gas exports to other countries, seizure of U.S. and European residents’ assets, or undertaking or provoking other military
conflict elsewhere in Europe, any of which could exacerbate negative consequences on global financial markets and the economy. While
diplomatic efforts have been ongoing, the conflict between Russia and Ukraine is currently unpredictable and has the potential
to result in broadened military actions. The duration of ongoing hostilities and corresponding sanctions and related events cannot be
predicted and may result in a negative impact on the markets and thereby potential business combination targets.
We
have no operating history and are subject to a mandatory liquidation and subsequent dissolution requirement if we do not complete an
initial business combination by October 8, 2022. As such, there is a risk that we will be unable to continue as a going concern if we
do not consummate an initial business combination by the applicable deadline. If we are unable to effect an initial business combination
by the deadline, we will be forced to liquidate.
We
are a blank check company, and as we have no operating history and are subject to a mandatory liquidation and subsequent dissolution
requirement, there is a risk that we will be unable to continue as a going concern if the Company is unable to complete a Business Combination
within the Combination Period, the Company (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
We
do not have a specified maximum conversion threshold. The absence of such a conversion threshold may make it easier for us to consummate
a business combination even where a substantial number of public stockholders seek to convert their shares to cash in connection with
the vote on the business combination.
We
have no specified percentage threshold for conversion in our amended and restated certificate of incorporation. As a result, we may be
able to consummate a business combination even though a substantial number of our public stockholders do not agree with the transaction
and have converted their shares. However, in no event will we consummate an initial business combination unless we have net tangible
assets of at least $5,000,001 either immediately prior to or upon consummation of our initial business combination.
In
connection with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish
to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may
make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In
connection with any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have
the right, regardless of whether he is voting for or against such proposed business combination or does not vote at all, to demand that
we convert his shares into a pro rata share of the trust account as of two business days prior to the consummation of the initial business
combination. We may require public stockholders who wish to convert their shares in connection with a proposed business combination to
either (i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holders’ option, in each case prior to a
date set forth in the tender offer documents or proxy materials sent in connection with the proposal to approve the business combination.
In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will
need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain
physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC,
it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short
time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate
for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion
rights and thus may be unable to convert their shares.
If,
in connection with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish
to convert their shares to comply with specific requirements for conversion, such converting stockholders may be unable to sell their
securities when they wish to in the event that the proposed business combination is not approved.
If
we require public stockholders who wish to convert their shares to comply with specific requirements for conversion and such proposed
business combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly,
investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition
until we have returned their securities to them. The market price for our shares of common stock may decline during this time and you
may not be able to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able to sell
their securities.
Because
of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We
expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including
venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors
possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with
the net proceeds from our initial public offering, our ability to compete in acquiring certain sizable target businesses will be limited
by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain
target businesses. Furthermore, seeking stockholder approval or engaging in a tender offer in connection with any proposed business combination
may delay the consummation of such a transaction. Additionally, our outstanding warrants, and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully
negotiating a business combination.
We
may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of
the target business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our initial public offering will be sufficient to allow us to consummate a business combination,
because we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction.
If the net proceeds of our initial public offering prove to be insufficient, either because of the size of the business combination,
the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash a significant number
of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may not be available on acceptable
terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our sponsor, officers, directors or stockholders is required to provide any financing to us
in connection with or after a business combination.
If
we do not conduct an adequate due diligence investigation of a target business, we may be required to subsequently take write-downs or
write-offs, restructuring, and impairment or other charges that could have a significant negative effect on our financial condition,
results of operations and our stock price, which could cause you to lose some or all of your investment.
We
must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and
expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even
if we conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect a particular
target business, and factors outside the control of the target business and outside of our control may later arise. If our diligence
fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may be
forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in
our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our common stock. In addition, charges of
this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt
held by a target business or by virtue of our obtaining post-combination debt financing.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination
targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms
that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that we must
complete our initial business combination by October 8, 2022. Consequently, such target business may obtain leverage over us in negotiating
an initial business combination, knowing that if we do not complete our initial business combination with that particular target business,
we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the
timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination
on terms that we would have rejected upon a more comprehensive investigation.
We
may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely
on the judgment of our board of directors in approving a proposed business combination.
We
will only be required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that
is affiliated with any of our sponsor, initial stockholders, officers, directors or their affiliates. In all other instances, we will
have no obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving
a proposed business combination.
Resources
could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business.
It
is anticipated that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements,
disclosure documents, and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point for
the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target
business, we may fail to consummate the business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business.
If
we effect a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks
that may negatively impact our operations.
If
we consummate a business combination with a target business in a foreign country, we would be subject to any special considerations or
risks associated with companies operating in the target business’ home jurisdiction, including any of the following:
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rules
and regulations or currency conversion or corporate withholding taxes on individuals; |
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tariffs
and trade barriers; |
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regulations
related to customs and import/export matters; |
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● |
tax
issues, such as tax law changes and variations in tax laws as compared to the United States; |
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● |
currency
fluctuations and exchange controls; |
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● |
challenges
in collecting accounts receivable; |
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cultural
and language differences; |
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employment
regulations; |
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crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and |
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deterioration
of political relations with the United States. |
We
cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might
suffer.
If
we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely
govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates
will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able
to enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital.
Additionally,
if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside
of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible
for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce
judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal
securities laws.
Because
we must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting
principles or international financial reporting standards, we will not be able to complete a business combination with prospective target
businesses unless their financial statements are prepared in accordance with U.S. generally accepted accounting principles or international
financial reporting standards.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or
US GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB.
We will include the same financial statement disclosure in connection with any tender offer documents we use, whether or not they are
required under the tender offer rules. Additionally, to the extent we furnish our stockholders with financial statements prepared in
accordance with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at the time of the consummation
of the business combination. These financial statement requirements may limit the pool of potential target businesses we may acquire.
There
may be tax consequences to our business combinations that may adversely affect us.
While
we expect to undertake any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such business
combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended tax-free
treatment upon a transfer of shares or assets. A non-qualifying reorganization could result in the imposition of substantial taxes.
If
we acquire a company in the technology industry, our future operations may be subject to risks associated with this sector.
While
we may pursue an initial business combination target in any stage of its corporate evolution or in any industry or sector, we currently
intend to concentrate our efforts in identifying technology or technology enabled businesses that directly or indirectly offer specific
technology solutions or broader technology software and services. Because we have not yet identified or approached any specific target
business, we cannot provide specific risks of any business combination. However, risks inherent in investments in this sector may include,
but are not limited to, the following:
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adverse
changes in international, national, regional or local economic, demographic and market conditions; |
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competition
from other companies and businesses; |
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● |
the
ability to develop successful new products or improve existing ones; |
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● |
the
disruption or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access
our products and services, which may cause our users, advertisers, and partners to cut back on or stop using our products and services
altogether, which could harm our business; |
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● |
mobile
malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products, which could harm our business
and reputation; |
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litigation
and other legal proceedings; |
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● |
the
ability to attract and retain highly skilled employees; |
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● |
environmental
risks; and |
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civil
unrest, labor strikes, acts of God, including earthquakes, floods and other natural disasters and acts of war or terrorism, which
may result in uninsured losses. |
Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to technology or technology enabled businesses that directly or indirectly offer specific
technology solutions or broader technology software and services. Accordingly, if we acquire a target business in another industry, these
risks we will be subject to risks attendant with the specific industry in which we operate or target business which we acquire, which
may or may not be different than those risks listed above.
Risks
Relating to our Securities
If
third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders
may be less than $10.15.
Our
placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and
service providers we engage and prospective target businesses we negotiate with 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, they may not
execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust
account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which
could take priority over those of our public stockholders. If we are unable to complete a business combination and distribute the proceeds
held in trust to our public stockholders, our sponsor has agreed (subject to certain exceptions described elsewhere in our offering prospectus)
that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.15 per share by the claims of target
businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold
to us. 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 believe it is unlikely that our sponsor will be able to satisfy its indemnification obligations if it is
required to do so. As a result, the per-share distribution from the trust account may be less than $10.15, plus interest, due to such
claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust
account, we may not be able to return to our public stockholders at least $10.15.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Our
amended and restated certificate of incorporation provides that we will continue in existence only until 18 months from the closing of
our initial public offering. If we have not completed a business combination by such date, we will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the
outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including any interest not previously released to us but net of franchise and income taxes payable, divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in
the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other
applicable law. We cannot assure you that we will properly assess all claims that may be potentially brought against us. 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 the date of distribution. Accordingly, we cannot assure you that
third parties will not seek to recover from our stockholders amounts owed to them by us.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer”
or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration
of the time we have to complete an initial business combination, this may be viewed or interpreted as giving preference to our public
stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed
as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot
assure you that claims will not be brought against us for these reasons.
The
securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest
income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received
by public stockholders may be less than $10.15 per share.
The
net proceeds of our initial public offering and certain proceeds from the sale of the Private Placement Warrants, in the amount of $87,543,750,
will be held in an interest-bearing trust account. The proceeds held in the trust account may only be invested in direct U.S. government
securities with a maturity of 180 days or less, or in certain money market funds which invest only in direct U.S. Treasury obligations.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market
Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
In the event of very low or negative yields, the amount of interest income (which we may withdraw to pay income taxes, if any) would
be reduced. In the event that we are unable to complete our initial business combination, our public stockholders are entitled to receive
their share of the proceeds held in the trust account, plus any interest income. If the balance of the trust account is reduced below
$87,543,750 as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public
stockholders may be reduced below $10.15 per share.
An
investor will only be able to exercise a warrant if the issuance of shares of common stock upon such exercise has been registered or
qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No
warrants will be exercisable and we will not be obligated to issue shares of common stock unless the shares of common stock issuable
upon such exercise have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the
holder of the warrants. If the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants
may be limited and they may expire worthless if they cannot be sold.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority
of the then outstanding public warrants.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure
any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of at least a majority of
the then outstanding public warrants in order to make any change that adversely affects the interests of the registered holders.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if
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we
issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing
of our initial business combination at a Newly Issued Price of less than $9.20 per share; |
|
|
|
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● |
the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions),
and |
|
|
|
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the
Market Value is below $9.20 per share, then the exercise price of the warrants will be adjusted to be equal to 115% of the greater
of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest
cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price. This may make it more difficult for us to
consummate an initial business combination with a target business. |
Nasdaq
may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
securities are currently listed on Nasdaq, a national securities exchange. We cannot assure you that our securities will continue to
be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination,
it is likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed
to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements
at that time. Nasdaq will also have discretionary authority to not approve our listing if Nasdaq determines that the listing of the company
to be acquired is against public policy at that time.
If
Nasdaq delists our securities from trading on its exchange, or we are not listed in connection with our initial business combination,
we could face significant material adverse consequences, including:
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● |
a
limited availability of market quotations for our securities; |
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● |
reduced
liquidity with respect to our securities; |
|
● |
a
determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common
stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market
for our shares of common stock; |
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● |
a
limited amount of news and analyst coverage for our company; and |
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a
decreased ability to issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually
our common stock and warrants will be listed on Nasdaq, our units, common stock and warrants will be covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if
there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities
issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer
listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state in which we offer
our securities.
Our
outstanding warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business
combination.
We
issued warrants to purchase 8,625,000 shares of common stock as part of the units offered in our initial public offering and private
warrants to purchase 4,518,750 shares of common stock. We may also issue additional private warrants to our sponsor, initial stockholders,
officers, directors or their affiliates in payment of working capital loans made to us as described in our offering prospectus. To the
extent we issue shares of common stock to effect a business combination, the potential for the issuance of a substantial number of additional
shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities,
when exercised, will increase the number of issued and outstanding shares of common stock and reduce the value of the shares issued to
complete the business combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase
the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants
could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent
these warrants are exercised, you may experience dilution to your holdings.
Further,
unlike the warrants offered by many other blank check companies, whose warrants become exercisable on the later of (i) 30 days following
their initial business combination and (ii) twelve months after the date their initial public offering, our warrants become exercisable
30 days after an initial business combination, even if that date is less than twelve months after our initial public offering. The possibility
that our warrants may become exercisable more quickly than the warrants of other blank check companies may make us a less attractive
acquisition vehicle in the eyes of a target business relative to other blank check companies and may cause our warrants to have a greater
or more immediate adverse effect on the market price for our securities or our ability to obtain future financing. In addition, as our
warrants may become exercisable sooner, you may experience dilution to your holdings sooner.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the reported last sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period
commencing once the warrants become exercisable and ending on the third trading day prior to the date on which we give proper notice
of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by us, we may not exercise
our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification
under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register
or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered
by us in this offering. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price
therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when
you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants
will be redeemable by us so long as they are held by the sponsor or its permitted transferees.
Our
management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive
fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants
for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in our offering prospectus have been satisfied,
our management will have the option to require any holder that wishes to exercise his warrant (including any private warrants) to do
so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the
number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his
warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.
We have identified material weaknesses in our
internal control over financial reporting and may identify additional material weaknesses in the future. Failure to remediate such material
weaknesses in the future or to maintain an effective system of internal control could impair our ability to comply with the financial
reporting and internal controls requirements for publicly traded companies.
As a U.S. public company, we operate in an increasingly
demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act, Nasdaq regulations, SEC rules and regulations,
expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules. Company responsibilities required
by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure
controls and procedures. Effective internal controls are necessary for us to produce reliable financial reports and are important to help
prevent financial fraud.
In connection with the preparation and audit of our
consolidated financial statements, we identified material weaknesses in our internal control over financial reporting. A material weakness
is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
We are in the process of designing and implementing
measures to improve our internal control over financial reporting to remediate the material weaknesses, including by implementing new
information technology and systems for the preparation of the financial statements, implementing additional review procedures within our
accounting and finance department, hiring additional staff and engaging external accounting experts to support improving our accounting
processes and procedures and supplement our internal resources in our computation processes. While we are designing and implementing measures
to remediate the material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures
at this time. These measures may not remediate the deficiencies in internal control or prevent additional material weaknesses or significant
deficiencies in our internal control over financial reporting in the future. Our failure to implement and maintain effective internal
control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements
or cause us to fail to meet our reporting obligations.
We anticipate that the process of building our accounting and financial
functions and infrastructure will result in substantial costs, including significant additional professional fees and internal costs.
Any disruptions or difficulties in implementing or using such a system could adversely affect our controls and harm our business. Moreover,
such disruption or difficulties could result in unanticipated costs and diversion of management’s attention.
Risks
Relating to our Management Team
Our
ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our
key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage
after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our
ability to successfully effect a business combination is dependent upon the efforts of our key personnel. We believe that our success
depends on the continued service of our key personnel, at least until we have consummated our initial business combination. We cannot
assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers
is required to commit any specified amount of time to our affairs and, accordingly, our officers will have conflicts of interest in allocating
management time among various business activities, including identifying potential business combinations and monitoring the related due
diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of
the services of our key personnel could have a detrimental effect on us.
The
role of our key personnel after a business combination, however, cannot presently be ascertained. Although some of our key personnel
serve in senior management or advisory positions following a business combination, it is likely that most, if not all, of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar with
such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect
our operations.
Our
directors may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of funds
in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below $10.15 per public share and our sponsor asserts that it is unable
to satisfy its 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 such indemnification obligations. It is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. As a result, they may have a conflict
of interest in determining whether to enforce our sponsor’s indemnification obligations. If our independent directors choose not
to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.15 per share.
Our
officers and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business
we may seek to acquire.
We
may consummate a business combination with a target business in any geographic location or industry we choose. We cannot assure you that
our officers and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its
industry to make an informed decision regarding a business combination.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following a business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel will be able to remain with the company after the consummation of a business combination only if they are able to negotiate
employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations
would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to the company after the consummation of the business
combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination.
Our
officers and directors will not commit their full time to our affairs. We presently expect each of our officers and directors to devote
such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees prior to
the consummation of our initial business combination. The foregoing could have a negative impact on our ability to consummate our initial
business combination.
Our
officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business
combination.
Our
sponsor has waived its right to convert its founders’ shares or any other shares purchased in our initial public offering or thereafter,
or to receive distributions from the trust account with respect to its founders’ shares upon our liquidation if we are unable to
consummate a business combination. Accordingly, the shares acquired prior to our initial public offering, as well as the private warrants
and any warrants purchased by our officers or directors in the aftermarket, will be worthless if we do not consummate a business combination.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination and in determining whether the terms, conditions and timing of a particular business
combination are appropriate and in our stockholders’ best interest.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations and may in the future become affiliated
with other entities engaged in business activities similar to those intended to be conducted by us. Accordingly, they may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly, they
may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business
combination. As a result, a potential target business may be presented by our management team to another entity prior to its presentation
to us and we may not be afforded the opportunity to engage in a transaction with such target business. Additionally, our officers and
directors may in the future become affiliated with entities that are engaged in a similar business, including another blank check company
that may have acquisition objectives that are similar to ours. Accordingly, they may have conflicts of interest in determining to which
entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target
business may be presented to other entities prior to its presentation to us, subject to our officers’ and directors’ fiduciary
duties under Delaware law. For a more detailed description of our officers’ and directors’ business affiliations and the
potential conflicts of interest that you should be aware of, see the sections titled “Management — Directors and Executive
Officers” and “Management — Conflicts of Interest.”
General
Risk Factors
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth
companies will make our shares of common stock less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for
up to five years. However, if our non-convertible debt issued within a three year period or revenues exceeds $1.07 billion, or the market
value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter
of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company,
we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, we have reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements and we are exempt from the requirements of
holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that
have different effective dates for public and private companies until those standards apply to private companies. As such, our financial
statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find
our shares of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock
less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.
If
our security holders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock
and the existence of these rights may make it more difficult to effect a business combination.
Our
initial stockholders are entitled to make a demand that we register the resale of the founders’ shares and the shares underlying
the private warrants at any time commencing three months prior to the date on which their securities may be released from escrow. Additionally,
the holders of representative shares and any other warrants our sponsor, initial stockholders, officers, directors, or their affiliates
may be issued in payment of working capital loans made to us, are entitled to demand that we register the resale of the representative
shares and any other warrants we issue to them (and the underlying securities) commencing at any time after we consummate an initial
business combination. The presence of these additional securities trading in the public market may have an adverse effect on the market
price of our securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or
increase the cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering into
a business combination with us or will request a higher price for their securities because of the potential effect the exercise of such
rights may have on the trading market for our shares of common stock.
If
we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may
be restricted, which may make it difficult for us to complete a business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account, it is possible that
we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities
will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by the trustee only in United
States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of
180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. By restricting the investment of the proceeds to these instruments, we intend
to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act.
If
we are nevertheless deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions that
may make it more difficult for us to complete a business combination, including:
|
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restrictions
on the nature of our investments; and |
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restrictions
on the issuance of securities. |
In
addition, we may have imposed upon us certain burdensome requirements, including:
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registration
as an investment company; |
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adoption
of a specific form of corporate structure; and |
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reporting,
record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations. |
Compliance
with these additional regulatory burdens would require additional expense for which we have not allotted.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable
to our investors altogether.
Our
search for an initial business combination, and any target business with which we ultimately consummate an initial business combination,
may be materially adversely affected by the coronavirus (COVID-19) pandemic and other events, and the status of debt and equity markets.
The
COVID-19 pandemic has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of
other infectious diseases) could adversely affect, the economies and financial markets worldwide, and the business of any potential target
business with which we consummate an initial business combination could be materially and adversely affected. Furthermore, we may be
unable to complete an initial business combination if concerns relating to COVID-19 continue to restrict travel, limit the ability to
have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate
and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for an initial business combination
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19
or other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an
extensive period of time, our ability to consummate an initial business combination, or the operations of a target business with which
we ultimately consummate an initial business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including
as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable
to us or at all.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of
completing an acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require that we
have such system of internal controls audited beginning with our Annual Report on Form 10-K for the year ending December 31, 2022. If
we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or
stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley
Act also requires that our independent registered public accounting firm report on management’s evaluation of our system of internal
controls. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal
controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required new or improved controls,
or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could
harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors
to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
Provisions
in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit
the price investors might be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could
delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and
those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to
comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results
of operations.
On March 30, 2022, the
SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs
and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies;
effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing
the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become
subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form,
may materially adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and
time related thereto.
Our
amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other
actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing
the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel,
which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other
actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing
the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which
the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the
Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days
following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery
or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and
restated certificate of incorporation. This choice of forum provision may limit or make more costly a stockholder’s ability to
bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or
stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision
contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional
costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over
all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,
the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other
claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides
that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America
shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action
arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that there
is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities
laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal
courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.