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
annual report, the prospectus relating to our IPO and the registration statement relating to our proposed initial business combination
before making a decision to invest in our securities. See “Item 1 Business - Additional Information Regarding the Proposed Initial
Business Combination and the Company.” If any of the following events occur, our business, financial condition and operating results
may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part
of your investment.
Summary of Risk Factors
Our business is subject to numerous risks and uncertainties.
These risks include, but are not limited to, risks associated with:
| ● | being a newly incorporated company with no operating history and no revenues; |
| ● | our ability to complete our initial business combination, including risks arising from the uncertainty resulting from the COVID-19
pandemic; |
| ● | the ability of holders of our Class A Common Stock (the “public stockholders”) to exercise redemption rights; |
| ● | the requirement that we complete our initial business combination within 24 months from the closing of the IPO unless extended in
accordance with our amended and restated certificate of incorporation (the “completion window”); |
| ● | the possibility that Nasdaq may delist our securities from trading on its exchange; |
| ● | being declared an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”); |
| ● | complying with changing laws and regulations; |
| ● | the performance of the prospective target business or businesses; |
| ● | our ability to select an appropriate target business or businesses; |
| ● | the pool of prospective target businesses available to us and the ability of our directors and officers; |
| ● | the ability of Barry D. Zyskind, Adam Karkowsky, Christopher Longo and Trident Pine Acquisition, L.P. (collectively, the “founders”)
our sponsor, directors and officers to generate a number of potential business combination opportunities; |
| ● | the issuance of additional Class A Common Stock in connection with a business combination that may dilute the interest of our stockholders; |
| ● | the incentives to our sponsor, founders, directors and officers to complete a business combination to avoid losing their entire investment
in us if our initial business combination is not completed; |
| ● | our directors and officers allocating their time to other businesses and potentially having conflicts of interest with our business
or in approving our initial business combination; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business
combination; |
| ● | our ability to obtain additional financing to complete our initial business combination; |
| ● | our ability to amend the terms of warrants in a manner that may be adverse to the holders of public warrants (as defined herein); |
| ● | our ability to redeem your unexpired public warrants prior to their exercise; |
| ● | our public securities’ potential liquidity and trading; and |
| ● | provisions in our amended and restated certificate of incorporation and Delaware law that may have the effect of inhibiting a takeover
of us and discouraging lawsuits against our directors and officers. |
Risks Relating to Our Search for, and Consummation
of or Inability to Consummate an Initial Business Combination
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate
in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support
such a combination.
We may not hold a stockholder vote to approve our
initial business combination unless the business combination would require stockholder approval under applicable law or stock exchange
listing requirements or if we decide to hold a stockholder vote for business or other reasons. For instance, the 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. However, except as required by applicable law or stock exchange rules, 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. Even if we seek stockholder approval, the
holders of our founder shares will participate in the vote on such approval. Accordingly, we may consummate our initial business combination
even if holders of a majority of our outstanding public shares do not approve of the business combination we consummate.
If we seek stockholder approval of our
initial business combination, our initial stockholder, directors and officers have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Our initial stockholder, directors and officers
have agreed (and their permitted transferees will agree) to vote any founder shares and any public shares held by them in favor of our
initial business combination. As a result, in addition to our initial stockholder’s founder shares, we would need 12,937,501, or
37.5%, of the 34,500,000 public shares sold in the IPO to be voted in favor of a transaction (assuming all issued and outstanding shares
are voted) in order to have such initial business combination approved. We expect that our initial stockholder and their permitted transferees
will own at least 20% of our outstanding shares of common stock at the time of any such stockholder vote. Accordingly, if we seek stockholder
approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be
the case if our initial stockholder and their permitted transferees agreed to vote their founder shares in accordance with the majority
of the votes cast by our public stockholders.
Your only opportunity to affect the investment
decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash,
unless we seek stockholder approval of such business combination.
At the time of your investment in us, you will not
be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, since our board of directors
may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to
vote on the business combination. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which
will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our
initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make
it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the business combination. The amount deferred underwriting discount payable by is in connection
with the IPO is not available for us to use as consideration in an initial business combination. Furthermore, in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become 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. Consequently, if accepting all properly submitted redemption requests would cause
our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above,
we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
If we are able to consummate an initial business combination, the per-share value of shares held by non-redeeming stockholders will reflect
our obligation to pay the deferred underwriting commissions.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into an agreement for our initial
business combination, we will not know how many stockholders may exercise their redemption rights and, therefore, we will need to structure
the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires us to have a minimum amount
of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements or arrange for third-party
financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure
the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional
third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore,
this dilution would increase to the extent that the anti-dilution provision of the Class B common stock results in the issuance of shares
of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock at the time of our initial business
combination. In addition, the amount of deferred underwriting commissions payable to the underwriters is not required to be adjusted for
any shares that are redeemed in connection with an initial business combination. The above considerations may limit our ability to complete
the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination agreement requires
us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our initial business combination would be unsuccessful increases. If our initial business combination is unsuccessful,
you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate
liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro
rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit
of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
The requirement that we complete our
initial business combination within the completion window may give potential target businesses leverage over us in negotiating a business
combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular
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 a business combination will be aware that we must complete our initial business combination within the completion
window. Consequently, such target business may obtain leverage over us in negotiating a 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 be able to complete our initial
business combination within the completion window, in which case we would cease all operations except for the purpose of winding up and
we would redeem our public shares and liquidate, in which case our public stockholders may receive only $10.00 per share, or less than
such amount in certain circumstances, and our warrants will expire worthless.
Our sponsor, directors and officers have agreed
that we must complete our initial business combination within the completion window. We may not be able to find a suitable target business
and complete our initial business combination within such time period. Our ability to complete our initial business combination may be
negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
If we have not completed our initial business combination
within such time period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible
but not more than 10 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 (net of permitted withdrawals and 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 (3)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. In such case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share, on the
redemption of their shares, and our warrants will expire worthless. Please see “— If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
If permitted withdrawals and other sources of working
capital are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our
initial business combination and we will depend on loans from our sponsor or management team to fund our search, to pay our taxes and
to complete our initial business combination. If we are unable to obtain such loans, we may be unable to complete our initial business
combination.
If we are required to seek additional capital, we
would need to borrow funds from our sponsor, founders, directors, officers, advisors or any of their respective affiliates or third parties
to operate or may be forced to liquidate. Neither our sponsor, founders, directors, officers, advisors nor any of their respective affiliates
is under any obligation or other duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside
the trust account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial
business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the
trust account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants
will expire worthless. Please see “— If third parties bring claims against us, the proceeds held in the trust account could
be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
herein.
The securities in which we invest the
funds held in the trust account could bear a negative rate of interest, which could reduce the aggregate value of the assets held in the
trust account such that the per share redemption amount received by public stockholders may be less than your anticipated per share redemption
amount.
The funds in the trust account will be invested
only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under
Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations. While short-term U.S. government
treasury bills 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 that we are unable to
complete our initial business combination or make certain amendments to our amended and restated certificate of incorporation, our public
stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income not released
to us, net of taxes payable. Negative interest rates could impact the per share redemption amount that may be received by public stockholders.
If we seek stockholder approval of our
initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase shares
or warrants from the public, which may influence a vote on a proposed business combination and reduce the public “float” of
our common stock.
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, directors, officers, advisors or any of their respective affiliates may purchase public shares or public warrants or a combination
thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation or other duty to do so. Such a purchase may include a contractual acknowledgement that
such public stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees
not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or any of their respective affiliates
purchase public shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption
rights, such selling public stockholders would be required to revoke their prior elections to redeem their shares. The price per share
paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its
shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in favor of the
business combination and thereby increase the likelihood of obtaining stockholder approval of our 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 if any matters are 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. 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.
In addition, if such purchases are made, the public
“float” of our Class A common stock and the number of beneficial holders of our securities may be reduced, possibly making
it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy
rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these
rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of
the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will describe the various procedures that must be
complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise
their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates
to our transfer agent prior to the date set forth in the tender offer or proxy materials documents mailed to such holders, or up to two
business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials,
or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these procedures,
its shares may not be redeemed.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced
to sell your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earlier to occur of: (1) the completion of our initial business combination, and then only
in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described
herein; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in
connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within the completion window; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination
within the completion window, subject to applicable law and as described herein. In addition, if we are unable to complete an initial
business combination within the completion window for any reason, compliance with Delaware law may require that we submit a plan of dissolution
to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public
stockholders may be forced to wait beyond the completion window before they receive funds from our trust account. In no other circumstances
will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to
the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on our redemption of their stock, and our warrants will expire worthless.
We expect to encounter intense competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical,
human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there will be numerous target businesses we could potentially acquire with the
net proceeds of the IPO and the sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain
target businesses that are sizable will be limited by our available financial resources. Our sponsor, any of its affiliates or any of
their respective clients may make additional investments in us, although our sponsor and its affiliates have no obligation or other duty
to do so.
This inherent competitive limitation gives others
an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial
business combination and we are obligated to pay cash for public shares that are redeemed, it will potentially reduce the resources available
to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating
and completing a business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire
worthless. Please see “— If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the funds available to us outside
of the trust account are insufficient to allow us to operate for at least the completion window, we may be unable to complete our initial
business combination.
The funds available to us outside of the trust account
may not be sufficient to allow us to operate for at least the completion window, assuming that our initial business combination is not
completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. Our affiliates are not obligated
to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our
expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such
time.
We believe that the funds available to us outside
of the trust account, including permitted withdrawals and loans or additional investments from our sponsor, directors, officers, advisors
or any of their respective affiliates or third parties, although they are under no obligation or other duty to loan funds to, or invest
in, us, will be sufficient to allow us to operate for at least the completion window; however, we cannot assure you that our estimate
is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us
with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision
(a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions
with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the
right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach
or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. Please see “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors herein.
We may depend on permitted withdrawals
from our trust account and loans from our sponsor or management team to fund our search, to pay our taxes and to complete our initial
business combination. If we are unable to obtain such loans, we may be unable to complete our initial business combination.
Our sponsor, founders, our directors and officers
or their respective affiliates may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements.
For example, on December 6, 2021, we issued a promissory note in the principal amount of $350,000 to our sponsor. If we are required to
seek additional capital, we would need to borrow funds from our sponsor, management team or third parties to operate or may be forced
to liquidate. Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation or other
duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from
funds released to us upon completion of our initial business combination. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such
case, our public stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants will expire worthless.
Please see “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
Subsequent to our completion of our initial
business combination, we may be required to 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 the price of our securities, which could cause you
to lose some or all of your investment.
Even if we conduct extensive due diligence on a
target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present
with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence,
or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, 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 if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. 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 securities. 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.
Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination
could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such
reduction in value.
If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than
$10.00 per share.
The placement of funds in the trust account may
not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our
independent registered public accounting firm), 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, such parties may not execute such agreements, or even if they execute such agreements they may not 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 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. Making such a request of potential target businesses may make our acquisition
proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field
of potential target businesses that we might pursue. 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 we are unable to find a
service provider willing to execute a waiver. 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. Upon redemption of our public shares, if we are unable to complete our initial business combination
within the completion window, or upon the exercise of a redemption right in connection with our initial business combination, we will
be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the per share amount initially
held in the trust account, due to claims of such creditors.
Our sponsor has agreed that it will be liable to
us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust
assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any and all rights
to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the
underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. We have not independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and we have not asked our sponsor to reserve for such indemnification
obligations. We have not asked our sponsor to reserve for such obligations. As a result, if any such claims were successfully made against
the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public
share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share
in connection with any redemption of your public shares. None of our directors or officers will indemnify us for claims by third parties
including, without limitation, claims by vendors and prospective target businesses.
Our independent directors may decide
not to enforce the indemnification obligations of our sponsor, 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 the lesser of: (1) $10.00 per public share; or (2) the actual amount per share held in the trust account as of the date
of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case
net of permitted withdrawals, 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 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 in certain instances. For example, the cost of such legal action may be deemed by the independent directors to
be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome is not likely. 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 $10.00 per share.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed
as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of
punitive damages.
If, after we distribute the proceeds in the trust
account to our public stockholders, 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. In addition, our board of directors may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith by paying public stockholders from the trust account prior to addressing the claims
of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per
share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust
account to our public stockholders, 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, the per share amount that would otherwise be received by our public stockholders in connection with our liquidation
would be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be
restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including, without limitation:
| ● | restrictions on the nature of our investments; and |
| ● | restrictions on the issuance of our securities; |
each of which may make it difficult for us to complete our initial
business combination. In addition, we may have imposed upon us burdensome requirements, including, without limitation:
| ● | registration as an investment company with the SEC; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations that we are currently
not subject to. |
In order not to be regulated as an investment company
under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other
than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or
trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate
the post-transaction business or assets for the long-term. We do not plan to buy businesses or assets with a view to resale or profit
from their resale.
We do not plan to buy unrelated businesses or assets
or to be a passive investor.
We do not believe that our anticipated principal
activities will subject us to the Investment Company Act. The proceeds held in the trust account may only be invested in United States
“government securities” within the meaning of 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. Because the investment of the proceeds will be restricted to these instruments, we
believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were
deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses
for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete
our initial business combination within the completion window, our public stockholders may receive only approximately $10.00 per share
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share on the redemption of their shares if we are unable to complete our initial business combination within
the completion window. Please see “— If third parties bring claims against us, the proceeds held in the trust account could
be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
herein.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our
initial business combination, 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, including our ability to negotiate and complete our initial business
combination, and results of operations.
Because we are neither limited to evaluating
target businesses in a particular industry nor any specific target businesses with which to pursue our initial business combination, you
will be unable to ascertain the merits or risks of any particular target business’s operations.
We may seek to complete a business combination with
an operating company in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be
permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with
which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage
entity. Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those
risks will adversely impact a target business. We also cannot assure you that an investment in our securities will ultimately prove to
be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and
guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business
combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not
meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does
meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does
not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it
difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount
of cash. In addition, if stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to
obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial
business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our trust account and our warrants will expire worthless. Please see “— If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
We may seek acquisition opportunities
in acquisition targets that may be outside of our management’s areas of expertise.
We will consider an initial business combination
outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine that
such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable candidate
in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor
to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain
or assess all of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately prove
to be less favorable to investors than a direct investment, if an opportunity were available, in an initial business combination candidate.
In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise
may not be directly applicable to its evaluation or operation, and the information contained herein regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able
to adequately ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholders or warrant
holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the
value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which
could subject us to volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
To the extent we complete our initial business combination
with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business
without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties
in obtaining and retaining key personnel. Although our directors and officers will endeavor to evaluate the risks inherent in a particular
target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time
to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce
the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion
from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an
independent source that the price we are paying for the business is fair to our stockholders from a financial point of view.
Unless we complete our initial business combination
with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA
or from an independent accounting firm that the price we are paying is fair to our stockholders from a financial point of view.
In addition, if our board of directors is not able
to determine the fair market value of the target business or businesses, in connection with the Nasdaq rules that require that an initial
business combination be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets
held in the trust account (excluding the amount of any deferred underwriting discount and taxes payable on the income earned on the trust
account), we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting
firm with respect to the satisfaction of such criteria.
Other than the two circumstances described above,
we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine
fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender
offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We may issue additional shares of Class
A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of
our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at
a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described
herein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
authorizes the issuance of up to 240,000,000 shares of Class A common stock, par value $0.0001 per share, and 60,000,000 shares of Class
B common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. There are
210,000,000 and 52,500,000 (assuming in each case, that the underwriters have not exercised their option to purchase additional units)
authorized but unissued shares of Class A and Class B common stock, respectively, available for issuance, which amount takes into account
shares reserved for issuance upon exercise of outstanding warrants but not upon the conversion of the Class B common stock. Shares of
Class B common stock are automatically convertible into shares of our Class A common stock at the time of our initial business combination,
initially at a one-for-one ratio but subject to adjustment as set forth herein. There are no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock, and may issue shares of preferred stock, in order to complete our initial business combination or under
an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation
will provide that we may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation
or on our initial business combination or that would entitle holders thereof to receive funds from the trust account). We may also issue
shares upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination
as a result of the anti-dilution provisions described herein. However, our amended and restated certificate of incorporation will provide,
among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (1) receive funds from the trust account or (2) vote on any initial business combination. The issuance of additional
shares of common or preferred stock:
| ● | may significantly dilute the equity interest of investors; |
| ● | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock; |
| ● | could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present directors
and officers; and |
| ● | may adversely affect prevailing market prices for our units, common stock and/or warrants. |
Resources could be wasted in researching
initial business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants
will expire worthless.
We anticipate 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 we decide not to complete a
specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial 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 are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our trust account and our warrants will expire worthless. Please see “— If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors herein.
We may only be able to complete one business
combination with the proceeds of the IPO and the sale of the Private Placement Warrants, which will cause us to be solely dependent on
a single business which may have a limited number of products or services. This lack of diversification may materially negatively impact
our operations and profitability.
The net proceeds from the IPO and the sale of the
Private Placement Warrants provided us with $345,000,000 that we may use to complete our initial business combination (which includes
deferred underwriting commissions being held in the trust account).
We may effectuate our initial business combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able
to effectuate our initial business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial
business combination with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory
risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses,
unlike other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. Accordingly, the prospects for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset; or |
| ● | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may subject us to numerous
economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in
which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several
businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent
on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens
and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional
risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating
business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination with
a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek
to effectuate our initial business combination with a privately held company. Very little public information generally exists about private
companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of
limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
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 management may not be able to maintain
control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets
of a target business, 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 business sufficient for
us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that
does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders
prior to our initial business combination may collectively own a minority interest in the post business combination company, depending
on valuations ascribed to the target and us in our initial business combination. For example, we could pursue a transaction in which we
issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock,
our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent
to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or
group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that
our management will not be able to maintain control of the target business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which
a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation
will not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 (such that we do not then become 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. As a result, we may be able to complete our initial business combination even though a substantial majority of our
public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial
business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules,
have entered into privately negotiated agreements to sell their shares to our sponsor, founders, directors, officers, advisors or any
of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all
shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business
combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete our initial business
combination that some of our stockholders or warrant holders may not support.
In order to effectuate an initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including
their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption
thresholds extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant
agreements to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we will not seek to amend
our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial
business combination.
Certain provisions of our amended and
restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our trust account) may be amended with the approval of holders of not less than 65% of our common
stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend
our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination
that some of our stockholders may not support.
Our amended and restated certificate of incorporation
provides that any of its provisions (other than amendments relating to the appointment of directors, which require the approval by a majority
of at least 90% of our common stock voting at a stockholder meeting) related to pre-business combination activity (including extensions
of the completion window, the requirement to fund the trust account and not release such amounts except in specified circumstances and
to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our
common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended
if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation provides
that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable stock
exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation
or on our initial business combination. Our initial stockholder, who will beneficially own 20% of our common stock (assuming it does not
purchase any units or Class A common stock), may participate in any vote to amend our amended and restated certificate of incorporation
and/or trust agreement and will have the discretion to vote in any manner they choose, but will not have sufficient voting power (assuming
they do not purchase any units or Class A common stock) to approve such amendment without the support of other stockholders holding at
least 45% of our outstanding common stock. As a result, we may be able to amend the provisions of our amended and restated certificate
of incorporation which will govern our pre-business combination behavior more easily than some other blank check companies, and this may
increase our ability to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against
us for any breach of our amended and restated certificate of incorporation.
Our initial stockholder, directors and officers
have agreed, pursuant to a written agreement, that they will not propose any amendment to our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window,
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, divided by the number
of then outstanding public shares. These agreements are contained in a letter agreement that we have entered into with our initial stockholder,
directors and officers. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will
not have the ability to pursue remedies against our initial stockholder, directors or officers for any breach of these agreements. As
a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us
to restructure or abandon a particular business combination.
Although we believe that the net proceeds of the
IPO and the sale of the Private Placement Warrants will be sufficient to allow us to complete our initial business combination, we cannot
ascertain the capital requirements for any particular transaction. If the net proceeds of the IPO and the sale of the Private Placement
Warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net
proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection
with our initial business combination, we may be required to seek additional financing (including from our sponsor or its affiliates)
or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at
all. Our sponsor is not obligated to provide, or seek, any such financing or, except as expressly set forth herein, to provide any other
services to us. To the extent that additional financing proves to be unavailable when needed to complete our initial 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, even if we do not need additional financing to complete our initial business combination, we may require
such 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 directors, officers or stockholders is required
to provide any financing to us in connection with or after our initial business combination. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our trust account, and our warrants will expire worthless. Please see “— If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
Cyber incidents or attacks directed at
us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
Furthermore, cybersecurity and protection against cyber incidents and attacks will be particularly important to us after our initial business
combination. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to,
cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business
and lead to financial loss.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent
novel coronavirus, or COVID-19, outbreak.
On March 11, 2020, the World Health Organization
officially declared the outbreak of the COVID-19 a “pandemic.” A significant outbreak of COVID-19 and other infectious diseases
could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business
of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to complete a business combination if continued concerns relating to COVID-19 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 a 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
matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations
of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
Risks Relating to Our Securities
Nasdaq may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our units, Class A common stock and warrants are
listed on Nasdaq. We cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to
our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we
must maintain certain financial, distribution and stock price levels. In general, we must maintain a minimum amount in stockholders’
equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in connection
with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements,
which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities
on Nasdaq. For instance, our stock price would generally be required to be at least $4 per share, our stockholders’ equity would
generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders (with at least 50%
of such round lot holders holding securities with a market value of at least $2,500) of our securities. We cannot assure you that we will
be able to meet those initial listing requirements at that time.
If Nasdaq delists any of our securities from trading
on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be
quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common
stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for
our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | 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 our units, Class A common stock and warrants are listed on Nasdaq, our units, Class A
common stock and warrants will qualify as covered securities under such statute. 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, other
than the State of Idaho, 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 qualify as covered securities under such statute and we would be subject to regulation in each state
in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds of the IPO and the sale of
the Private Placement Warrants are intended to be used to complete an initial business combination with a target business, we may be deemed
to be a “blank check” company under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000
and filed a Current Report on Form 8-K, including an audited balance sheet of our company demonstrating this fact, we are exempt from
rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded
the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a longer
period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if the IPO were subject to
Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds
in the trust account were released to us in connection with our completion of our initial business combination.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in
excess of 15% of our Class A common stock.
If we seek stockholder approval of our initial business
combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules,
our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange
Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in the IPO, without
our prior consent (the “Excess Shares”). However, our amended and restated certificate of incorporation does not restrict
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and
you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will
not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result,
you will continue to hold the Excess Shares and, in order to dispose of such shares, would be required to sell your Excess Shares in open
market transactions, potentially at a loss.
Our stockholders may be held liable for
claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
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 the completion window may be considered a liquidating distribution under Delaware law. If a 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. However, it is our intention to redeem our public shares as soon as reasonably possible following
the 24th month from the closing of the IPO in the event we do not complete our initial business combination and, therefore,
we do not intend to comply with the foregoing procedures.
Because we do not intend to comply 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 10 years following our dissolution.
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, consultants,
etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, 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 likely be barred after the third anniversary of the dissolution.
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 beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public
stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the completion
window is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of
stockholders until after we consummate our initial business combination and you will not be entitled to any of the corporate protections
provided by such a meeting.
We may not hold an annual meeting of stockholders
until after we consummate our initial business combination (unless required by Nasdaq) and thus may not be in compliance with Section
211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with
a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders want
us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt to force us to hold one by
submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Moreover, our Class B stockholders
will be entitled to elect all of our directors prior to the completion of our initial business combination and may elect to do so by written
consent without a meeting.
We have not registered the shares of
Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such
registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise
its warrants except on a “cashless basis” and potentially causing such warrants to expire worthless.
We have not registered the shares of Class A common
stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms
of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of
our initial business combination, we will use our reasonable best efforts to file with the SEC, and within 60 business days following
our initial business combination to have declared effective, a registration statement covering the issuance of the shares of Class A common
stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until
the warrants expire or are redeemed. We cannot assure you that we will be able to do so if, for example, any facts or events arise which
represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained
or incorporated by reference therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon
exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants
on a “cashless basis.” However, no warrant will be exercisable for cash or on a “cashless basis,” and we will
not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise
is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration or qualification
is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national
securities exchange such that our Class A common stock is not “covered security” under Section 18(b)(1) of the Securities
Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis,”
such that we may issue the shares of Class A common stock without an effective registration statement pursuant to Section 3(a)(9) of the
Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will
use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no
exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration
or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire
worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of Class A common stock included in the units. If the warrants become redeemable, we may exercise our redemption
right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities
laws.
The grant of registration rights to our
initial stockholder and its permitted transferees may make it more difficult to complete our initial business combination, and the future
exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement to be entered into concurrently
with the issuance and sale of the securities in the IPO, our initial stockholder and its permitted transferees can demand that we register
the resale of their founder shares after those shares convert to shares of our Class A common stock at the time of our initial business
combination. In addition, our sponsor and its permitted transferees can demand that we register the resale of the Private Placement Warrants
and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants, and holders of warrants that may be issued
upon conversion of working capital loans may demand that we register the resale of such warrants or the Class A common stock issuable
upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition,
the existence of the registration rights may make our initial business combination more costly or difficult to complete. This is because
the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration
to offset the negative impact on the market price of our Class A common stock that is expected when the common stock owned by our initial
stockholder or their permitted transferees, the private placement warrants owned by our sponsor or warrants issued in connection with
working capital loans are registered for resale.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of
this annual report to issue any notes or other debt securities, or to otherwise incur outstanding debt following the IPO, we may choose
to incur substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless
we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account.
As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach
certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt security is outstanding; |
| ● | our inability to pay dividends on our common stock; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation; and |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
Our initial stockholder will control
the election of our board of directors until consummation of our initial business combination and will hold a substantial interest in
us. As a result, it will elect all of our directors prior to the consummation of our initial business combination and may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholder owns 20% of our outstanding
common stock (assuming it does not purchase any units or Class A common stock). In addition, the founder shares, all of which are held
by our initial stockholder, entitles the holders thereof to elect all of our directors prior to the consummation of our initial business
combination. Holders of our public shares will have no right to vote on the election of directors during such time. These provisions of
our amended and restated certificate of incorporation may only be amended by a majority of at least 90% of our common stock voting at
a stockholder meeting. As a result, you will not have any influence over the election of directors prior to our initial business combination.
Neither our initial stockholder nor, to our knowledge,
any of our directors or officers, have any current intention to purchase additional securities. Factors that would be considered in making
such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, as a result
of their substantial ownership in our company, our initial stockholder may exert a substantial influence on other actions requiring a
stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation
and approval of major corporate transactions. If our initial stockholder purchases any additional shares of common stock in the aftermarket
or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, our initial stockholder
will exert significant influence over actions requiring a stockholder vote.
Our initial stockholder contributed $25,000,
or approximately $0.003 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase
of our Class A common stock.
Our initial stockholder acquired the founder shares
at a nominal price, significantly contributing to the dilution of holders of our Class A common stock. This dilution would increase to
the extent that the anti-dilution provisions of the Class B common stock result in the issuance of Class A common stock on a greater than
one-to-one basis upon conversion of the Class B common stock at the time of our initial business combination and would become exacerbated
to the extent that public stockholders seek redemptions from the trust. In addition, because of the anti-dilution rights of the founder
shares, any equity or equity-linked securities issued or deemed issued in connection with our initial business combination would be disproportionately
dilutive to our Class A common stock.
Our warrant agreement designates the
courts of the City of New York, County of New York, State of New York or the United States District Court for the Southern District of
New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants,
which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the City of New York, County of New York, State of New York or
the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which
jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement,
is filed in a court other than a court of the City of New York, County of New York, State of New York or the United States District Court
for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be
deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection
with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service
of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management team.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the warrants could be converted into cash or stock
(at a ratio different than initially provided), the exercise period could be shortened and the number of shares of our Class A common
stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are 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, but
requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects
the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse
to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend
the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such
amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or
stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of our common stock
purchasable upon exercise of a warrant. Our initial stockholder, founders, directors and officers and any of their respective affiliates
may purchase public warrants with the intention of reducing the number of public warrants outstanding or to vote such warrants if any
matters are submitted to warrant holders for approval, including amending the terms of the public warrants in a manner adverse to the
interests of the registered holders of public warrants. While our initial stockholder, founders, directors and officers and their respective
affiliates has no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for such transactions, there is no limit on the number of our public warrants that our initial stockholder, founders, directors and officers
and their respective affiliates may purchase and it is not currently known how many public warrants, if any, our initial stockholder,
founders, directors and officers and any of their respective affiliates may hold at the time of our initial business combination or at
any other time during which the terms of the public warrants may be proposed to be amended.
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 closing 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 ending on the third trading day prior to the date we send the notice
of redemption to the warrant holders. If the warrants become redeemable, we may exercise our redemption right even if we are unable to
register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants
could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to
do so (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (3) 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.
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 Class A 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 have been satisfied, we will have the option to require any holder that wishes to exercise his or her warrant
(including any warrants held by our initial stockholder, directors or officers, other purchasers of the Private Placement Warrants or
their permitted transferees) to do so on a “cashless basis.” If we choose to require holders to exercise their warrants on
a cashless basis, the number of shares of Class A common stock received by a holder upon exercise will be fewer than it would have been
had such holder exercised his or her warrant for cash. This will have the effect of reducing the potential “upside” of the
holder’s investment in our company.
Our warrants and founder shares may have
an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase 11,500,000 shares
of our Class A common stock, at a price of $11.50 per whole share (subject to adjustment as described in the warrant agreement), as part
of the units offered in the IPO. Simultaneously with the closing of the IPO, we issued an aggregate of 5,933,333 Private Placement Warrants,
each exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described in the
warrant agreement. Our initial stockholder currently holds 8,625,000 founder shares. The founder shares are convertible into shares of
Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor, an affiliate of our
sponsor or certain of our directors and officers make any working capital loans, up to $1,500,000 of such loans may be converted into
warrants, at the price of $1.50 per warrant, at the option of the lender. Such warrants would be identical to the Private Placement Warrants.
To the extent we issue shares of Class A common
stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common
stock upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business. Any
such issuance will increase the number of outstanding shares of our Class A common stock and reduce the value of the Class A common stock
issued to complete the business transaction. Therefore, our warrants and founder shares may make it more difficult to effectuate a business
combination or increase the cost of acquiring the target business.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules require that a proxy statement
with respect to a vote on a business combination include historical and/or pro forma financial statement disclosure. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer
rules. 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 (“GAAP”), or international financial reporting standards as issued by the International
Accounting Standards Board, 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). These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time
for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within
the completion window.
Our warrants are accounted for as a warrant
liability which could have an adverse effect on the future market price of our Class A common stock and warrants and could also make it
more difficult to consummate an initial business combination.
Upon the consummation of our IPO and the concurrent
sale of Private Placement Warrants on March 15, 2021, we issued an aggregate of 17,433,333 warrants, comprising the 11,500,000 warrants
included in the units and the 5,933,333 Private Placement Warrants, including the underwriters’ over-allotment option which was
exercised in full. We are accounting for the warrants as a liability and are recording the warrants at fair value upon issuance. We are
required to determine the fair value of the warrants at the end of each quarter and any changes in fair value are reflected on our statement
of operations and balance sheet. Consequently, any increase in the fair value of the warrant liability will have an adverse effect on
our net income and stockholders’ equity, which could in turn have an adverse effect on the market price of our Class A common stock
and warrants, or the market price of our Class A common stock and warrants of any successor following our initial business combination.
Because of this, potential targets may seek a special purpose acquisition company that does not have warrants that are accounted for as
a liability, which could make it more difficult for us to consummate an initial business combination with a target business.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
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 comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we
remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements
of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we
seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such initial business combination.
Provisions in our amended and restated
certificate of incorporation 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 Class A common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These
provisions include three-year director terms and the ability of the board of directors to designate the terms of and issue new series
of preferred shares, which 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.
Section 203 of the DGCL affects the ability of
an “interested stockholder” to engage in certain business combinations, for a period of three years following the time that
the stockholder becomes an “interested stockholder.” We elected in our certificate of incorporation not to be subject to Section
203 of the DGCL. Nevertheless, our certificate of incorporation contains provisions that have the same effect as Section 203 of the DGCL,
except that it will provide that affiliates of our sponsor and their transferees will not be deemed to be “interested stockholders,”
regardless of the percentage of our voting stock owned by them, and will therefore not be subject to such restrictions. These charter
provisions may limit the ability of third parties to acquire control of our company.
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 the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Risks Relating to Our Management Team
Our directors and officers 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 conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our directors and officers are not required to,
and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations
and our search for a business combination and their other responsibilities. We do not intend to have any full-time employees prior to
the completion of our business combination. Each of our directors and officers is engaged in several other business endeavors for which
he or she may be entitled to substantial compensation and our directors and officers are not obligated to contribute any specific number
of hours per week to our affairs.
Affiliates of our sponsor, including Trident Pine
Acquisition, L.P., Peel Acquisition Company II, LLC, AmTrust Financial Services, Inc. and their respective affiliates have a history of
operating and making investments in the types of companies that we may target for our initial business combination. Such affiliates of
our sponsor will not have a duty to offer acquisition opportunities to the company. Our founders and officers and certain of our directors
are affiliated with one or more of Stone Point Capital LLC, Peel Acquisition Company II, LLC, AmTrust Financial Services, Inc, Novum Underwriting
Partners, LLC and Cedar Insurance Company. and none of them will have any duty to offer acquisition opportunities to the company unless
presented to him or her solely in his or her capacity as a director or officer of the company and after he or she has satisfied his or
her contractual and fiduciary obligations to other parties.
If our officers’ and directors’ other
business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Please see “Directors, Executive Officers and Corporate Governance” for a discussion of our officers’ and directors’
other business affairs.
We are dependent upon our directors and
officers and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals. We believe that our success depends on the continued service of our directors and officers, at least until
we have completed our initial business combination. We do not have an employment agreement with, or key-man insurance on the life of any
of our other directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory
positions following our initial business combination, we do not currently expect that any of them will do so. While we intend to closely
scrutinize any individuals we engage after our initial 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 company regulated by the SEC, which
could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the directors and officers of an acquisition
candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that
certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our
initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may cause our key personnel to have conflicts
of interest in determining whether to proceed with a particular business combination. However, we do not expect that any of our key personnel
will remain with us after the completion of our initial business combination.
Our key personnel may be able to remain with our
company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the 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 us after the completion of the business combination. Such negotiations also could make such key personnel’s retention
or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion
of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential
business combination, as we do not expect that any of our key personnel will remain with us after the completion of our initial business
combination. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business
combination.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our
initial business combination with a prospective target business, our ability to assess the target business’s management may be limited
due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management, therefore,
may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any stockholders or warrant holders who choose to remain a stockholder
or warrant holder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders
or warrant holders are unlikely to have a remedy for such reduction in value.
The directors and officers of an initial business
combination candidate may resign upon completion of our initial business combination. The departure of a business combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an initial business
combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time.
Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the initial
business combination candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place. As a result, we may need to reconstitute the management team of the post-transaction company
in connection with our initial business combination, which may adversely impact our ability to complete an initial business combination
in a timely manner or at all.
Certain of our directors and officers
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to
be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity or
other transaction should be presented.
Until we consummate our initial business combination,
we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor, directors and officers are,
or may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar
business. We do not have employment contracts with our directors and officers that will limit their ability to work at other businesses.
In addition, our sponsor, founders, directors and officers and their respective affiliates may participate in the formation of, or become
a director or officer of, any other blank check company prior to completion of our initial business combination. As a result, our sponsor,
founders, directors and officers could have conflicts of interest in determining whether to present business combination opportunities
to us or to any other blank check company with which they may become involved.
As described in “Directors, Executive Officers
and Corporate Governance — Conflicts of Interest,” each of our directors and officers presently has, and any of them in the
future may have fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such director or
officer is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our directors or
officers becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary,
contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity
to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity
to us. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its
presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a
director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another
legal obligation.
Please see “Directors, Executive Officers
and Corporate Governance — Conflicts of Interest” for a discussion of our officers’ and directors’ business affiliations
and potential conflicts of interest.
Our directors, officers, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits
our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with our sponsor, founders or our directors or officers or we may pursue an affiliated
joint acquisition opportunity with any such persons. We do not have a policy that expressly prohibits any such persons from engaging for
their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
In particular, affiliates of our sponsor, founders,
our directors and our officers have invested, and may in the future invest, in a broad array of sectors, including those in which our
company may invest. As a result, there may be substantial overlap between companies that would be a suitable business combination for
us and companies that would make an attractive target for such other affiliates.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, founders, directors
or officers which may raise potential conflicts of interest.
In light of the involvement of our sponsor, founders,
directors and officers with other businesses, we may or may not decide to acquire one or more businesses affiliated with or competitive
with our sponsor, founders, directors and officers, and their respective affiliates. Our directors also serve as officers and board members
for other entities, including, without limitation, those described under “Directors, Executive Officers and Corporate Governance
— Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, founders,
directors and officers are not currently aware of any specific opportunities for us to complete our initial business combination with
any entities with which they are affiliated. Although we will not be specifically focusing on, or targeting, any transaction with any
affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination
and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion
from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, regarding the fairness to
our stockholders from a financial point of view of a business combination with one or more domestic or international businesses affiliated
with our sponsor, founders, directors or officers, potential conflicts of interest still may exist and, as a result, the terms of the
business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our initial stockholder will lose
its entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may
hold), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
In December 2020, our initial stockholder purchased
an aggregate of 8,625,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. The number of
founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares of
common stock upon the completion of the IPO. The founder shares will be worthless if we do not complete an initial business combination.
In addition, our sponsor has subscribed to purchase
an aggregate of 5,933,333 Private Placement Warrants for a purchase price of approximately $8,900,000, or $1.50 per warrant, that will
also be worthless if we do not complete our initial business combination. Each Private Placement Warrant entitles the holder thereof to
purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment.
The founder shares are identical to the shares
of Class A common stock included in the units sold in the IPO, except that: (1) only holders of the founder shares have the right to vote
on the election and removal of directors prior to our initial business combination; (2) the founder shares are subject to certain transfer
restrictions; (3) our initial stockholder, directors and officers have entered into a letter agreement with us, pursuant to which they
have agreed to: (a) 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, (b) 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 our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business
combination or to redeem 100% of our public shares if we have not consummated our initial business combination within the completion window;
and (c) waive 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 the completion window (although they will be entitled to liquidating distributions
from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the
completion window); (4) the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial
business combination on a one-for-one basis, subject to adjustment; and (5) the holder of founder shares is entitled to registration rights.
The personal and financial interests of our sponsor,
founders, directors and officers may influence their motivation in identifying and selecting a target business combination, completing
an initial business combination and influencing the operation of the business following the initial business combination. This risk may
become more acute as the deadline for completing our initial business combination nears.
Risks Associated with Acquiring and Operating
a Business in Foreign Countries
If our management team pursues a company
with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in
connection with investigating, agreeing to and completing such combination, and if we effect such initial business combination, we would
be subject to a variety of additional risks that may negatively impact our operations.
If our management team pursues a company with operations
or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border
business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting
due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes
in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with
such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting,
including any of the following:
| ● | costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements
of overseas markets; |
| ● | rules and regulations regarding currency redemption; |
| ● | complex corporate withholding taxes on individuals; |
| ● | laws governing the manner in which future business combinations may be effected; |
| ● | tariffs and trade barriers; |
| ● | regulations related to customs and import/export matters; |
| ● | exchange listing and/or delisting requirements; |
| ● | local or regional economic policies and market conditions; |
| ● | unexpected changes in regulatory requirements; |
| ● | challenges in managing and staffing international operations; |
| ● | tax issues, including, but not limited to, tax law changes and variations in tax laws as compared to the United States; |
| ● | currency fluctuations and exchange controls; |
| ● | challenges in collecting accounts receivable; |
| ● | cultural and language differences; |
| ● | underdeveloped or unpredictable legal or regulatory systems; |
| ● | protection of intellectual property; |
| ● | social unrest, crime, strikes, riots, and civil disturbances; |
| ● | regime changes and political upheaval; |
| ● | terrorist attacks, natural disasters and wars; |
| ● | deterioration of political relations with the United States; |
| ● | obligatory military service by personnel; and |
| ● | government appropriation of assets. |
We may not be able to adequately address these
additional risks. If we were unable to do so, we may be unable to complete such initial business combination or, if we complete such initial
business combination, our operations might suffer, either of which may adversely impact our business, results of operations and financial
condition.
If our management following our initial
business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws,
which could lead to various regulatory issues.
Following our initial business combination, any
or all of our management could resign from their positions as officers of the company, and the management of the target business at the
time of the business combination could remain in place. Management of the target business may not be familiar with U.S. securities laws.
If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws.
This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
General Risk Factors
We are a newly incorporated company with
no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly incorporated company with no operating
results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination with one or more target businesses. We may be unable to complete our initial business combination.
If we fail to complete our initial business combination, we will never generate any operating revenues.
Past performance by our sponsor, founders,
members of our management team and their respective affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses
associated with, our sponsor, founders, members of our management team and their respective affiliates is presented for informational
purposes only. Any past experience and performance, including related to acquisitions, of our sponsor, founders and their respective affiliates
and members of our management team is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for
our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You should
not rely on the historical record and performance of our sponsor, founders, members of our management team or their respective affiliates
as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. In addition,
our sponsor, founders, directors and officers have had limited experience with blank check companies or special purpose acquisition companies
in the past. An investment in us is not an investment in our sponsor, founders or their respective affiliates.
Certain agreements related to the IPO
and our initial business combination may be amended without stockholder approval.
Certain agreements, including the underwriting
agreement relating to the IPO, the letter agreement among us and our initial stockholder, directors and officers, and the registration
rights agreement among us and our initial stockholder, the Merger Agreement and other agreements we entered into in connection with the
Merger may be amended without stockholder approval. These agreements contain various provisions that our public stockholders might deem
to be material. It may be possible that our board, in exercising its business judgment and subject to its fiduciary duties, chooses to
approve one or more amendments to any such agreement in connection with the consummation of our initial business combination. Any such
amendments would not require approval from our stockholders, may result in the completion of our initial business combination that may
not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities.
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
As of December 31, 2021, we had $313,382 in cash
and a working capital deficiency of $844,633. Further, we have incurred and expect to continue to incur significant costs in pursuit of
our acquisition plans. Management’s plans to address this need for capital through our initial business combination are discussed
in the section of this annual report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful. These factors,
among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in
this annual report do not include any adjustments that might result from our inability to continue as a going concern.
Legal proceedings in connection with
the initial business combination, the outcomes of which are uncertain, could delay or prevent the completion of the initial business combination.
In connection with the initial business combination,
certain of our stockholders have filed lawsuits and other shareholders have threatened to file lawsuits alleging breaches of fiduciary
duty and violations of the disclosure requirements of the Exchange Act. We intend to defend the matters vigorously. These cases are in
the early stages and we are unable to reasonably determine the outcome or estimate any potential losses, and, as such, have not recorded
a loss contingency.
Additional lawsuits may be filed against us or
our directors and officers in connection with the initial business combination. Defending such additional lawsuits could require us to
incur significant costs and draw the attention of our management team away from the initial business combination. Further, the defense
or settlement of any lawsuit or claim that remains unresolved at the time the initial business combination is consummated may adversely
affect the post-combination company’s business, financial condition, results of operations and cash flows. Such legal proceedings
could delay or prevent the business combination from becoming effective within the agreed upon timeframe.
We have identified a material weakness
in our internal control over financial reporting as of December 31, 2021. If we are unable to maintain an effective system of internal
control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely
affect investor confidence in us and materially and adversely affect our business and operating results.
Following the issuance of the “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (the “SEC Staff Statement”)
and recent comment letters issued by the SEC, our audit committee identified, in light of the SEC Staff Statement and those comment letters,
a material weakness in our internal controls 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 and corrected on a timely basis.
Effective internal controls are necessary for us
to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation
measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses in the
future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures
that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain
compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing
requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you
that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material
weaknesses.
We are an emerging growth company and
a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result,
our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to
five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held
by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging
growth company as of the end of such fiscal year. We cannot predict whether investors will find our securities less attractive because
we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions,
the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a
standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K under the Securities Act. 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 last business day of our most recently completed second fiscal quarter, and (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 last business day of our most recently completed second fiscal quarter.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
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 directors, officers
and employees for breach of fiduciary duty and other similar 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. This provision may have the effect of discouraging lawsuits against our directors and officers.
We
face risks related to insurance sector companies.
Business
combinations with companies in the insurance sector (including those focused on the insurance-related technology sector (“InsurTech”))
entail special considerations and risks. If we are successful in completing a business combination with such a target business, we will
be subject to, and may be adversely affected by, the following risks:
| ● | compliance
with governmental regulations and changes in laws and regulations and risks from investigations
and legal proceedings could be costly and could adversely affect operating results; |
| ● | we
may not be able to obtain regulatory approvals in connection with a business combination
in a timely manner, or at all, and this delay or failure may result in additional expenditures
of money and resources, jeopardize our efforts to consummate a business combination within
required time periods and force us to liquidate; |
| ● | each
of our target businesses will be subject to extensive regulation, which may adversely affect
our ability to achieve our business objectives; in addition, if a target business fails to
comply with these regulations, it may be subject to penalties, including fines and suspensions,
which could reduce our earnings significantly; |
| ● | if
we fail to properly evaluate the financial position and reserves of a target business with
which we enter into a business combination, our losses and benefits from the operation of
that business may exceed our loss and benefit reserves, which could have a significant adverse
effect on our results of operations; |
| ● | a
downgrade in the claims paying and financial strength ratings of a target business may cause
significant declines in its revenues and earnings; |
| ● | changes
in market interest rates or in the equity security markets may impair the performance of
a target business’ investments, the sales of its investment products and issuers of
securities held in the portfolio of the target business; |
| ● | the
exclusions and limitations in policies written by a target business may not be enforceable; |
| ● | cyclical
changes in the property/casualty insurance industry may negatively impact a target business’
results of operations; |
| ● | catastrophic
losses are unpredictable and may adversely affect the results of operations, liquidity and
financial condition of a target business; |
| ● | periods
of adverse frequency of losses are unpredictable and may adversely affect the results of
operations, liquidity and financial condition of a target business; |
| ● | availability
of adequate and cost-effective reinsurance coverage is unpredictable and may adversely affect
the ability of the company to offset excess risks from the balance sheet of a target business; |
| ● | a
target business may be subject to assessments and other surcharges from state guaranty funds,
mandatory reinsurance arrangements and state insurance facilities, which may reduce or otherwise
impair profitability; |
| ● | reliance
by a target business on information technology and telecommunications systems and the failure
or disruption of these systems could disrupt its operations and adversely affect its results
of operations; |
| ● | if
our target business’ established reserves for insurance claims are insufficient, it
may not be able to meet its obligations as they become due and its earnings may be reduced
or it could suffer losses; and |
| ● | if
a target business is engaged in insurance brokerage, a reduction in insurance premium rates
and commission rates may have an adverse effect on its operations and profits. |
Any
of the foregoing could have an adverse impact on our operations following a business combination. However, while we currently intend
to concentrate our efforts on identifying businesses in the InsurTech sector and businesses that provide insurance products and services
in all sectors of the insurance industry, we are not required to complete our initial business combination with an InsurTech or insurance
business, and, as a result our efforts in identifying prospective target businesses will not be limited to the InsurTech or insurance
sectors. Accordingly, if we acquire a target business in another industry, these risks will likely not affect us and we will be subject
to other risks attendant with the specific industry in which we operate or target business which we acquire, none of which can be presently
ascertained.
We
may face risks related to businesses in the InsurTech sector.
Business
combinations with businesses in the InsurTech sector may involve special considerations and risks. If we complete our initial business
combination with a business in the financial services industry or a business providing technology services to the financial industry,
we will be subject to the following risks, any of which could be detrimental to us and the business we acquire:
| ● | if
we are unable to keep pace with evolving technology and changes in the InsurTech sector,
our revenues and future prospects may decline; |
| ● | our
ability to provide InsurTech products and services to customers may be reduced or eliminated
by regulatory changes; |
| ● | any
business or company we acquire could be vulnerable to cyberattack or theft of individual
identities or personal data; |
| ● | difficulties
with any products or services we provide could damage our reputation and business; |
| ● | a
failure to comply with privacy regulations could adversely affect relations with customers
and have a negative impact on business; and |
| ● | we
may not be able to protect our intellectual property and we may be subject to infringement
claims. |
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 businesses in the InsurTech sector. Accordingly,
if we acquire a target business in another industry, these risks will likely not affect us and we will be subject to other risks attendant
with the specific industry in which the target business which we acquire operates, none of which can be presently ascertained.