Item
1. Business
Overview
We are a blank check company incorporated
as a Delaware corporation in November 2015 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this report
as our initial business combination. We have generated no operating revenues to date and we will not generate operating revenues
until we consummate our initial business combination.
On March 20, 2018, the Company consummated
its initial public offering (“IPO”) of 15,000,000 units (the “Initial Units”). Each Unit consists of one share of common stock of the Company,
$0.0001 par value per share (“Common Stock”), and one warrant of the Company (“Public Warrant”), with each
warrant entitling the holder to purchase one share of Common Stock at $11.50 per share. The Units were sold at an offering price
of $10.00 per Unit, generating gross proceeds of $150,000,000. The Company had granted Cantor Fitzgerald & Co. (“Cantor”),
the representative of the several underwriters in the IPO, a 45-day option to purchase up to 2,250,000 additional Units to cover
over-allotments, if any (the “Over-Allotment Units”). On March 28, 2018, Cantor exercised the option in full and purchased
an aggregate of 2,250,000 Over-Allotment Units (the “Over-Allotment Units”; collectively with the Initial Units, the
“Units”).
Simultaneously with the consummation
of the IPO, the Company consummated the private placement (“Private Placement”) of an aggregate of 4,500,000
warrants (“Placement Warrants”) at a price of $1.00 per Placement Warrant, generating total proceeds of
$4,500,000. Also, simultaneously with the consummation of the IPO, the Company issued a convertible promissory note to our
Sponsor with a principal amount of $1,500,000 and no interest (the “Sponsor Note”). On March 28, 2018, in
connection with the underwriters’ exercise of the over-allotment option in full, the Company issued another promissory
note to the Sponsor with a principal amount of $225,000 and no interest (the “Second Note”; together with the
Sponsor Note, the “Sponsor Notes”). The Sponsor Notes shall be repaid or converted into warrants of the Company at a conversion price of $1.00 per warrant,
at the Sponsor’s discretion, only upon consummation of the Company’s initial business combination.
A total of $174,225,000 of the net
proceeds from the IPO (including the full exercise of the over-allotment option) the Sponsor Notes and the Placement Warrants was
placed in a U.S.-based trust account established for the benefit of the Company’s public stockholders.
Our units began trading on March 16, 2018
on the NASDAQ Capital Market under the symbol TIBRU. Commencing on April 10, 2018, the securities comprising the units began separate
trading. The units, common stock, and warrants are trading on the NASDAQ Capital Market under the symbols “TIBRU,”
“TIBR” and “TIBRW,” respectively.
On August 28, 2019, we issued an unsecured
promissory note in the amount of up to $1,000,000 to our Sponsor. The note bears no interest and is repayable in full upon the
earlier of consummation of our initial business combination and winding up. The note may also be converted into warrants at a price
of $1.00 per warrant at the option of the Sponsor upon the consummation of our initial business combination. Such warrants would
be identical to the private placement warrants issued to the Sponsor at the Company’s initial public offering.
On October 10, 2019, we entered into the
Business Combination Agreement (the “Business Combination Agreement”) with Lagniappe Ventures LLC, a Delaware limited
liability company (the “Sponsor”), in the capacity as the representative from and after the closing of the Business
Combination (as defined below) (the “Closing”) for the stockholders of Tiberius (other than the Sellers (as defined
below)) (the “Purchaser Representative”), International General Insurance Holdings Ltd., a company organized under
the laws of the Dubai International Financial Center (“IGI”), and Wasef Jabsheh (“Jabsheh”), in the capacity
as the representative (the “Seller Representative”) for the holders of IGI’s outstanding common shares that execute
and deliver Share Exchange Agreements (as defined below) in connection with the Business Combination (the “Sellers”),
to which International General Insurance Holdings Ltd., a newly-formed Bermuda exempted company (“Pubco”) and Tiberius
Merger Sub, Inc., its newly-formed wholly-owned subsidiary organized in Delaware (“Merger Sub”) became parties thereto
pursuant to joinder agreements entered into after the date thereof.
In connection with the Business
Combination Agreement, certain shareholders of IGI holding approximately 99% of the issued and outstanding capital shares of
IGI have entered into Share Exchange Agreements with us, IGI and the Seller Representative, pursuant to which Pubco became a
party upon execution of a joinder thereto (each, an “Share Exchange Agreement”), and other shareholders of IGI
that may enter into Share Exchange Agreements after the date of the Business Combination Agreement and prior to the
Closing.
Pursuant to the Business Combination Agreement
and the Share Exchange Agreements, subject to the terms and conditions set forth therein, at the Closing (a) we will merge with
and into Merger Sub, with us continuing as the surviving entity (the “Merger”), and with all holders of our securities
receiving substantially identical securities of Pubco, and (b) Pubco will acquire all or substantially all of the issued and outstanding
capital shares of IGI (the “Purchased Shares”) from the Sellers in exchange for a mix of cash and common shares of
Pubco, with IGI becoming a subsidiary of Pubco (the “Share Exchange” and, together with the Merger and the other transactions
contemplated by the Business Combination Agreement, the “Business Combination”).
The total consideration to be paid by Pubco
to the Sellers for the Purchased Shares (the “Transaction Consideration”) will be equal to (i) the sum of (the “Adjusted
Book Value”) (A) the total consolidated book equity value of IGI and its subsidiaries as of the most recent month end of
IGI prior to the Closing (the “Book Value”), plus (B) the amount of IGI’s out-of-pocket transaction expenses
which reduced the Book Value from what it would have been if such expenses had not been incurred, multiplied by (ii) 1.22, and
multiplied by (iii) a fraction equal to (A) the total number of Purchased Shares divided by (B) the total number of issued and
outstanding IGI common shares as of the Closing.
$80.0 million of the Transaction Consideration
will be paid in cash (the “Cash Consideration”), with each Purchased Share acquired for cash paid based on a value
equal to two times Adjusted Book Value per share. The Purchased Shares paid with the Cash Consideration will be allocated among
the Sellers based on an agreed upon formula, with Wasef Jabsheh receiving $65.0 million of the Cash Consideration, Mr. Jabsheh’s
family members receiving no Cash Consideration and the remaining Sellers receiving the remaining $15.0 million pro rata based on
the Purchased Shares owned by each such remaining Seller.
The remaining Transaction Consideration
will be paid by Pubco to the Sellers by delivery of newly issued common shares of Pubco (the “Exchange Shares”) equal
in value to the Transaction Consideration less the Cash Consideration, with each Exchange Share valued at the price per share (the
“Redemption Price”) at which each share of our common stock is redeemed pursuant to the redemption by us of shares
of our common stock from our public stockholders in connection with the Business Combination, as required by its amended and restated
certificate of incorporation and our initial public offering prospectus. The Exchange Shares will be allocated among the Sellers
pro rata based on the total number of Purchased Shares held by them after deducting the number of Purchased Shares paid for with
the Cash Consideration.
A number of Exchange Shares otherwise issuable
to the Sellers at the Closing equal to 2.5% of the Transaction Consideration (the “Escrow Shares”) will be set aside
in escrow and delivered to Continental Stock Transfer & Trust Company (or such other escrow agent reasonably acceptable to
Tiberius and IGI), as escrow agent (the “Escrow Agent”), at the Closing, with such Escrow Shares, and any dividends,
distributions or other earnings thereon, to be used as the sole source of remedy available to Pubco for any post-closing Transaction
Consideration negative adjustments. The Escrow Shares will be allocated among the Sellers pro rata based on the number of Exchange
Shares received by each Seller, and while held in escrow, each Seller will have voting rights on the Escrow Shares based on such
allocation. The Transaction Consideration to be paid by Pubco at the Closing will be based on an estimate of the most current month-end
Adjusted Book Value at the Closing and subject to a post-Closing true-up. If the true-up results in a decrease in the Transaction
Consideration, such true-up will be paid to Pubco by delivery of the Escrow Shares (which will be effectively cancelled by Pubco)
and other escrow property based on a price per share equal to the Redemption Price. If the true-up results in an increase in the
Transaction Consideration, such true-up will be paid by Pubco by delivery of additional Exchange Shares based on a price per share
equal to the Redemption Price (and without a cap on the number of additional Exchange Shares to be issued). Upon the final determination
of the true-up, any remaining Escrow Shares or other escrow property will be delivered to the Sellers.
Simultaneously with the execution of the
Business Combination Agreement on October 10, 2019, we entered into subscription agreements (each, a “Subscription Agreement”)
with certain investors (the “PIPE Investors”), pursuant to which we agreed to issue and sell to the PIPE Investors
an aggregate of $23,611,809 of shares of our common stock at a price of $10.20 per share immediately prior to, and subject to,
the Closing, which will become Pubco common shares in the Business Combination. The Subscription Agreement investment is conditioned
on the concurrent Closing and other customary closing conditions. The PIPE Investors were also given registration rights in the
Subscription Agreements pursuant to which Pubco, as the successor to Tiberius, will be required to file a resale registration statement
for the shares issued to the PIPE Investors within 30 days after the Closing and use its commercially reasonable efforts to have
the registration statement declared effective as soon as practicable after the filing thereof. Each PIPE Investor agreed in the
Subscription Agreement that it and its affiliates will not have any right, title, interest or claim of any kind in or to any monies
in the Trust Account held for its public shareholders, and agreed not to, and waived any right to, make any claim against the Trust
Account (including any distributions therefrom). The proceeds from the Subscription Agreement investment will be used to fund a
portion of the cash consideration for the Business Combination, the transaction expenses and other liabilities of Tiberius and
otherwise provide working capital and funds for corporate purposes to Pubco after the Closing.
Simultaneously with the execution of the
Business Combination Agreement on October 10, 2019, we entered into subscription agreements (each, a “Backstop Subscription
Agreement”) with our directors and officers Michael Gray and Andrew Poole and their related company The Gray Insurance Company
(collectively, the “Backstop Investors”), pursuant to which we agreed to issue and sell to the Backstop Investors up
to an aggregate of $20,000,000 of shares of our common stock at $10.20 per share immediately prior to, and subject to, the Closing,
which will become Pubco common shares in the Business Combination, if and solely to the extent that the minimum cash condition
set forth in the Business Combination Agreement would otherwise not be met without their purchase (and prior to giving effect to
any payment in Pubco common shares in lieu of cash under a certain amendment to the Underwriting Agreement we entered into in connection
with our initial public offering). The Backstop Subscription Agreement investment is conditioned on the concurrent Closing and
other customary closing conditions. The Backstop Investors were also given registration rights in the Backstop Subscription Agreements
pursuant to which Pubco, as our successor, will be required to file a resale registration statement for the shares issued to the
Backstop Investors within 30 days after the Closing and use its commercially reasonable efforts to have the registration statement
declared effective as soon as practicable after the filing thereof. Each Backstop Investor agreed in the Backstop Subscription
Agreement that it and its affiliates will not have any right, title, interest or claim of any kind in or to any monies in the Trust
Account held for our public shareholders, and agreed not to, and waived any right to, make any claim against the Trust Account
(including any distributions therefrom). The proceeds from the Backstop Subscription Agreement investment will be used to fund
a portion of the cash consideration for the Business Combination, our transaction expenses and other liabilities and otherwise
provide working capital and funds for corporate purposes to Pubco after the Closing.
Other than as specifically discussed, this
report does not assume the closing of the Business Combination.
Our Search for Business Combination Opportunities
Since our initial public offering, we have
concentrated our efforts on seeking and completing an initial business combination within the middle-market insurance sector that
has an expected enterprise value of greater than $350 million. While we are permitted to pursue an acquisition opportunity in any
business industry or sector and in any geographic region, we have focused on companies in the middle-market insurance sector in
order to best combine the expertise and experience of our management team in a sector that offers attractive investment opportunities.
We broadly define the insurance sector (or
insurance companies) to include, but not be limited to:
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Insurance carriers, including property-casualty, life, health and reinsurance;
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Insurance distribution companies, including retail agents, insurance brokers or managing general
underwriters;
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Service providers, including claims or medical cost management, data and technology providers,
and asset managers; and
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InsurTech companies, including companies focused on harnessing technology to maximize savings and
efficiency, launching growth opportunities and innovating new risk selection processes from the established insurance operating
model.
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We believe that the middle-market insurance
sector is highly fragmented, with hundreds of private companies facing a confluence of insurance industry-specific factors contributing
to ever increasing financial and operational pressures, including:
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Onset of InsurTech companies harnessing technology and driving an increased importance of data;
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Tightening regulations including an enhancement to the A.M. Best stochastic-based BCAR (Best Capital Adequacy Ratio) model
and enhancements to the NAIC (National Association of Insurance Commissioners) Property Casualty RBC (Risk Based Capital) formula,
leading to higher capital requirements;
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Low interest rate environment, negatively impacting returns on invested capital;
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Increasing competition, often from larger entities, decreasing underwriting margins and limiting revenue growth;
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Declining cash flow, resulting in lower distributions to owners;
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Limited diversification and monetization options, due to their small size and limited resources; and
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Recent catastrophic events including Hurricane Harvey, Hurricane Irma, Hurricane Maria, two recent earthquake loss events in
Mexico and the 2017 California wildfires, leading to balance sheet stress.
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We believe that these factors impede middle-market
insurance companies’ ability to effectively compete, thereby creating opportunities to acquire quality companies at attractive
valuations. Post combination, with the benefit of our management team’s domain and operational expertise, we envision that
the public entity will serve as a platform allowing for: (i) enhanced return on equity and tangible book value per share growth,
(ii) improved access to capital, (iii) strengthened management and board of directors, with an enhanced ability to recruit as needed,
(iv) implementation of industry best practice methodologies, (v) optimized operations, (vi) the ability to make add-on acquisitions
and (vii) the opportunity to benefit from a potential change in the competitive environment in markets for property related coverages
as a result of recent catastrophic events, all resulting in a larger and stronger insurance entity, one that will be well equipped
to compete and capitalize on market opportunities in a consolidating industry.
While there is no assurance that we will
be able to consummate a business combination with an insurance company such as IGI, our management team’s objective is to
generate attractive risk adjusted returns (including a focus on tangible book value per share growth) and create value for our
stockholders by applying our disciplined strategy of underwriting intrinsic worth and improving tangible book value per share growth
after making an acquisition to unlock value. We believe that our management’s investments in the insurance sector, M&A
experience, and advisory capabilities optimize the opportunity to identify, diligence, consummate and add substantial value to
the business post combination with a focus on tangible book value per share growth. Our management team has: a) experience in operating
profitable middle-market insurance sector companies, b) a broad network of contacts and relationships in the insurance and financial
markets that may serve as a useful source of proprietary deal flow, in addition to traditional relationships with other third party
investment funds, investment banks, consultants, auditors, and lawyers c) in-depth investing, financial and M&A transaction
acumen, and d) worked together previously on various projects over a period of years.
Our management team is led by Michael T.
Gray and Andrew J. Poole, supported by a team of executives at The Gray Insurance Company, and by a Board of Directors that is
comprised of seasoned insurance industry and finance executives.
Past performance by our management team
or The Gray Insurance Company is not a guarantee either (i) of success with respect to any business combination we may consummate
or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the
historical performance record of our management as indicative of our future performance.
Acquisition and Business Strategy
Our current acquisition and value creation
strategy is to identify, acquire and, after our initial business combination, build a public company in the insurance sector. Our
executive officers and directors have extensive experience in the insurance sector as managers, operators, principals, investors,
advisors or directors, with experience in sourcing, evaluating, negotiating, structuring and executing transactions. Our acquisition
deal flow, due diligence and selection process will leverage their deep, broad and trusted network of insurance and finance industry
relationships as well as their relationships with third party investment funds, investment bankers, consultants, attorneys and
accountants.
We have elected to focus our search for
an initial business combination target on insurance because multiple members of our management team and Board of Directors have
extensive experience and a successful track record of investment and management within this sector. We believe that this sector
is currently experiencing some element of change or dislocation that is having a broad impact on businesses within the industry.
Those businesses which have the capital and expertise to respond well will obtain a competitive advantage that should drive a measurable
increase in shareholder value and tangible book value per share growth. We believe that this creates a significant opportunity
for us to apply our human and financial capital to our initial acquisition target in order to capture this measurable increase
in value for our stockholders.
We believe that our management team (i)
provides access to a wide breadth of business combination opportunities, (ii) attracts potential business owners, who view the
public vehicle and our management team’s capabilities in a positive manner and, (iii) contributes value-added services in their
role as advisors or in leadership positions post business combination, as we seek to build a strong growth platform.
Target Industry of Focus
Since our initial public offering, we have
concentrated our efforts on seeking and completing an initial business combination within the middle-market insurance sector that
has an expected enterprise value of greater than $350 million. While we are permitted to pursue an acquisition opportunity in any
business industry or sector and in any geographic region, we have focused on companies in the middle-market insurance sector in
order to best combine the expertise and experience of our management team in a sector that offers attractive investment opportunities.
We broadly define the insurance sector (or
insurance companies) to include, but not be limited to:
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Insurance carriers, including property-casualty, life, health and reinsurance;
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Insurance distribution companies, including retail agents, insurance brokers or managing general underwriters;
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Service providers, including claims or medical cost management, data and technology providers, and asset managers; and
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InsurTech companies, including companies focused on harnessing technology to maximize savings and efficiency, launching growth
opportunities and innovating new risk selection processes from the established insurance operating model.
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We believe that the middle-market insurance
sector is highly fragmented, with hundreds of private companies facing a confluence of insurance industry-specific factors contributing
to ever increasing financial and operational pressures, including:
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Onset of InsurTech companies harnessing technology and driving an increased importance of data;
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Tightening regulations including an enhancement to the A.M. Best stochastic-based BCAR model and enhancements to the NAIC (National
Association of Insurance Commissioners) Property Casualty RBC (Risk Based Capital) formula, leading to higher capital requirements;
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Low interest rate environment, negatively impacting
returns on invested capital;
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Increasing competition, often from larger entities,
decreasing underwriting margins and limiting revenue growth;
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Declining cash flow, resulting in lower distributions
to owners;
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Limited diversification and monetization options,
due to their small size and limited resources; and
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Recent catastrophic events including Hurricane Harvey,
Hurricane Irma, Hurricane Maria, two recent earthquake loss events in Mexico and the 2017 California wildfires, leading to balance
sheet stress.
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Acquisition Criteria
Consistent with our current acquisition
strategy, we have identified the following general criteria and guidelines we intend to use in evaluating prospective target businesses.
While we have used these criteria and guidelines in evaluating acquisition opportunities, we may ultimately decide to enter into
our initial business combination with a target business such as IGI that only meets some but not all of these criteria and guidelines.
We intend to seek to acquire one or more businesses that we believe:
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have tangible book value per share growth that is underperforming
compared to its peers where we can create enhanced risk adjusted shareholder returns by identifying value enhancing processes
prior to the business combination;
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have significant growth and profit opportunities that are
not being utilized. Improvements can be accomplished through a combination of enhanced utilization of reinsurance and partnerships,
more effective growth in invested asset management, prudent capital management, data and technology enhancements leading to revenues
generating superior risk adjusted returns, reviews of third party capital opportunities and strengthening of the balance sheet;
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benefit from enhanced access to capital markets through
the public company structure. We believe that some private insurance companies have a lower return on tangible common equity and
find it more difficult to grow relative to their public company peer groups due to a lack of established access to the public
equity and debt markets;
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are being impeded by low interest rates, tightened regulatory
standards, insufficient distributions to owners, increased competition, increasing capital requirements, limited diversification
opportunities and the impact of InsurTech companies. Our management team believes it can leverage their experience and innovation
to drive improved financial performance and ultimately a stronger competitive position;
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current management will gain a valuable employee retention
tool by being a public company and be incented to retain ownership and help enhance shareholder value creation alongside our management
team and advisors;
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we can solve next generation and dissident shareholder
issues that a company may face; and
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have opted not to sell to a larger or foreign entity where
future upside is no longer largely driven by the original operations.
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Competitive Strengths
We believe our competitive strengths to
be the following:
Status as a Public Company. We believe
our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer
a target business a liquidity and potential upside alternatives, which are typically not available to middle-market insurance companies.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of
the sellers. Once public, we believe that the target business would then have greater access to capital, enhanced ability to conduct
M&A activities utilizing the stock as a currency and an additional means of providing management incentives consistent with
stockholders’ interests than it would have as a privately-held company. Being public can offer further benefits by augmenting
a company’s profile among potential new customers and vendors and aid in attracting talented employees. That being said,
while we believe that our status as a public company will make us an attractive business partner, some potential target businesses
may view the inherent limitations in our status as a blank check company as a deterrent and may prefer to effect a business combination
with a more established entity or with a private company.
Financial Position. With funds held
in trust available for our initial business combination, currently (as of December 31, 2019) in the amount of $179,491,402 (including
deferred underwriting commissions and proceeds of the sponsor loan) as well as amounts available as a result of the forward purchase
contracts, we offer a target business a variety of options such as providing the owners of a target business with shares in a public
company and a public means to sell such shares, providing cash for stock, and providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial
business combination using cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the
most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and
desires.
Operating, Investing and Deal Sourcing
Experience. While there is no assurance that we will be able to consummate a business combination with an insurance company,
our management team’s objective is to generate attractive risk adjusted returns (including a focus on tangible book value
per share growth) and create value for our stockholders by applying our disciplined strategy of underwriting intrinsic worth and
improving tangible book value per share growth after making an acquisition to unlock value. We believe that our management’s
investments in the insurance sector, M&A experience, and advisory capabilities optimize the opportunity to identify, diligence,
consummate and add substantial value to the business post combination with a focus on tangible book value per share growth. Our
management team has: a) experience in operating profitable middle-market insurance sector companies, b) a broad network of contacts
and relationships in the insurance and financial markets that may serve as a useful source of proprietary deal flow, in addition
to traditional relationships with other third party investment funds, investment banks, consultants, auditors, and lawyers c) in-depth
investing, financial and M&A transaction acumen, and d) worked together previously on various projects over a period of years.
Initial Business Combination
NASDAQ rules provide that our initial business
combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance
in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing
a definitive agreement in connection with our initial business combination. If our board is not able to independently determine
the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm
or a qualified independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed
on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement
even if our securities are not listed on NASDAQ at the time of our initial business combination.
We anticipate structuring our initial business
combination so that the post-transaction company will own or acquire 100% of the equity interests or assets of the target business
or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires
less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management
team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target.
In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial
number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of
our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a
target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the 80% fair market value test. If the business combination involves
more than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses.
If our securities are not listed on NASDAQ after this offering, we would not be required to satisfy the 80% requirement. However,
we intend to satisfy the 80% requirement even if our securities are not listed on NASDAQ at the time of our initial business combination.
Based on the valuation analysis of our management and board of directors, we have determined that the fair market value of IGI
was substantially in excess of 80% of the funds in the trust account and that the 80% test was therefore satisfied.
Our anchor investor has committed, pursuant
to a forward purchase contract with us, to purchase, in a private placement to occur concurrently with the consummation of our
initial business combination, 1,500,000 of our units at $10.00 per unit, and 300,000 shares of common stock (which shares will
be issued for no additional consideration and will have the same terms as the founder shares described herein) for total gross
proceeds of $15,000,000. The funds from the sale of units will be used as part of the consideration to the sellers in the initial
business combination including the Business Combination or for the combined company’s working capital needs. This commitment
is independent of the percentage of stockholders electing to redeem their public shares and provides us with a minimum funding
level for the initial business combination or future working capital needs. As part of the forward purchase contract, we have granted
our anchor investor the right to appoint a single observer to our Board of Directors. In May 2018, Michael Millhouse, a designee
of our anchor investor, was elected as a director of our company. Pursuant to that certain Warrant Purchase Agreement between us
and our anchor investor executed in October 2019, we agreed to purchase from the anchor investor, simultaneously with and subject
to the closing of the Business Combination, 3,000,000 of warrants owned by our anchor investor, with 1,500,000 of such warrants
currently owned by this investor and 1,500,000 of such warrants to be issued to this investor, at $0.75 per warrant, for an aggregate
purchase price of $2,250,000.
If the shares of common stock, either held
directly or underlying the securities issued to or held our anchor investor represent 10.0% or more of our issued and outstanding
common stock at the closing of our initial business combination, then the size of our anchor investor’s forward purchase
contract shall be reduced, so that it holds (in the aggregate) no more than 9.9% of our issued and outstanding common stock at
the closing of our initial business combination. The consummation of the purchases pursuant to the forward purchase agreement with
our anchor investor is subject to various closing conditions, including the anchor investor’s ability to invest in the industry
in which our proposed target business operates pursuant to our anchor investor’s internal written policies. Our co-anchor
investors have also committed, pursuant to a forward purchase contract with us, to purchase, in a private placement to occur concurrently
with the consummation of our initial business combination, 1,000,000 shares of our common stock at a purchase price of $10.00 per
share and 100,000 additional shares of our common stock (which additional shares shall be issued for no additional consideration
and otherwise have the same terms as the founder shares described herein) for total gross proceeds of $10,000,000. The funds from
the sale of such shares will be used as part of the consideration to the sellers in the initial business combination or for the
combined company’s working capital needs. This commitment is independent of the percentage of stockholders electing to redeem
their public shares and provides us with a minimum funding level for the initial business combination or future working capital
needs. As part of such forward purchase contracts, we have granted our co-anchor investors the right to each appoint a single observer
to our Board of Directors. Such observers will not have voting rights.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. While IGI is not affiliated with
our sponsor, officers or directors, in the event we do not consummate the Business Combination with IGI and seek to complete our
initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation
opinions for the type of company we are seeking to acquire or an independent accounting firm that our initial business combination
is fair to our company from a financial point of view.
Members of our management team directly
or indirectly own common stock and warrants following our initial public offering, and, accordingly, may have a conflict of interest
in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination
if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
Each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which
such officer or director is required to present a business combination opportunity to such entity. Accordingly, if any of our officers
or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has current
fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business
combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however,
that the fiduciary duties or contractual obligations of our executive officers will materially affect our ability to complete our
business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her
capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue.
Our officers and directors have agreed not
to become an officer or director of any other special purpose acquisition company with a class of securities registered under the
Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed to
complete our initial business combination within 24 months after the closing of our initial public offering. We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified
by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section
404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may
be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company
until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the
prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior
three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act.
Effecting our Initial Business Combination
General
We are not presently engaged in, and we
will not engage in, any operations until we consummate our initial business combination. We intend to effectuate our initial business
combination using cash from the proceeds of our initial public offering, the private placement of the private placement warrants,
the proceeds from the forward purchase contracts, our capital stock, debt or a combination of these as the consideration to be
paid in our initial business combination. We may seek to complete our initial business combination with a company or business that
may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent
in such companies and businesses.
If the entire purchase price of our initial
business combination is paid for using stock or debt securities, or if not all of the funds released from the trust account and
available from the proceeds of the forward purchase contracts are used for payment of the consideration in connection with our
business combination or used for redemptions of purchases of our common stock, we may apply the balance of the cash released to
us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction
company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund
the purchase of other companies or for working capital.
In addition to the proceeds from the forward
purchase contracts, we may seek to raise additional funds through a private offering of debt or equity securities in connection
with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds
of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws,
we would complete such financing only simultaneously with the completion of our business combination. In the case of an initial
business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing
the business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval
of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial
business combination.
If any of our executive officers becomes
aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing
fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity
prior to presenting such business combination opportunity to us. Certain of our executive officers currently have certain relevant
fiduciary duties or contractual obligations that may take priority over their duties 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
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Selection of a target business and structuring of our initial
business combination
NASDAQ rules provide that our initial business
combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance
in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of our signing
a definitive agreement in connection with our initial business combination. The fair market value of the target or targets will
be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as
discounted cash flow valuation or value of comparable businesses. If our board is not able to independently determine the fair
market value of the target business or businesses, we will obtain an opinion from independent investment banking firm or a qualified
independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed on NASDAQ after
this offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even
if our securities are not listed on NASDAQ at the time of our initial business combination. Subject to this requirement, our management
will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we
will not be permitted to effectuate our initial business combination with another blank check company or a similar company with
nominal operations.
In any case, we will only complete an initial
business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion
of such business or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of
the 80% fair market value test. There is no basis for investors in our initial public offering to evaluate the possible merits
or risks of any target business with which we may ultimately complete our business combination.
To the extent we effect our business combination
with a company or business that may be financially unstable or in its early stages of development or growth we may be affected
by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in
a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors. The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after the
completion of our initial business combination, the prospects for our success may depend entirely on the future performance of
a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one
or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of
being in a single line of business. By completing our business combination with only a single entity, our lack of diversification
may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products
or services.
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Limited ability to evaluate the target’s management
team
Although we have closely scrutinized the
management of a prospective target business including the management of IGI when evaluating the desirability of effecting our business
combination with that business and plan to continue to do so if the Business Combination is not consummated and we seek other business
combination opportunities, our assessment of the target business’s management may not prove to be correct. In addition, the
future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it
is possible that one or more of our directors will remain associated in some capacity with us following our business combination,
including the Business Combination in which Mr. Gray and Mr. Poole will serve as directors of Pubco post-Closing, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover, we cannot assure
you that members of our management team will have significant experience or knowledge relating to the operations of the particular
target business.
We cannot assure you that any of our key
personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any
of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we may
seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that the additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders may not have the ability to approve our initial
business combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule (as is the case in the Business Combination), or we may decide to seek stockholder approval for business or
other legal reasons.
Presented in the table below is a graphic
explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required
under Delaware law for each such transaction.
Type of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under NASDAQ’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
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we issue common stock that will be equal to or in excess of 20% of the number of shares of our
common stock then outstanding;
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any of our directors, officers or substantial stockholders (as defined by NASDAQ rules) has a 5%
or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business
or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding
shares of common stock or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted purchases of our securities
In the event we seek stockholder approval
of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination. However, other than the
transactions contemplated by the Backstop Subscription Agreements described above, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in
the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are in
possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such 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. We have
adopted an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods
and when they are in possession of any material nonpublic information and (ii) to clear all trades with our legal counsel prior
to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it
will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such
circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not
necessary.
In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem
their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however,
if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules.
The purpose of such purchases would be to
(i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of the business combination or (ii) 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 business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be
reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our sponsor, officers, directors and/or
their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their affiliates will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers,
directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the
extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied
with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will
not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public stockholders upon completion
of our initial business combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days
prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable),
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account,
as of December 31, 2019, was approximately $10.40 per public share. The per-share amount we will distribute to investors who properly
redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders
have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to
their founder shares and any public shares they may hold in connection with the completion of our business combination.
Manner of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business combination
either (i) in connection with a stockholder meeting called to approve the business combination such as the Business Combination
with IGI or (ii) by means of a tender offer if the Business Combination is not consummated. The decision as to whether we will
seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would
require us to seek stockholder approval under the law or stock exchange listing requirement. Asset acquisitions and stock purchases
would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions
where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation
would require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules
of the SEC unless stockholder approval is required by law or stock exchange listing requirement or we choose to seek stockholder
approval for business or other legal reasons.
If a stockholder vote is not required and
we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and
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file tender offer documents with the SEC prior to completing our initial business combination which
contain substantially the same financial and other information about the initial business combination and the redemption rights
as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement of our business
combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common
stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange
Act.
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public
shares in an amount that would cause our net tangible assets upon consummation of our initial business combination to be less than
$5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or
cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender
more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval of the
transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will
complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the business combination. In such case, our initial stockholders have agreed to vote their founder shares and any public shares
purchased during or after our initial public offering in favor of our initial business combination. As a result, we would need
only 6,443,751 of the 17,250,000 public shares, or 37.4%, sold in our initial public offering to be voted in favor of our initial
business combination in order to have such transaction approved. Each public stockholder may elect to redeem their public shares
irrespective of whether they vote for or against the proposed transaction. In addition, our initial stockholders have entered into
letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares
and public shares in connection with the completion of a business combination.
Our amended and restated certificate of
incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets
upon consummation of our initial business combination to be less than $5,000,001 (so that we are not subject to the SEC’s
“penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash
requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed business combination. 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, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Limitation on redemption upon completion of our initial business
combination if we seek stockholder approval
Notwithstanding the foregoing, if we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our 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 Excess Shares.
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such
holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us
or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in our initial public offering
could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium
to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than
10% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders to
unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would
not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our business
combination.
Tendering stock certificates in connection with redemption
rights
We may require our public stockholders seeking
to exercise their redemption rights (which requirement is applicable in the Business Combination), whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent up to two business
days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver
their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, at the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with
our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
Accordingly, a public stockholder would have from two days prior to the vote on the business combination if we distribute proxy
materials to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period,
it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $35.00 and it would be up to the broker whether or not to pass this cost
on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise
redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting
set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights,
such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated
that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after
the completion of our business combination.
If our initial business combination is not
approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any
certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination
is not completed, we may continue to try to complete a business combination with a different target until March 20, 2020.
Redemption of public shares and liquidation if no initial
business combination
Our sponsor, executive officers and directors
have agreed that we will have until March 20, 2020 to complete our initial business combination. If we are unable to complete our
initial business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000
of interest to pay dissolution expenses (which interest shall be net of taxes payable), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants,
which will expire worthless if we fail to complete our business combination within the 24-month time period.
Our initial stockholders have entered into
letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account
with respect to their founder shares if we fail to complete our initial business combination before March 20, 2020. However, if
our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from
the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted
24-month time period.
Our sponsor, executive officers and directors
have agreed, pursuant to a written letter agreement with us that they will not propose any amendment to our amended and restated
certificate of incorporation that would affect the substance or timing of our obligation to allow holders to redeem their public
shares, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of
any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. However, we may
not redeem our public shares in an amount that would cause our net tangible assets upon consummation of our initial business combination
to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Prior to acquiring
any securities from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be
bound by the same restriction.
If we do not consummate the Business Combination
or any other initial business combination by the deadline set forth in our amended and restated certificate of incorporation, we
expect to use the amounts held outside the trust account ($179,491,402 as of December 31, 2019) to pay for all costs and expenses
associated with implementing our plan of dissolution, as well as payments to any creditors, although we cannot assure you that
there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated
with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to
pay taxes, we may request the trustee to release to us an additional amount of up to $50,000 of such accrued interest to pay those
costs and expenses.
If we were to expend all of the net proceeds
of our initial public offering, other than the proceeds deposited in the trust account, and without taking into account interest,
if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately
$10.10. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have
higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received
by stockholders will not be substantially less than $10.10. Under Section 281(b) of the DGCL, our plan of dissolution must provide
for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient
assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all
creditors’ claims.
Although we will seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
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. In order to protect the amounts held in the trust account, Michael T. Gray, our Executive Chairman and Chief Executive
Officer, has agreed that he will be liable to us if and to the extent any claims by a vendor 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 (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to
the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to
any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then Mr. Gray
will not be responsible to the extent of any liability for such third-party claims. We cannot assure you, however, that Mr. Gray
would be able to satisfy those obligations. None of our other officers will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust
account are reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as
of the date of the liquidation of the trust account, due to reductions in value of the trust assets other than due to the failure
to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, and Mr. Gray asserts that
he is unable to satisfy his indemnification obligations or that he has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against Mr. Gray to enforce his indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against Mr. Gray to enforce his
indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose
not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of
the per-share redemption price will not be substantially less than $10.10 per share.
We will seek to reduce the possibility that
Mr. Gray will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Mr. Gray will also not be liable as to any claims under
our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.
We may have access to amounts held outside of the trust account ($179,491,402 as of December 31, 2019), to pay any such potential
claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$50,000) but these amounts may be spent on expenses incurred as a result of being a public company or due diligence expenses on
prospective business combination candidates. In the event that we liquidate and it is subsequently determined that the reserve
for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made
by creditors. Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of
distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our business combination before March 20, 2020 may be
considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject
any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
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 business combination before March 20, 2020, is not considered a liquidation distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.
If we are unable to complete our business combination before March 20, 2020, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net
of the amount of interest which may be withdrawn to pay taxes and less up to $50,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as
reasonably possible following March 20, 2020, and, therefore, we do not intend to comply with those procedures. As such, our stockholders
could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims
that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending
to the trust account is remote. Further, Michael T. Gray, our Executive Chairman and Chief Executive Officer, may be liable only
to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.10 per public share or (ii)
such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions
in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest withdrawn
to pay taxes and less any per-share amounts distributed from our trust account to our public stockholders in the event we are unable
to complete our business combination before March 20, 2020 and will not be liable as to any claims under our indemnity of the underwriters
of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver
is deemed to be unenforceable against a third party, Mr. Gray will not be responsible to the extent of any liability for such third-party
claims.
If we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able
to return $10.10 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable
debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed
as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled
to receive funds from the trust account only in the event of the redemption of our public shares if we do not complete our business
combination before March 20, 2020 or if they redeem their respective shares for cash upon the completion of the initial business
combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In
the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection
with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata
share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of
incorporation contains certain requirements and restrictions relating to our initial public offering that will apply to us until
the consummation of our initial business combination. If we seek to amend any provisions of our amended and restated certificate
of incorporation relating to stockholders’ rights or pre-business combination activity, we will provide dissenting public
stockholders with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders have
agreed to waive any redemption rights with respect to their founder shares and public shares in connection with the completion
of our initial business combination. Specifically, our amended and restated certificate of incorporation provides, among other
things, that:
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prior to the consummation of our initial business combination, we shall either (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their
shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), or (2) provide
our stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a
stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable), in each case subject to the limitations described herein;
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we will consummate our initial business combination only if we have net tangible assets upon consummation
of our initial business combination of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval,
a majority of the outstanding shares of common stock voted are voted in favor of the business combination;
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if our initial business combination is not consummated before March 20, 2020, then our existence
will terminate and we will distribute all amounts in the trust account; and
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prior to our initial business combination, we may not issue additional shares of capital stock
that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.
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These provisions cannot be amended without
the approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial business
combination, our amended and restated certificate of incorporation provides that we may consummate our initial business combination
only if approved by a majority of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
Competition
In identifying, evaluating and selecting
a target business for our business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available
to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may
not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Employees
We currently have three executive officers.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time that Messrs. Gray, Poole or Quin or any other members of our management will devote in any time period will vary based
on whether a target business has been selected for our initial business combination and the current stage of the business combination
process, but we expect that he will devote a substantial portion of his professional time to our affairs.
Periodic Reporting and Financial Information
We have registered our units, common stock
and public warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly
and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial
statements audited and reported on by our independent registered public auditors.
We will provide stockholders with audited
financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent
to stockholders to assist them in assessing the target business. 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
financing reporting standards (“IFRS”), depending on the circumstances and the historical financial statements may
be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”).
We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial
statements prepared in accordance with such principles or standards or that the potential target business will be able to prepare
its financial statements in accordance therewith. To the extent that this requirement cannot be met, we may not be able to acquire
the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation
will be material.
We are required to evaluate our internal
control procedures for the fiscal year ending December 31, 2019 as required by the Sarbanes-Oxley Act. Only in the event we are
deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal control procedures audited.
A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls.
The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the
time and costs necessary to complete any such acquisition.
We have filed a Registration Statement on
Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject
to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our
reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our business combination.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company
until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the
prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior
three-year period. References herein to emerging growth company shall have the meaning associated with it in the JOBS Act.
Item 1A.
Risk Factors
You should carefully consider all of
the risks described below, together with the other information contained in this report, including the financial statements, before
making a decision to invest in our units. If any of the following risks occur, our business, financial condition or operating results
may be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose
all or part of your investment. For risks relating to IGI and the Business Combination, see our preliminary proxy statement/prospectus
filed on December 10, 2019.
We are a blank check 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 blank check company with limited
operating results. Because we lack significant operating history, you have little 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 business combination. If we fail to complete our business combination, we will never generate any operating revenues.
Our public stockholders may not be afforded an opportunity
to vote on our proposed business combination, which means we may complete our initial business combination even though a majority
of our public stockholders do not support such a combination.
If the Business Combination is not consummated
and we seek to enter into a business combination with other target companies, we may not hold a stockholder vote to approve our
initial business combination unless the business combination would require stockholder approval under applicable state law or the
rules of NASDAQ or if we decide to hold a stockholder vote for business or other reasons. For instance, NASDAQ rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval
if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we
would seek stockholder approval of such business combination. However, except as required by law, 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. Accordingly, we may consummate
our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of
the business combination we consummate. Please see the section entitled “Business — Stockholders May Not Have the Ability
to Approve Our Initial Business Combination” for additional information.
If we seek stockholder approval of our initial business
combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote.
Our initial stockholders have agreed to
vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor of our
initial business combination. As of December 31, 2019, our initial stockholders own 20.1% of our outstanding shares of common stock.
As a result, we would need only 6,443,751 of the 17,250,000 public shares, or 37.4%, sold in our initial public offering to be
voted in favor of our initial business combination in order to have such transaction approved. 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 stockholders 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 the business combination
You may not be provided with an opportunity
to evaluate the specific merits or risks of one or more target businesses. Although we are seeking stockholder approval of the
Business Combination, if such transaction is not consummated and we seek to enter into a business combination with other target
companies, our Board of Directors may complete such business combination without seeking stockholder approval. Under such circumstance,
public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder
vote. Accordingly, 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. In particular, the Business Combination Agreement provides for a minimum cash of $100 million in cash and cash
equivalents, including funds in the trust account and from any equity financing as a closing condition for the Business Combination.
While we will have access to approximately $100 million committed capital from gross proceeds from the forward purchase contracts,
private placements to be consummated at the closing of the Business Combination and other sources to satisfy such closing condition,
we may have to satisfy a higher minimum cash closing condition if the Business Combination is not consummated and we seek to enter
into a business combination with other target companies. Under those circumstances, 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. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible
assets upon consummation of our initial business combination to be less than $5,000,001 (so that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause
our net tangible assets upon consummation of our initial business combination 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.
The ability of our 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 (including the Business Combination), we will not know how many stockholders may exercise their
redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that
will be submitted for redemption. If our 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 such as the private placement and the
backstop financing to be consummated in connection with the Business Combination. In addition, if a larger number of shares are
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. 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 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 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 is increased. 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 prescribed time frame may give potential target businesses leverage over us in negotiating a business combination
and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution
deadline, which could undermine our ability to complete our 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
by March 20, 2020. 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 time frame 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 prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate.
Our sponsor, executive officers and directors
have agreed that we must complete our initial business combination by March 20, 2020. We may not be able to complete the Business
Combination or find another suitable target business and complete our initial business combination within such time period. If
we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. In such case, our public shareholders may only receive approximately
$10.40 per share, based on the balance of our trust account as of December 31, 2019, and our warrants will expire worthless.
If we seek stockholder approval of our initial business
combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase shares from public
stockholders, 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 (such as the Business Combination) and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase shares
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 to do so. Such a purchase may include a contractual acknowledgement that such
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, executive officers, advisors or their affiliates purchase
shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights,
such selling stockholders would be required to revoke their prior elections to redeem their shares. 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 the 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 business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our 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 public stockholder fails to receive notice of our
offer to redeem our public shares in connection with our 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 business combination. Despite our compliance
with these rules, if a public 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. In the event that a public 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: (i) the completion of our initial business combination,
(ii) the redemption of our public shares in connection with a stockholder vote to amend any provisions of our amended and restated
certificate of incorporation relating to stockholders’ rights or pre-initial business combination activity and (iii) the
redemption of 100% of our public shares if we are unable to complete our initial business combination within 24 months from the
closing of our initial public offering (subject to applicable requirements of law). In addition, if our plan to redeem our public
shares, if we are unable to complete an initial business combination, within 24 months from the closing of our initial public offering
is not completed 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 24 months from the closing of our initial public offering 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. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
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, common stock and warrants are
listed on NASDAQ. We cannot assure you that our securities 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. Generally, we must maintain a minimum amount in stockholders’
equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders with at least
50% of such round lot holders holding securities with a market value of at least $2,500). 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 and our stockholders’ equity
would generally be required to be at least $5 million. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If NASDAQ delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our common stock is a “penny stock” which will require brokers
trading in our 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;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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In addition, although we intend to satisfy
the 80% fair market value requirement even if our securities are not listed on NASDAQ at the time of our initial business combination,
if NASDAQ were to delist our securities for any reason, we may choose at that time not to comply with the requirement that our
initial business combination must be with one or more target businesses that together have a fair market value equal to at least
80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the
time of our signing a definitive agreement in connection with our initial business combination.
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.” Since our units, our common stock and warrants are listed on NASDAQ, they
are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does
allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity,
then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having
used these powers to prohibit or restrict the sale of securities issued by blank check companies, 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 be covered securities and we would be subject to regulation in each state in which we offer our securities,
including in connection with our initial business combination.
Our stockholders will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds
of our initial public offering and the sale of the private placement warrants are intended to be used to complete an initial business
combination with a target business that has not been identified, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 at the time of our initial
public offering, 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 securities
are tradable and we have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover, 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 an 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 10% of our common stock, you will lose the ability to redeem all such shares in excess of 10% 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 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 10% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” However, we would
not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our 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 business combination. And as
a result, you will continue to hold that number of shares exceeding 10% and, in order to dispose of such shares, would be required
to sell your stock in open market transactions, 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 only receive their pro rata portion of the funds
in the trust account that are available for distribution to them, which could be less than $10.10 per share on our redemption,
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 are numerous
target businesses we could potentially acquire with the net proceeds of our initial public offering 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. This inherent competitive limitation gives others an advantage in pursuing the acquisition
of certain target businesses. Furthermore, if we are obligated to pay cash for the shares of common stock redeemed and, in the
event we seek stockholder approval of our business combination, we make purchases of our common stock, potentially reducing the
resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage
in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the trust account that are available for distribution to them, which could
be less than $10.10 per share on the liquidation of our trust account and our warrants will expire worthless.
If the net proceeds of our initial public offering not
being held in the trust account are insufficient to allow us to operate until March 20, 2020, 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 until March 20, 2020, assuming that our initial business combination
is not completed during that time. We believe that, as of December 31, 2019, the funds available to us outside of the trust account
(primarily proceeds from loans to our sponsor), will be sufficient to allow us to operate until March 20, 2020. If we are unable
to complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the
trust account that are available for distribution to them, which could be less than $10.10 per share on the liquidation of our
trust account and our warrants will expire worthless.
If funds available to us outside of the trust account
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 business combination. If we are unable to obtain these loans, we may not be able to complete our initial business
combination.
As of December 31, 2019, we had $78,697
held outside the trust account that is available to us. If we are required to seek additional capital, we would need to borrow
funds from our sponsor, management team or other third parties to operate in addition to the $500,000 loans outstanding as of December
31, 2019 or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under
any obligation to advance additional funds to us in such circumstances. Any such additional advances 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. Consequently, our public stockholders may only receive their pro rata portion
of the funds in the trust account that are available for distribution to them, which could be less than $10.10 per share on our
redemption of our public shares, and our warrants will expire worthless.
Subsequent to our completion of our initial business combination,
we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose
some or all of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may
be present inside 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 would 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 who choose to
remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due
to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination
contained an actionable material misstatement or material omission.
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 $10.10
per share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although we have sought and will continue to seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
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.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. 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 business combination within the prescribed time frame, or upon the exercise of a redemption
right in connection with our 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 $10.10 per share initially held in the trust account, due to claims of such
creditors. Michael T. Gray has agreed, pursuant to a written agreement, that he will be liable to us if and to the extent any claims
by a vendor 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 (i) $10.10 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions
in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Mr. Gray will not be responsible
to the extent of any liability for such third party claims. We have not independently verified whether Mr. Gray has sufficient
funds to satisfy their indemnity obligations and, therefore, Mr. Gray may not be able to satisfy those obligations. We have not
asked Mr. Gray to reserve for such eventuality. We believe the likelihood of Mr. Gray having to indemnify the trust account is
limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Our independent directors may decide not to enforce the
indemnification obligations of Michael T. Gray, our Executive Chairman and Chief Executive Officer, 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 (i) $10.10 per share or (ii) other than due to the failure to obtain such waiver such lesser
amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value
of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and Mr. Gray asserts that he is unable
to satisfy his obligations or that he has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against Mr. Gray to enforce his indemnification obligations. While we currently expect
that our independent directors would take legal action on our behalf against Mr. Gray to enforce his indemnification obligations
to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular
instance. 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 $10.10 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 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, thereby exposing itself and us to claims of punitive damages,
by paying public stockholders from the trust account prior to addressing the claims of creditors.
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 stockholders in connection
with our liquidation may 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 business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments, and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete
our business combination.
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In addition, we may have imposed upon us
burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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We do not believe that our principal activities
will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in United
States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States
Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. 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 complete
a business combination. If we are unable to complete our initial business combination, our public stockholders may only receive
their pro rata portion of the funds in the trust account that are available for distribution to them, which could be less than
$10.10 per share on the liquidation of our trust account and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply
with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or
regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
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 Delaware General Corporation Law,
or 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 24 months from the closing of our
initial public offering may be considered a liquidation 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 24 month from the closing of our initial public offering in the event we do not complete our
business combination and, therefore, we do not intend to comply with those procedures.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 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, 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 by March 20, 2020 is not considered a liquidation distribution under
Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of
limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidation distribution.
We have not registered the shares of 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
and causing such warrants to expire worthless.
We have not registered the shares of 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, as soon as practicable, but in no event later than thirty (30) days after the
closing of our initial business combination, to use our best efforts to file and have effective a registration statement under
the Securities Act covering such shares and maintain a current prospectus relating to the common stock issuable upon exercise of
the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. 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 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 within 90 days of the closing of our initial business combination, 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, unless an exemption is
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 the Securities
Act or applicable state securities laws. 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 common stock included in the units.
The grant of registration rights to our initial stockholders
and holders of our private placement warrants as well as sellers and investors in connection with our initial business combination
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 common stock.
Pursuant to the agreement entered into concurrently
with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees
can demand that we register the founder shares, holders of our private placement warrants and their permitted transferees can demand
that we register the private placement warrants and the shares of common stock issuable upon exercise of the private placement
warrants and the common stock issuable upon conversion of loans. In connection with the Business Combination, Pubco will be required
to file a resale registration statement shortly after Closing which registers for resale the Pubco common shares held by our sponsor,
officers and directors and the former stockholders of IGI. Following the consummation of the Business Combination, Pubco is also
required to file and maintain an effective registration statement under the Securities Act covering securities to be issued to
investors pursuant to forward purchase contracts and securities to be issued to the PIPE Investors. Pubco is also required to file
a registration statement covering the issuance of Pubco common shares upon the exercise of Pubco 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 common stock.
Because we are not limited to a particular industry or
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 will seek a business combination with
an operating company in the insurance sector, but may also pursue acquisition opportunities in other industries, except that we
will not, under our amended and restated certificate of incorporation, be permitted to effectuate our business combination with
another blank check company or similar company with nominal operations. To the extent we complete our 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 officers and directors
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 units will ultimately prove to be more favorable
to investors than a direct investment, if such opportunity were available, in a potential business combination target. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them,
or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy statement
relating to the business combination contained an actionable material misstatement or material omission.
Past performance by The Gray Insurance Company, including
our management team, may not be indicative of future performance of an investment in us.
Information regarding performance by, or
businesses associated with, The Gray Insurance Company and its affiliates is presented for informational purposes only. Past performance
by The Gray Insurance Company, including our management team, is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination.
You should not rely on the historical record of The Gray Insurance Company or our management team’s prior performance as
indicative of our future performance or the returns we will, or are likely to, generate going forward. Our officers and directors
have not had experience with blank check companies or special purpose acquisition companies prior to our initial public offering.
If the Business Combination is not consummated, we may
seek investment opportunities in industries outside of the insurance sector (which industries may or may not be outside of our
management’s area of expertise). Additionally, if investing in any such industry is against the internal written policies
of our anchor investor, we may not be able to consummate the forward purchase contract with our anchor investor.
As of the date of this report, we have been
focusing on business combination opportunities in the insurance sector and have not actively looked to identify business combination
candidates in other industries (which industries may be outside our management’s area of expertise). Even if the Business
Combination is not consummated, we intend to continue to focus on identifying business combination candidates in the insurance
sector. However, we will consider a business combination outside of the insurance sector if a business combination candidate is
identified and we determine that such candidate offers an attractive investment opportunity for our company or we are unable to
identify a suitable candidate in insurance sector after having expended 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, especially risks in connection
with target businesses in industries outside of our management’s area of expertise. We also cannot assure you that an investment
in our units will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment,
if an opportunity were available, in a business combination candidate.
In the event we elect to pursue an investment
outside of the insurance sector, our management’s expertise may not be directly applicable to its evaluation or operation,
and the information contained herein regarding the insurance sector would not be relevant to an understanding of the business that
we elect to acquire.
In addition, if investing in any such industry
is against the internal written policies of our anchor investor, we may be unable to consummate the forward purchase contract with
our anchor investor. As a result, we may be deprived of approximately $15,000,000 in funds otherwise available to us, which would
make consummation of our initial business combination, or provision of working capital subsequent to any such consummation, materially
more difficult, and may require us to obtain alternate financing, to restructure our initial business combination in such a way
as to not rely on the funds under such forward purchase agreement, or may result in our failure to successfully consummate our
initial business combination altogether.
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 such as IGI with which we enter
into our initial business combination will not have all of these attributes. If we complete our initial business combination with
a target that does not meet some or all of these 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 law, or we decide
to obtain stockholder approval for business or other legal 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 only receive their pro rata portion of the funds in the
trust account that are available for distribution to them, which could be less than $10.10 per share on the liquidation of our
trust account and our warrants will expire worthless.
We may seek investment opportunities with a financially
unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business
combination with 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 volatile revenues or earnings
and difficulties in obtaining and retaining key personnel. Although our officers and directors 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 or 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 company from a financial point of view.
Unless we complete our business combination
with an affiliated entity, we are not required to obtain an opinion from an independent investment banking or accounting firm that
the price we are paying is fair to our company from a financial point of view. 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 common or preferred shares to
complete our initial business combination or under an employee incentive plan after completion of our initial business combination,
any one of which 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 60,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares
of preferred stock, par value $0.0001 per share. As of December 31, 2019, there were 38,437,500 authorized but unissued shares
of common stock available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding
warrants. There are no shares of preferred stock issued and currently outstanding. We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after completion
of our initial business combination, however, our amended and restated certificate of incorporation provides, 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 (i) receive funds from the trust account or (ii) vote on any initial business combination. The issuance of additional
shares of common or preferred stock:
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may significantly dilute the equity interest of investors in our initial public offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could cause a change in control if a substantial number of shares of common stock is 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 officers and directors; and
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may adversely affect prevailing market prices for our units, common stock and/or warrants.
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Resources could be wasted in researching acquisitions
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 only receive their pro rata
portion of the funds in the trust account that are available for distribution to them, which could be less than $10.10 per share
on the liquidation of our trust account and our warrants will expire worthless.
The investigation of each specific target
business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments requires
substantial management time and attention and substantial costs for accountants, attorneys and others. The cost incurred up to
the point that we decide not to complete a specific initial business combination 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 only receive their pro rata portion of the funds in the
trust account that are available for distribution to them, which could be less than $10.10 per share on the liquidation of our
trust account and our warrants will expire worthless.
We are dependent upon our executive officers and directors
and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the
continued service of our executive officers and directors, at least until we have completed our business combination. In addition,
our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will
have conflicts of interest in allocating management time among various business activities, including identifying potential business
combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the
life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive
officers could have a detrimental effect on us.
Our ability to successfully effect our initial business
combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join
us following 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 business
combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
may not presently be ascertained. Although some of our key personnel may remain with the target business in senior management positions,
directorship or advisory roles following our business combination, it is likely that some or all of the management of the target
business will remain in place. For instance, although Mr. Gray and Mr. Poole will remain as directors of Public following the Business
Combination, all current members of IGI’s management will remain in place.
While we intend to closely scrutinize any individuals we engage after our 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 and take time away from oversight of our operations.
In addition, the officers
and directors 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.
Prior to our initial public offering, none of our executive
officers or directors had been associated with a special purpose acquisition corporation and such lack of experience could adversely
affect our ability to consummate a business combination.
Prior to our initial public offering, none
of our executive officers or directors has ever been associated with a special purpose acquisition corporation. Accordingly, you
may not have sufficient information with which to evaluate their ability to identify and consummate a business combination using
the proceeds of our initial public offering. Our management’s lack of experience in operating a special purpose acquisition
corporation could adversely affect our ability to consummate a business combination and could result in our failure to complete
a business combination in the prescribed time frame.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination. These agreements may provide for them to
receive compensation following our business combination and as a result, may cause them to have conflicts of interest in determining
whether a particular business combination is the most advantageous.
Our key personnel may be able to remain
with the company after the completion of our 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. 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 business combination will not be the determining factor in our decision
as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key
personnel will remain with us after the completion of our business combination. We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with us. 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’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should
the target’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 who choose to remain
stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely
to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to a breach
by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination contained
an actionable material misstatement or material omission.
Our executive officers and directors will allocate their
time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors 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 businesses. We do not intend to have
any full-time employees prior to the completion of our business combination. Each of our executive officers is engaged in several
other business endeavors for which he may be entitled to substantial compensation and our executive officers are not obligated
to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board
members for other entities. If our executive 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.
Certain of our executive officers and directors 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
should be presented to our company or to another entity.
Until we consummate our initial business
combination, we intend to engage in the business of identifying and combining with one or more businesses. Our executive officers
and directors are, or may in the future become, affiliated with entities that are engaged in a similar business.
Our officers and directors also may become
aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business
opportunity should be presented to our company or to another entity. 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 such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Members of our management team directly
or indirectly own common stock and warrants and, accordingly, may have a conflict of interest in determining whether a particular
target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers
and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or
resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to
our initial business combination.
Our executive officers, directors, 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, executive 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, our directors or
executive officers, although we do not intend to do so. Nor do we 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.
We may engage in a business combination with one or more
target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing
holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor,
executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor,
executive officers and directors. Our directors also serve as officers and board members for other entities. 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 disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding
the fairness to our company from a financial point of view of a business combination with one or more domestic or international
businesses affiliated with our executive officers, directors or existing holders, 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 sponsor, executive officers and directors will
lose their entire investment in us if our business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
As of the date of this report, our sponsor,
officers and directors own an aggregate of 4,337,500 shares of common stock, including 4,312,500 founder shares. In addition, our
sponsor owns 4,500,000 private placement warrants, each exercisable into one share of our common stock at $11.50 per share and
holds convertible promissory notes with an aggregate principal amount of $2,225,000, which are convertible into warrants of the
Company at the Sponsor’s option. The founder shares will be worthless if we do not complete an initial business combination.
In addition, the sponsor loan will not be repaid if our business combination is not consummated.
The founder shares are identical to the
shares of common stock included in the units being sold in our initial public offering. However, the holders have agreed (A) to
vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any shares in connection with
a tender offer or stockholder vote to approve a proposed initial business combination.
The personal and financial interests of
our executive officers and directors 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.
Since our sponsor, executive officers and directors will
not be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed, a conflict of interest
may arise in determining whether a particular business combination target is appropriate for our initial business combination.
At the closing of our initial business combination,
our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due
diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred
in connection with activities on our behalf. These financial interests of our sponsor, executive officers and directors may influence
their motivation in identifying and selecting a target business combination and completing an initial business combination.
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 report to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur
substantial debt to complete our 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:
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default and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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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;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable
on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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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;
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limitations on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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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.
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We may only be able to complete one business combination
with the proceeds of our initial public offering, the sale of the private placement warrants and the proceeds of the forward purchase
contracts 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 negatively impact our operations and profitability.
As of December 31, 2019, $179,491,402 was
available for completing our business combination (which includes $1,725,000 of sponsor loans being held in the trust account and
up to $7,350,000 for the payment of deferred underwriting commission). In addition, our anchor investor has committed, pursuant
to a forward purchase contract with us, to purchase, in a private placement to occur concurrently with the consummation of our
initial business combination, 1,500,000 of our units, and 300,000 shares of common stock (which shares will be issued for no additional
consideration and otherwise have the same terms as the founder shares described herein) for total gross proceeds of $15,000,000,
and our co-anchor investors have also committed, pursuant to forward purchase contracts with us, to purchase, in a private placement
to occur concurrently with the consummation of our initial business combination, 1,000,000 shares of our common stock at a purchase
price of $10.00 per share and 100,000 additional shares of our common stock (which additional shares shall be issued for no additional
consideration and shall otherwise have the same terms as the founder shares described herein) for total gross proceeds of $10,000,000.
In addition, in connection with the Business Combination, we entered into subscription agreements with certain accredited investors,
pursuant to which we agreed to issue and sell to such investors an aggregate of $23,611,809 of shares of our common stock at a
price of $10.20 per share immediately prior to, and subject to, the closing of the Business Combination. We also entered into subscription
agreements with our directors and officers Michael Gray and Andrew Poole and their related company the Gray Insurance Company,
pursuant to which such investors agreed to purchase up to an aggregate of $20,000,000 of shares of our common stock at a price
of $10.20 per share immediately prior to, and subject to, the Closing, which will become Pubco common shares in the Merger, if
and solely to the extent that the minimum cash condition set forth in the Business Combination Agreement would otherwise not be
met without their purchase (and prior to giving effect to any payment in Pubco common shares in lieu of cash under certain Underwriting
Agreement amendment).
We may effectuate our business combination
with a single target business or multiple target businesses simultaneously. However, we may not be able to effectuate our 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:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products,
processes or services.
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This lack of diversification may subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to complete our 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. By definition, very little public information
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.
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 a 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 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 the business combination may collectively own a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares 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 our control of the target business.
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 do not have a specified maximum redemption threshold.
The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial
majority of our stockholders seek redemption.
Our amended and restated certificate of
incorporation does 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 upon consummation of our initial business combination to be less than $5,000,001
(such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our
business combination even though a substantial majority of our public stockholders have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our business combination pursuant
to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors,
advisors or their 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 our initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments.
We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments
in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
In order to effectuate a business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments.
For example, blank check companies have amended the definition of business combination and extended deadlines to complete business
combinations. We cannot assure you that we will not seek to amend our charter or governing instruments in order to effectuate our
initial business combination.
The 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 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 to facilitate the completion of an initial business combination that some of our stockholders
may not support.
Some other blank check companies have a
provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-business combination activity, without approval by a certain percentage of the company’s stockholders. In those companies,
amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders. Our amended
and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including
the requirement to deposit proceeds of our initial public offering and the private placement of warrants into 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 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 may be amended by holders of a majority of our common stock, subject to applicable
provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who collectively beneficially own 20.1% of
our common stock, will 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. As a result, we may be able to amend the provisions of our amended
and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other blank
check companies, and this may increase our ability to complete a 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 sponsor, executive officers and directors
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation that would affect the substance or timing of our obligation to allow holders to redeem their public shares, unless
we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net
of the interest which may be withdrawn to pay taxes), divided by the number of then outstanding public shares. These agreements
are contained in letter agreements that we have entered into with our sponsor, executive officers and directors. Prior to acquiring
any securities from our initial stockholders, permitted transferees must enter into a written agreement with us agreeing to be
bound by the same restriction. 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 sponsor, executive officers or directors 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.
We anticipate that we will find the greatest
number of opportunities for our initial business combination among companies with aggregate enterprise value of greater than $350
million. If we are unable to use our capital stock in sufficient quantity in addition to the proceeds from our initial public offering,
the private placement of warrants and the approximately $25,000,000 available to us as a result of the forward purchase contracts,
the acquisition of a target business with enterprise value within this range will require that we seek additional financing in
excess of the net proceeds of our initial public offering the sale of the private placement warrants. We cannot assure you that
such financing will be available on acceptable terms, if at all. The current economic environment has made it especially difficult
for companies to obtain acquisition financing. 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 business combination, we may require such financing to fund the operations or growth of the target business. The
failure to secure additional financing (in excess of the $25,000,000 for the forward purchase contracts) could have a material
adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is
required to provide any financing to us in connection with or after our business combination. If we are unable to complete our
initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to them, which could be less than $10.10 per share on the liquidation of our trust account,
and our warrants will expire worthless.
In evaluating a prospective target business for our initial
business combination, our management may rely on the availability of all of the funds from the sale of the forward purchase securities
to be used as part of the consideration to the sellers in the initial business combination or for working capital after consummation
of the business combination. If the sale of some or all of the forward purchase securities fails to close, or we are forced to
cut it back due to their closing conditions, we may lack sufficient funds to consummate our initial business combination or to
operate the business after the initial business combination.
Our anchor investor and co-anchor investor
have committed, pursuant to forward purchase contracts with us, to purchase $25,000,000 of our securities as described elsewhere
in this report, in private placements, to occur concurrently with the consummation of our initial business combination. The funds
from the sale of the forward purchase securities are expected to be used as part of the consideration to the sellers in our initial
business combination, and may be used to pay expenses in connection with our initial business combination or for working capital
in the post-transaction company. The obligations under the forward purchase contract do not depend on whether any public stockholders
elect to redeem their shares in connection with our initial business combination and provide us with a minimum funding level for
the initial business combination. However, if the sale of the forward purchase securities does not close by reason of the failure
of our anchor investor and co-anchor investor to fund the purchase price for the forward purchase securities, or due to a failure
of a closing condition to the consummation of such purchase, or we are forced to cut it back due to their closing conditions, we
may lack sufficient funds to consummate our initial business combination or to operate the business after the initial business
combination, or we may need to seek alternative financing. In the event of any such failure to fund, we may not be able to obtain
additional funds to account for such shortfall on terms favorable to us or at all. Any such shortfall may also reduce the amount
of funds that we have available for working capital of the post-business combination company. Our anchor investor and co-anchor
investor are not obligated to reserve funds to satisfy their obligations under the forward purchase contracts.
Our initial stockholders control a substantial interest
in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Our initial stockholders own 20.1% of our
issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation.
If our initial stockholders purchase any units in our initial public offering or if our initial stockholders purchase any additional
shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our
initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional
securities, other than as disclosed in this report. Factors that would be considered in making such additional purchases would
include consideration of the current trading price of our common stock. In addition, our board of directors, whose members were
elected by our sponsor, is and will be divided into two classes, each of which will generally serve for a term of two years with
only one class of directors being elected in each year. As a consequence of our “staggered” board of directors, not
all directors will be considered for election at our annual meetings of stockholders prior to the consummation of our initial business
combination and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome.
Accordingly, our initial stockholders will continue to exert control at least until the completion of our business combination.
We may amend the terms of the warrants in a manner that
may be adverse to holders with the approval by the holders of at least 65% of the then outstanding public warrants.
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 65% of the then outstanding public warrants to make any change
that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner
adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although our
ability to amend the terms of the warrants with the consent of at least 65% 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, shorten the
exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
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 last reported sales price of our common stock equals or exceeds $18.00 per share 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. Redemption of
the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may
be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish
to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for
redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants or
sponsor loan warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
Our warrants may have an adverse effect on the market
price of our common stock and make it more difficult to effectuate our business combination.
We sold warrants to purchase 17,250,000
shares of our common stock as part of units in our initial public and, simultaneously with the closing of our initial public offering,
we issued private placement warrants to purchase 4,500,000 shares of our common stock. In addition, at the closing of our initial
business combination, we may issue additional sponsor loan warrants upon conversion of the sponsor loan. To the extent we issue
shares of common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional
shares of common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business.
Such warrants, when exercised, will increase the number of issued and outstanding shares of our common stock and reduce the value
of the shares of common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult to
effectuate a business transaction or increase the cost of acquiring the target business.
The private placement warrants and sponsor
loan warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long as they
are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) with respect to the private placement
warrants, they (including the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions,
be transferred, assigned or sold by the sponsor until 30 days after the completion of our initial business combination and (iii)
they may be exercised by the holders on a cashless basis.
A market for our securities may not fully develop or sustain,
which would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market
for our securities may not be sustained. You may be unable to sell your securities unless a market can be fully developed and sustained.
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 meeting certain financial significance tests include historical and/or
pro forma financial statement disclosure in periodic reports. 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, or GAAP, or international financing reporting standards, or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may
acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance
with federal proxy rules and complete our initial business combination within the prescribed time frame.
We are an emerging growth company within the meaning of
the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth 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 internal controls 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 any June 30 before that time,
in which case we would no longer be an emerging growth company as of the following December 31. 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 an 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.
Compliance obligations under the Sarbanes-Oxley Act may
make it more difficult for us to effectuate our business combination, require substantial financial and management resources, and
increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with this report. Since we are not deemed to be a large
accelerated filer or an accelerated filer based on such evaluation, we will not 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
company with which we seek to complete our 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 acquisition.
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 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 a staggered board of directors 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.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
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 requires, 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 such 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.
If we effect our initial business combination with a company
located in the United States but with operations or opportunities outside of the United States, we would be subject to a variety
of additional risks that may negatively impact our operations.
If we effect our initial
business combination with a company located in the United States but with operations or opportunities outside of the United States,
we would be subject to any special considerations or risks associated with companies operating in an international setting, including
any of the following:
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costs and difficulties inherent in managing cross-border business operations
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact
our results of operations and financial condition.
We face risks related to insurance sector companies.
Business combinations
with companies in the insurance sector 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 possibly adversely affected by, the following risks:
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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;
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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;
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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;
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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 significantly adverse effect on our results of operations;
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A downgrade in the claims paying and financial strength ratings of a target business may cause
significant declines in its revenues and earnings;
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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;
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The exclusions and limitations in policies written by a target business may not be enforceable;
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Cyclical changes in the property/casualty insurance industry may negatively impact a target business’
results of operations;
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Catastrophic losses are unpredictable and may adversely affect the results of operations, liquidity
and financial condition of a target business;
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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;
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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;
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If our target business’ established reserves for insurance claims are insufficient, its earnings
may be reduced or it could suffer losses; and
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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.
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Any of the foregoing
could have a negative adverse impact on our operations following a business combination. However, our efforts in identifying prospective
target businesses will not be limited to the insurance 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 we operate
or target business which we acquire, none of which can be presently ascertained.