Overview
Z-Work
Acquisition Corp. is a newly formed blank check company incorporated as a Delaware corporation for the purpose of creating a business
merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or
more businesses, which we refer to throughout this Form 10-K as our initial business combination.
We
will not be limited to any particular industry, sector or geographic region in our identification and acquisition of a business
combination target. Nevertheless, we were created to take advantage of transformative macro and micro trends occurring domestically
and internationally, driven by the impact of technology on how work is executed, facilitated and enhanced. We believe that this
focus will allow us to identify many high growth-potential, tech-driven and tech-enabled targets for a desirable business combination.
Our officers, directors and strategic advisors have decades of critical operational experience and expertise, with both public
and private companies, which we believe gives us a compelling advantage in terms of sourcing robust opportunities and leveraging
those opportunities into high-performing ventures.
We
are committed to bringing our operational experience to bear as an important additive catalyst for growth, in order to accelerate
the foundational success of our target’s management team. In a time when financial support is becoming more commoditized,
we feel strongly that proven operational success, demonstrable experience and a track record of growth will be important differentiators
that will afford us a competitive advantage in sourcing and partnering with growth companies.
Focusing
on the Transformation of Work
Although
technology has become commonplace in nearly every sector of the economy, it is our belief that some sectors are experiencing technological
disruption and transformation more rapidly. Work, in all its forms, is being fundamentally disrupted and transformed as companies
both big and small recognize the power of technology to improve worker productivity, satisfaction and, ultimately, their bottom
lines. The most visible aspect of this trend is the emergence of marketplaces facilitating new and more efficient modes of interaction
between employers and workers. But we believe the landscape of opportunities is broader, including critical products and services
that support small and medium-sized (“SMB”) and enterprise companies on the one side, and workers (including gig workers,
independent contractors, temps and others) on the other. We plan to target high growth, technology-based and technology-enhanced
companies that provide such products and services. Because technology is disrupting core components of how work is done across
sectors, industries and geographies, and at an accelerating pace, we believe there is a large and fruitful range of targets that
fit our focus and can benefit from our leadership team’s experience.
Our
focus is not dependent on the impact of the COVID-19 virus, although the pandemic has accelerated existing secular trends and
highlighted the potential impact of these structural changes in such diverse areas as video meetings and telemedicine. Despite
the disruption to the global economy, many companies focused on the transformation of work through technology have experienced
phenomenal growth over the last year. There are a broad range of private companies which are also benefiting from this transformation,
and we believe they form a large set of potentially attractive target companies.
The
Value Proposition We Offer to Target Companies
The
Z-Work management team, directors and strategic advisors bring a set of operational skills and transaction experience that we
believe will be highly valued by target companies:
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Operating
Experience and Skills
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Z-work’s
officers, directors and strategic advisors have extensive experience serving in senior positions in organizations across the corporate
life cycle, from start-ups to multi-billion-dollar public companies. The Z-Work team understands the important issues entrepreneurs
and senior executives need to get right when building high-growth enterprises. The Z-work team possesses a wide array skills across
key functional areas that can add significant value to target companies.
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Marketplace
Building and Data Monetization
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Most
marketplaces fail, but when they succeed, they are often powerful business. Our Executive Co-Chairmen, Doug Atkin and Mr. Terrill,
understand the ingredients necessary to build successful ones. Our Executive Co-Chairman Doug Atkin was one of the key architects
who built Instinet into the largest electronic marketplace for equity trading. At its peak and while Doug Atkin was CEO, Instinet
traded ~30% of all Nasdaq volume. Mr. Terrill has developed leading marketplaces in on-line dating (Match.com) and the gig economy
(HomeAdvisor/Angie’s List). Mr. Roston was a senior executive at IAC which owns and has owned numerous successful digital
marketplaces including Match Group and ANGI Homeservices. Doug Atkin also has extensive experience in data monetization. He was
CEO of Majestic, an early data-driven research firm servicing the world’s largest fund managers.
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Marketing
and Branding Expertise
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Mr.
Terrill has proven success in developing successful online and off-line marketing strategies, including at Match.com and HomeAdvisor.
Our Chief Community Advisor and Director Douglas Atkin is the author of The Culting of Brands, an analysis of the process of branding
that offers insights into how companies can cultivate near-fanatical customer loyalty, attract and retain consumer population
segments and foster loyal employees.
Our
Chief Community Advisor and Director Douglas Atkin is one of the foremost experts in “community building.” In an increasingly
competitive business environment, where consumers can easily hop from one online service to another, building online and off-line
communities is critically important, and a strong community keeps customers connected, lowering churn and increasing overall satisfaction.
At Airbnb, Douglas Atkin developed the company’s and community’s Purpose, led all community initiatives and was Architect
of the company’s and community’s values and culture. As Partner and Chief Community Officer at Meet-Up, Douglas Atkin
helped build the world’s largest network of communities. Similarly, Mr. Terrill oversaw strong communities at both Match.com
and HomeAdvisor/Angie’s List. Mr. Roston oversaw the hyper growth of communities of hourly workers at both Bluecrew (blue
collar work) and NurseFly (nursing).
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Transactions:
IPOs, M&A and Deal Flow
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Z-Work’s
team has deep experience taking companies public and executing M&A transactions. Doug Atkin led Instinet’s $464 million
IPO and Mr. Terrill led HomeAdvisor’s $700 million reverse merger with Angie’s List.
While
at HomeAdvisor, Mr. Terrill led the acquisitions of CraftJack, MHelpDesk, Felix, Techstars, WerkSpot and Handy. Mr. Roston has
over 15 years of M&A experience and has completed over 50 M&A transactions with a combined value of over $75 billion.
On a combined basis, our management team members, directors and strategic advisors have made over 150 private company investments,
including a number of investments alongside leading private equity and venture funds. Z-Work’s management team members,
directors and strategic advisors have extensive networks, which provide them with access to deal flow from corporations, private
equity funds and others. Given Z-Work team members’ operating experience and reputations, CEOs often approach them for advice,
and many of those approaches have led to investment opportunities.
Acquisition
Criteria
In
identifying acquisition targets, we will prioritize several important attributes that we believe are critical for future success:
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Demonstrated,
sustainable growth potential
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We
believe that demonstrated, sustainable growth potential is a key determinant in identifying a strong target business and is one
of the best indicators of future success. Our collective experience, knowledge and skills as seasoned operators in high growth
environments provides a distinct advantage to our team in terms of identifying and selecting strong business combination targets
and assessing the sustainability of past performance and the potential for strong growth in the future.
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Management
that can drive innovation
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It
can be easy to misidentify the core drivers of management success, mistaking charismatic zeal or technological wizardry for substantive
success. Our deep experience as operators of high growth, tech-enabled companies, as well our collective experience with mergers
and acquisitions, venture investments and portfolio company analysis, create a strong foundation for identifying management teams
that can drive the innovations necessary to succeed in a complex technology environment.
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Companies
that are scalable, with a large addressable market
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As
seasoned operators of companies and marketplaces with proven scale and large addressable markets, we understand how to analyze
a company’s market opportunity, near-term and long-term. Without tested operational knowledge and skills, it is easy to
overestimate or underestimate the true addressable market of a company, as well as the likelihood of it successfully scaling its
business. We believe that our experience gives us an advantage in evaluating targets’ addressable markets and probability
of successfully scaling over time.
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Strong,
clear value proposition
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We
will look for target businesses with strong and resonant value propositions. How does a company’s value proposition give
them advantages over their competition? How are products and services built and refined in relation to the value proposition?
Is the value proposition strong enough to scale and take market share in a large addressable market? With decades of experience
growing and scaling leading brands and companies with unique value propositions, we can identify companies best positioned to
exploit strong value propositions.
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Quantitative
rigor and discipline
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The
most successful high growth, tech-driven and tech-enabled companies use data and data analysis with rigor, which allows them to
scale quickly and take market share in large addressable markets. We believe that our deep operating experience will allow us
to understand, analyze and assess the core metrics of a target company in order to comprehend its drivers and its potential.
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Engagement
with demographic trends
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We
consider demographic trends to be of critical importance in today’s rapidly evolving technology environment, and we believe
the best target companies are those that can tap into these trends. Our operating track records demonstrate our ability to understand
demographic trends and leverage them successfully, creating long term sustainable growth. We will seek the same ability in our
target businesses.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations and factors that our management
team may deem relevant. In the event that we decide to enter into our initial business combination with a target business that
does not meet the above criteria, we will disclose that the target business does not meet the above criteria in our stockholder
communications related to our initial business combination, which, as discussed in this Form 10-K, would be in the form of proxy
solicitation materials or tender offer documents that we would file with the SEC.
Our
sponsor may form, and our officers and directors may become an officer or director of, one or more other special purpose acquisition
companies, each with a class of securities intended to be registered under the Securities Exchange Act of 1934, as amended, or
the Exchange Act, prior to the completion of our initial business combination.
Initial
Business Combination
Nasdaq
rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair
market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working
capital purposes, if any, and excluding the amount of deferred underwriting discounts held in trust and taxes payable on the income
earned on the trust account). Our board of directors will make the determination as to the fair market value of our initial business
combination. If our board of directors is not able to independently determine the fair market value of our initial business combination,
we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not
be able to make an independent determination of the fair market value of our initial business combination, it may be unable to
do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination
must be approved by a majority of our independent directors.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business for the post-acquisition company 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 an interest in the target or assets 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 initial business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in
which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new
shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding
shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business
or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned
or acquired is what will be valued for purposes of the 80% of net assets test. If the initial business combination involves more
than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and
we will treat the target businesses together as the initial business combination for the purposes of a tender offer or for seeking
stockholder approval, as applicable.
The
net proceeds of our offering and the sale of the private placement warrants released to us from the trust account upon the closing
of our initial business combination may be used as consideration to pay the sellers of a target business with which we complete
our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all
of the funds released from the trust account are used for payment of the consideration in connection with our initial business
combination or used for redemption of our public shares, we may use the balance of the cash released to us from the trust account
following the closing for general corporate purposes, including for maintenance or expansion of operations of the post-transaction
businesses, 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, we may be required to obtain additional financing
in connection with the closing of our initial business combination to be used following the closing for general corporate purposes
as described above. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities
or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward
purchase agreements or backstop agreements we may enter into following consummation of our offering. Subject to compliance with
applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination.
At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional
funds through the sale of securities or otherwise. None of our sponsor, officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination. We may also obtain financing prior to the closing
of our initial business combination to fund our working capital needs and transaction costs in connection with our search for
and completion of our initial business combination. Our amended and restated certificate of incorporation provides that, following
our offering and prior to the consummation of our initial business combination, we will be prohibited from issuing additional
securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our
public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of
incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of our offering
or (y) amend the foregoing provisions, unless (in connection with any such amendment to our amended and restated certificate of
incorporation) we offer our public stockholders the opportunity to redeem their public shares.
Business
Combination Process
In
evaluating prospective business combinations, we expect to conduct a thorough due diligence review process that will encompass,
among other things, a review of historical and projected financial and operating data, meetings with management and their advisors
(if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other
reviews as we deem appropriate. We will also utilize the expertise of our management team in analyzing potential target companies
and evaluating operating projections, financial projections and determining the appropriate return expectations given the risk
profile of the target business.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared
ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial
business combination target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions that such an initial business combination is fair to our company from a financial point of view.
Each
or our initial stockholders, officers and directors has or may in the future have fiduciary or contractual obligations to other
entities pursuant to which they are or will be required to present a business combination opportunity. Accordingly, if any of
them becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations to present the opportunity, he or she will honor his or her fiduciary or contractual obligations to
present such opportunity to such entity. We believe, however, that these fiduciary duties or contractual obligations will not
materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the
extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Corporate
Information
Our
executive offices are located at 575 Fifth Avenue, 15th Floor, New York NY 10017, and our telephone number is 626-867-7295. The
information contained on or accessible through our corporate website or any other website that we may maintain is not part of
this Form 10-K.
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 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 offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period. References herein to “emerging growth company” shall have the
meaning associated with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our common stock held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceed $100
million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million
as of the prior June 30.
Financial
Position
With
funds available for an initial business combination initially in the amount of $221,950,000, after payment of $8,050,000 of deferred
underwriting fees, in each case before fees and expenses associated with our initial business combination, we offer a target business
a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our
initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit
its needs and desires. However, we have not taken any steps to secure third-party financing and there can be no assurance it will
be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following our offering.
We intend to effectuate our initial business combination using cash from the proceeds of our offering and the private placement
of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination
(pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of our offering or
otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be
financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in
such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our initial business combination or used for redemption of
our public shares, we may use the balance of the cash released to us from the trust account following the closing for general
corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal
or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies
or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. In addition, we intend to target businesses with enterprise values that are
greater than we could acquire with the net proceeds of our offering and the sale of the private placement warrants, and, as a
result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to
satisfy any redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial
business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously
with the completion of our initial business combination. In the case of an initial business combination funded with assets other
than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination would
disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There
is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances
or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or
backstop agreements we may enter into following consummation of our offering. At this time, we are not a party to any arrangement
or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
None of our sponsor, officers, directors or stockholders is required to provide any financing to us in connection with or after
our initial business combination. Our amended and restated certificate of incorporation provides that, following our offering
and prior to the consummation of our initial business combination, we will be prohibited from issuing additional securities that
would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a)
on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to
(x) extend the time we have to consummate a business combination beyond 24 months from the closing of our offering or (y) amend
the foregoing provisions, unless (in connection with any such amendment to our amended and restated certificate of incorporation)
we offer our public stockholders the opportunity to redeem their public shares.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result
of being solicited by us by calls or mailings. These sources may also introduce us to target businesses in which they think we
may be interested on an unsolicited basis, since many of these sources will have read this Form 10-K and know what types of businesses
we are targeting. Our officers and directors, as well as our sponsor and its affiliates, may also bring to our attention target
business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows, conferences or conventions. In addition, we expect to receive a number of proprietary
deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our
officers and directors and our sponsor and their respective industry and business contacts as well as their affiliates. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms
of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities
to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction
that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will
our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be
paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by
the Company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion
of our initial business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive
officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees
or consulting fees from a prospective business combination target in connection with a contemplated initial business combination,
we do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from
negotiating for the reimbursement of out-of-pocket expenses by a target business. We have agreed to pay our sponsor $12,500 per
month, equal to $150,000 per year, $100,000 of which will be paid to Mr. Roston as an annual cash salary and $50,000 of which
will be paid for additional support services sourced from Communitas Capital, a venture firm of which our Executive Co-Chairman
Doug Atkin is Managing Partner. Some of our officers and directors may enter into employment or consulting agreements with the
post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements
will not be used as a criterion in our selection process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared
ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial
business combination target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions that such an initial business combination is fair to our company from a financial point of view.
As
more fully discussed in the section of this Form 10-K entitled “Management — Conflicts of Interest,” if any
of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business
of any entity to which he or she has then-existing fiduciary or contractual obligations, he or she may be required to present
such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us.
Potential
target companies with whom we may engage in discussions after the closing of the offering may have had prior discussions with
other blank check companies, bankers in the industry and/or other professional advisors, including blank check companies with
which our executive officers or board of directors were affiliated.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair
market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working
capital purposes, if any, and excluding the amount of deferred underwriting discounts held in trust and taxes payable on the income
earned on the trust account). The fair market value of our initial business combination will be determined by our board of directors
based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation
based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions
of comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial
business combination (including with the assistance of financial advisors), we will obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
Subject to this requirement, our management will 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. Additionally, pursuant to Nasdaq rules, any initial business combination
must be approved by a majority of our independent directors.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction
company is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. There is no basis for investors
in our offering to evaluate the possible merits or risks of any target business with which we may complete our initial business
combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective business target, we expect to conduct a due diligence review, which may encompass, among other things,
meetings with incumbent ownership, management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of, and negotiation with, a prospective target business with which our initial business combination
is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business
combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which
may have a substantial adverse impact on the particular industry in which we operate
after our initial business combination, and
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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 intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our initial business combination with that business, our assessment of the target business’ management may not prove to
be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated
with any certainty. The determination as to whether any of the members of our management team will remain with the combined company
will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain
associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their
full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our
management team will have significant experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
Type
of Transaction
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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 shares of Class A common stock that will be equal to or in excess of 20% of the
number of shares of our Class A common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has
a 5% or greater interest (or such persons collectively have a 10% or greater interest),
directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in
outstanding common shares 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
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase public shares or public warrants in privately-negotiated transactions or in the open market either prior
to or following the completion of our initial business combination. There is no limit on the number of shares or warrants our
initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance
with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not
make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such
purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would
constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the
going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases
are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section
13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds
held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial
business combination.
Subsequent
to the consummation of our offering, we will adopt an insider trading policy which will require insiders to: (i) refrain from
purchasing our securities during certain blackout periods when they are in possession of any material non-public information and
(ii) clear all trades of company securities with a compliance officer 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.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may
result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases
are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or any of 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 tendered by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder
has already submitted a proxy with respect to our initial business combination. Such persons would select the stockholders from
whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such
person may deem relevant at the time of purchase. The price per share paid in any such transaction may be different than the amount
per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination.
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 be made only to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers,
directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the
extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then
outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated
to be approximately $10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares
will not be reduced by deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors
have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and any public shares held by them in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder
approval of a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and
will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require
us to seek stockholder approval under applicable law or stock exchange listing requirements.
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. So long as we obtain and maintain a listing for
our securities on Nasdaq, we will be required to comply with Nasdaq’s stockholder approval rules.
The
requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods
listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or
not we maintain our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by
holders of 65% of our common stock entitled to vote thereon.
If
we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting,
we will:
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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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If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the Company representing a majority of the voting power
of all outstanding shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count
towards this quorum and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder
shares and any public shares purchased during or after our offering (including in open market and privately-negotiated transactions)
in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common
stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a
result, in addition to our initial stockholders’ founder shares, we would need only 8,625,001, or 37.5%, of the 23,000,000
public shares sold in our offering to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted). In addition, following PSAM’s purchase of 2,000,000 of
our units in the offering, representing 8.7% of the outstanding units sold in our offering, which includes 2,000,000 public shares.
If PSAM votes those public shares in favor of our initial business combination, then we would need only 6,624,001 public shares
in addition to the PSAM public shares, or 28.8% of the 23,000,000 public shares sold in our offering, to be voted in favor of
our initial business combination in order to have our initial business combination approved (assuming all outstanding shares are
voted). We intend to give not less than 10 days’ nor more than 60 days’ prior written notice of any such meeting,
if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and
the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination.
Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction
or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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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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●
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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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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 number will be based on the requirement that we will only redeem
our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior
to or upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
that 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.
Upon
the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules,
we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common
stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
We
intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent or deliver their shares to our transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case
of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business
combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder
seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days
prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate
whether we are requiring public stockholders to satisfy such delivery requirements. We believe that this will allow our transfer
agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders,
which could delay redemptions and result in additional administrative cost. If the proposed initial business combination is not
approved and we continue to search for a target company, we will promptly return any certificates or shares delivered by public
stockholders who elected to redeem their shares.
Our
amended and restated certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption)
our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of deferred underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny
stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to
our initial business combination. For example, the proposed initial business combination may require: (i) cash consideration to
be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business
combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination
or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to more than an aggregate of 15% of the shares sold in our offering, which we refer to as the “Excess
Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders
from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption
rights against a proposed initial business combination as a means to force us or our management to purchase their shares at a
significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder
holding more than an aggregate of 15% of the shares sold in our offering could threaten to exercise its redemption rights if such
holder’s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable
terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our offering without our prior
consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to
complete our initial business combination, particularly in connection with an initial business combination with a target that
requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Delivering
Stock Certificates in Connection with the Exercise of Redemption Rights
As
described above, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record
holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates
to our transfer agent or deliver their shares to our transfer agent electronically using the Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as
applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve
the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require
a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent
two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials
or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial
business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly,
a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute
proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable,
to submit or tender its shares if it wishes to seek to exercise its redemption rights. In the event that a stockholder fails to
comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not
be redeemed. 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 process and the act of certificating the shares or delivering them through
the DWAC system. The transfer agent will typically charge the broker submitting or tendering shares a fee of approximately $80.00
and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred
regardless of whether or not we require holders seeking to exercise redemption rights to submit or 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 proxy materials or tender
offer documents, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may
simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion
of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until 24 months from the closing of our offering.
Redemption
of Public Shares and Liquidation if no Initial business combination
Our
amended and restated certificate of incorporation provides that we will have only 24 months from the closing of our offering 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 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will
be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete
our initial business combination within the 24-month time period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our
initial business combination within 24 months from the closing of our offering. However, if our sponsor, officers or directors
acquire public shares in or after our 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, 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 to (A) modify the substance or timing of our obligation to provide for
the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of our offering or (B) with respect to
any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding
public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of deferred underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot
satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption
of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the approximately $1,285,000 of proceeds held outside the trust account, although
we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned
on the proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to
cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued
in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request the trustee
to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our offering and the sale of the private placement warrants, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.
We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than
$10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or
make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided
for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any,
we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses and 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 enter into an agreement waiving such claims to the monies held in the trust account, our management
will consider whether competitive alternatives are reasonably available to the Company, and will only enter into an agreement
with such third party if our management believes that such third party’s engagement would be in the best interests of the
Company under the circumstances. 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. WithumSmith+Brown, PC, our independent registered public accounting firm, and the underwriters
of the offering will not execute agreements with us waiving such claims to the monies held in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share
initially held in the trust account, due to claims of such creditors. Pursuant to a letter agreement, our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective
target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination
agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00
per share due to reductions in the value of the trust assets, less taxes payable; provided that such liability will not apply
to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in
the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters
of our offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor
to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to
satisfy their indemnity obligations, and believe that our sponsor’s only assets are securities of our company. Therefore,
we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties, including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it
is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations, and believe that our sponsor’s only assets are securities of our company. Accordingly, we cannot assure
you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per public
share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also
not be liable as to any claims under our indemnity of the underwriters of our offering against certain liabilities, including
liabilities under the Securities Act. We will have access to up to approximately $1,285,000 from the proceeds of our offering
with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently
estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the
reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for
claims made by creditors. In the event that our offering expenses exceed our estimate of $1,215,000, we may fund such excess with
funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust
account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate
of $1,215,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 24 months from the closing of our
offering may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination within 24 months from the closing of our offering, is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the
imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business
combination within 24 months from the closing of our offering, we will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds
held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate
and dissolve, 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
our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be
liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited
and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per
public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust
account, due to reductions in value of the trust assets, in each case net of the amount of interest released to us to pay taxes
and will not be liable as to any claims under our indemnity of the underwriters of our offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party,
our sponsor will not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against
us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion
of our initial business combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend any provisions of our amended and restated certificate of incorporation to (A) modify the substance or timing of
our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our offering
or (B) with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination within 24
months from the closing of our offering, subject to applicable law. In no other circumstances will a stockholder have any right
or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business
combination, a stockholder’s voting in connection with the initial business combination alone will not result in a stockholder’s
redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its
redemption rights as described above. These provisions of our amended and restated certificate of incorporation, like all provisions
of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, public companies and operating businesses seeking strategic business combinations. Many of these entities are well
established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover,
many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger
target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in
pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our
public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
and our outstanding 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.
Facilities
Our
executive offices are located at 575 Fifth Avenue, 15th Floor, New York NY 10017, and our telephone number is 626-867-7295. Our
executive offices are provided to us by our sponsor. Pursuant to an administrative support agreement with our sponsor, dated as
of January 28, 2021, we agreed to pay our sponsor a total of $10,833 per month for up to 24 months, equal to $130,000 per
year over two years. In light of additional administrative support services to be provided, we amended and restated the administrative
support agreement to provide that, as of February 1, 2021, we would pay our Sponsor $12,500 per month, or $150,000 per year, $100,000
of which will be paid to Mr. Roston as an annual cash salary and $50,000 of which will be paid for additional support services
expected to be sourced from Communitas Capital, a venture firm of which our Executive Co-Chairman Doug Atkin is Managing Partner.
Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Employees
We
currently have three officers and no employees. Our officers are not obligated to devote any specific number of hours to our matters
but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the stage of the initial business combination process we are in.
Periodic
Reporting and Financial Information
We
have registered our Units, Class A Common shares and 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 accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation
materials or tender offer documents sent to stockholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with, or reconciled to, GAAP or IFRS, depending on the circumstances,
and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial
statement requirements may limit the pool of potential targets we may conduct an initial business combination with because some
targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target
business identified by us as a potential business combination candidate will have financial statements prepared in accordance
with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements
outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business.
While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging
growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such business combination. Following the effectiveness of our offering, subject to the rules and regulations promulgated under
the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange
Act prior or subsequent to the consummation of our initial business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held
by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three-year period.
Summary
of Risk Factors
An
investment in our securities involves a high degree of risk. Below is a summary of the principal risk factors that make an investment
in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of
the risks summarized in this summary of risk factors, and other risks that we face, can be founded below in “Risk Factors”
and should be carefully considered, together with other information in this Annual Report on Form 10-K. Our principal risks and
uncertainties include, but are not limited to, the following risks, uncertainties and other factors:
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We
are a recently incorporated company with no operating history and no revenues, and you
have no basis on which to evaluate our ability to achieve our business objective.
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Past
performance by our management team or their respective affiliates may not be indicative
of future performance of an investment in us.
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Our
stockholders may not be afforded an opportunity to vote on our proposed initial business
combination, which means we may complete our initial business combination even though
a majority of our stockholders do not support such a combination.
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Your
only opportunity to affect the investment decision regarding a potential business combination
may be limited to the exercise of your right to redeem your shares from us for cash.
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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.
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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.
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The
ability of our public stockholders to exercise redemption rights with respect to a large
number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
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The
requirement that we consummate an initial business combination within 24 months (or such
later date as approved by our stockholders) after the closing of the offering may give
potential target businesses leverage over us in negotiating a business combination and
may limit the time we have in which to conduct due diligence on potential business combination
targets, in particular as we approach our dissolution deadline, which could undermine
our ability to complete our initial business combination on terms that would produce
value for our stockholders.
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Our
search for a business combination, and any target business with which we ultimately consummate
a business combination, may be materially adversely affected by the recent coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
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If
we seek stockholder approval of our initial business combination, our initial stockholders,
directors, executive officers, advisors and their affiliates may elect to purchase public
shares or warrants, which may influence a vote on a proposed business combination and
reduce the public “float” of our shares of Class A common stock or public
warrants.
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If
a stockholder fails to receive notice of our offer to redeem our public shares in connection
with our initial business combination, or fails to comply with the procedures for tendering
its shares, such shares may not be redeemed.
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You
will not have any rights or interests in funds from the trust account, except under certain
limited circumstances. Therefore, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a loss.
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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.
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You
will not be entitled to protections normally afforded to investors of many other blank
check companies.
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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 have
not consummated our initial business combination within the required time period, our
public stockholders may receive only approximately $10.00 per public share, or less in
certain circumstances, on the liquidation of our trust account and our warrants will
expire worthless.
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If
the net proceeds of the offering and the sale of the private placement warrants not being
held in the trust account are insufficient to allow us to operate for the 24 months following
the closing of the offering, it could limit the amount available to fund our search for
a target business or businesses and our ability to complete our initial business combination,
and we will depend on loans from our sponsor, its affiliates or members of our management
team to fund our search and to complete our initial business combination.
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Past
performance by our management team and their affiliates may be indicative of future performance
of an investment the Company, and we may seek business combinations opportunities in
industries that may not be in our management’s area of expertise.
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There
are risks relating to our securities, including that the securities in which we invest
the funds held in the trust account could bear a negative rate of interest, we are not
registering the shares of Class A common stock issuable upon the exercise of warrants
and risk related to the issuance of the warrants.
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Risks
Relating to our Search for, Consummation of, or Inability to Consummate,
a business combination and Post-business combination Risks
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold
a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination
even though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination
would require stockholder approval under applicable law or stock exchange listing requirements. In such case, the decision as
to whether we will seek stockholder approval of a proposed initial business combination or will allow stockholders to sell their
shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as
the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly,
we may complete our initial business combination even if holders of a majority of our outstanding public shares do not approve
of the initial business combination we complete. Please see the section of this Form 10-K entitled “Proposed 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.
Pursuant
to a letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares
purchased during or after our offering (including in open market and privately-negotiated transactions), in favor of our
initial business combination. As a result, in addition to our initial stockholders’ founder shares, we would need only 8,625,001,
or 37.5%, of the 23,000,000 public shares sold in our offering to be voted in favor of an initial business combination in order
to have our initial business combination approved (assuming all outstanding shares are voted). In addition, PSAM acquired 2,000,000
public units, which include 2,000,000 public shares. If PSAM votes those public shares in favor of our initial business combination,
then we would need only 6,624,001 public shares in addition to PSAM public shares, or 28.8% of the 23,000,000 public shares sold
in our offering, to be voted in favor of our initial business combination in order to have our initial business combination approved
(assuming all outstanding shares are voted). Our initial stockholders owned shares representing 20% of our outstanding shares
of common stock immediately following the completion of our offering. Accordingly, if we seek stockholder approval of our initial
business combination, the agreement by our initial stockholders to vote in favor of our initial business combination will increase
the likelihood that we will receive the requisite stockholder approval for such 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 an agreement for an initial business combination
with a target.
We
may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the initial business combination.
Furthermore, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least
$5,000,001 as described above upon consummation of our initial business combination and after payment of deferred underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement that may be contained in the agreement relating to our initial business combination. Consequently, if
accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater
amount necessary to satisfy a closing condition, each 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 an initial business combination agreement with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash
in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve
a portion of the cash in the trust account to meet such requirements, or arrange for third-party financing. In addition,
if a larger number of shares 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. Furthermore, this dilution
would increase to the extent that the anti-dilution provision of the Class B common stock results in the issuance of
Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock at the time of our
business combination. The above considerations may limit our ability to complete the most desirable business combination available
to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters is not
required to be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount
we will distribute to stockholders who properly exercise their redemption rights will not be reduced by deferred underwriting
commissions and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect
our obligation to pay the deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
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 your exercise of redemption rights 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 an initial business combination and may decrease our ability to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination within 24 months from the closing of our offering. Consequently, such target
business may have leverage over us in negotiating an initial business combination, knowing that if we do not complete our initial
business combination with that particular target business, we may be unable to complete our initial business combination with
any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited
time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a
more comprehensive investigation.
We
may not 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, in which case our public
stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination within 24 months
from the closing of our offering. We may not be able to find a suitable target business and complete our initial business combination
within such time period. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, political considerations, volatility in the capital and debt markets and the other risks described herein. If we have
not completed our initial business combination within such time period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may receive
only $10.00 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less
than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or warrants from public holders, which may influence a vote on a proposed initial business combination
and reduce the public “float” of our Class A common stock or public warrants.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase
shares or public warrants or a combination thereof, in privately-negotiated transactions or in the open market, either prior
to or following the completion of our initial business combination, although they are under no obligation to do so. However, they
have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
See “Proposed Business — Permitted Purchases of Our Securities” for a description of how our sponsor, initial
stockholders, directors, officers, advisors or any of their affiliates will select which stockholders to purchase securities from
in any private transaction.
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, 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 price per share paid in any such transactions may be different than the amount per share
a public stockholder would receive if such public stockholder elected to redeem its shares in connection with our initial business
combination. The purpose of such purchases could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may
result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such
reporting requirements. In addition, if such purchases are made, the public “float” of our Class A common stock
or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain
or maintain the quotation, listing or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for submitting or tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender
offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy
materials or tender offer documents, 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 submit
public shares for redemption. For example, we intend to require our public stockholders seeking to exercise their redemption rights,
whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver
their stock certificates to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date
set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up
to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct
redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public
shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the
name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other
procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. See the section of
this Form 10-K entitled “Proposed Business — Submitting Stock Certificates in Connection with Redemption Rights.”
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 earliest to occur of: (i) our
completion of an initial business combination, and then only in connection with those shares of Class A common stock that
such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public
shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation
to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares in connection
with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within 24 months from the closing of our offering or (B) with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity, and (iii) the redemption of our public shares if we are unable
to complete an initial business combination within 24 months from the closing of our offering, subject to applicable law
and as further described herein. 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 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 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. Holders of warrants will not have any right to the proceeds held
in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
units, Class A common stock and warrants are listed on Nasdaq. We cannot guarantee that our securities will be, or will continue
to be, listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities
on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and stock price levels.
Generally, we must maintain a minimum amount in stockholders’ equity ($2,500,000) and a minimum number of holders of our
securities (generally 300 public holders). Additionally, in connection with our initial business combination, we will be required
to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued
listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price
would generally be required to be at least $4 per share, our stockholders’ equity would generally be required to be at least
$5,000,000 and we would be required to have 300 round lot holders (with at least 50% of such holders holding securities with a
market value of at least $2,500). 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 Class A common stock is a “penny stock” which will require brokers trading in our Class A
common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading
market for our securities;
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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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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.” Our units, Class A common stock
and warrants 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.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our 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 U.S. securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful
completion of our offering and the sale of the private placement warrants and will file a Current Report on Form 8-K, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules.
Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our
initial business combination than companies subject to Rule 419. Moreover, if our offering were subject to Rule 419,
that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds
in the trust account were released to us in connection with our completion of an initial business combination. For a more detailed
comparison of our offering to offerings that comply with Rule 419, please see the section of this Form 10-K entitled “Proposed
Business — Comparison of Our offering to Those of Blank Check Companies Subject to Rule 419.”
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock,
you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our offering without our prior consent, 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 initial business combination. Your inability to redeem the Excess Shares will
reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your
investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold
that number of shares exceeding 15% 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 receive only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances,
and our warrants will expire worthless.
We
expect to encounter 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 similar or greater technical, human and other resources to ours, 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 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, because we are obligated to pay cash for the shares of Class A common
stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware
that this may reduce the resources available to us for our initial business combination. Any of these obligations may place us
at a competitive disadvantage in successfully negotiating an initial business combination. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust
account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00
per share upon our liquidation. See “— If third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and
other risk factors below.
If
the net proceeds of our offering and the sale of the private placement warrants not being held in the trust account are insufficient
to allow us to operate for at least the next 24 months, we may be unable to complete our initial business combination, in which
case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants
will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 24 months
following the closing of our offering, assuming that our initial business combination is not completed during that time. We believe
that, upon the closing of our offering, the funds available to us outside of the trust account will be sufficient to allow us
to operate for at least the next 24 months; however, we cannot assure you that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target
business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions
with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed initial
business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger
agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or
conduct due diligence with respect to, a target business. Of the net proceeds of our offering and the sale of the private placement
warrants, only approximately $1,285,000 will be available to us initially outside the trust account to fund our working capital
requirements. In the event that our offering expenses exceed our estimate of $1,215,000, we may fund such excess with funds not
to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease
by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,215,000, the amount
of funds we intend to be held outside the trust account would increase by a corresponding amount. 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 or may be forced to
liquidate. None of our sponsor, or any affiliate of our sponsor or any of our officers and directors is under any obligation to
advance funds to us in such circumstances. Any such 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. Up to $1,500,000 of such loans may be convertible
into private placement-equivalent warrants at a price of $1.50 per warrant at the option of the lender. Prior to the completion
of our initial business combination, we do not expect to seek advances or loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all
rights to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable to complete our
initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation. See “— If third
parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors below.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, and which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
identify all material issues that may be present within a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets,
restructure our operations or incur impairment or other charges that could result in our reporting losses. Even if our due diligence
successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent
with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our
liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.
In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result
of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance
the initial business combination or thereafter. Accordingly, any stockholders who choose to remain stockholders following the
initial 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.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek
to have all vendors, service providers, prospective target businesses and 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 enter into an agreement waiving such claims to the monies held in the trust account, our management will consider whether
competitive alternatives are reasonably available to us, and will only enter into an agreement with such third party if our management
believes that such third party’s engagement would be in our best interests under the circumstances. WithumSmith+Brown, PC,
our independent registered public accounting firm, and the underwriters of the offering, will not execute agreements with us waiving
such claims to the monies held in the trust account.
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 initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per
share initially held in the trust account, due to claims of such creditors. Pursuant to a letter agreement, our sponsor has agreed
that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or
a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement
or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public
share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable; provided that such
liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our
indemnity of the underwriters of our offering against certain liabilities, including liabilities under the Securities Act. However,
we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our
sponsor has sufficient funds to satisfy its indemnity obligations, and believe that our sponsor’s only assets are securities
of our company. As a result, if any such claims were successfully made against the trust account, the funds available for our
initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not
be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any
redemption of your public shares. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties, including, without limitation, claims by vendors
and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual
amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share
due to reductions in the value of the trust assets, in each case net of the interest, which may be withdrawn to pay taxes, and
our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors, in exercising their business judgment and subject to their fiduciary
duties, may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
Members
of our management team and board of directors have significant experience as founders, board members, officers or executives of
other companies. As a result, certain of those persons have been, may be, or may become, involved in proceedings, investigations
and litigation relating to the business affairs of the companies with which they were, are, or may in the future be, affiliated.
This may have an adverse effect on us, which may impede our ability to consummate an initial business combination.
During
the course of their careers, members of our management team and board of directors have had significant experience as founders,
board members, officers or executives of other companies. As a result of their involvement and positions in these companies, certain
persons were, are now, or may in the future become, involved in litigation, investigations or other proceedings relating to the
business affairs of such companies or transactions entered into by such companies. Any such litigation, investigations or other
proceedings may divert our management team’s and board’s attention and resources away from identifying and selecting
a target business or businesses for our initial business combination and may negatively affect our reputation, which may impede
our ability to complete an initial business combination.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will
also be required to waive) any right, title, interest or claim of any kind in or to any monies in the trust account and not to
seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be
satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business
combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against
our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood
of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit
us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs
of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
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 we and
our board may be exposed 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.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination within 24 months from
the closing of our offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain
procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against
it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating
distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to
the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,
and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention
to redeem our public shares as soon as reasonably possible following the 24th month from the closing of our offering
in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because
we 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 within 24 months from the closing of our offering
is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
We
may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by Nasdaq), and
thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for
the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent
in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business
combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance
with Section 211(c) of the DGCL.
Because
we are neither limited to evaluating a target business in a particular industry sector nor have we selected 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 to complete an initial business combination with companies in a variety of industries, except that we will not, under
our amended and restated certificate of incorporation, be permitted to effectuate our initial business combination with another
blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target
business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular
target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent
we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which
we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our 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 securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in a business combination target. Accordingly, any stockholders who choose to remain stockholders following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such
reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these 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 reasons, it may be more difficult for us
to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and
guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances as described herein, on the liquidation of our trust account and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption
of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account could be
reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk
factors herein.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of
revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
To
the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity
lacking an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the
business with which we combine. These risks include investing in a business without a proven business model or with limited historic
financial data, volatile revenues or earnings, intense competition 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 relevant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly
renders valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying
for the target(s) of our initial business combination is fair to our company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board of directors cannot independently determine
the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required
to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions 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 proxy materials or tender offer documents, as applicable,
related to our initial business combination.
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on
the liquidation of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons, including those
beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on
the redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and
other risk factors herein.
We
may 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, which could, in turn, negatively impact the value of our stockholders’ investment in us.
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 initial 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.
We
may engage in an initial business combination with one or more target businesses that have relationships with entities that may
be affiliated with our sponsor, officers, directors or existing holders that may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities,
including, without limitation, those described under the section of this Form 10-K entitled “Management — Conflicts
of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors
are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with
which they are affiliated, and there have been no substantive discussions concerning an initial business combination with any
such entity or 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 an initial business combination
as set forth in the section of this Form 10-K entitled “Proposed Business — Selection of a Target Business and
Structuring of our Initial 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 or another independent entity that commonly renders
valuation opinions, regarding the fairness to the Company and our stockholders from a financial point of view of an initial business
combination with one or more domestic or international businesses affiliated with our officers, directors or existing holders,
potential conflicts of interest still may exist and, as a result, the terms of the initial business combination may not be as
advantageous to our public stockholders as they would be absent any conflicts of interest. These risks may become more acute as
the 24-month deadline for the completion of our initial business combination.
Since
our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed
(except with respect to any public shares the may hold), a conflict of interest may arise in determining whether a particular
business combination target is appropriate for our initial business combination.
In
December 2020, our sponsor paid $25,000 in consideration of 5,750,000 founder shares, 750,000 of which are subject to forfeiture
if the underwriters’ over-allotment option is not exercised. The number of founder shares issued was determined based
on the expectation that such founder shares would represent 20% of the outstanding shares after our offering. The founder shares
will be worthless if we do not complete an initial business combination. In addition, our sponsor and Jefferies have committed
to purchase an aggregate of 4,333,333 private placement warrants (3,666,666 warrants to our sponsor and 666,667 warrants to Jefferies),
or 4,733,333 private placement warrants if the over-allotment option is exercised in full (3,966,666 warrants to our sponsor
and 766,667 warrants to Jefferies), each warrant exercisable to purchase one share of our Class A common stock at $11.50
per share, at a price of $6,500,000 (or $7,100,000 in the aggregate if the over-allotment option is exercised in full), or
$1.50 per warrant, that will also be worthless if we do not complete an initial business combination. Holders of founder shares
have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to
redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination or in connection
with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation. In addition, we may
obtain loans from our sponsor, affiliates of our sponsor or an officer or director. The personal and financial interests of our
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.
We
may be able to complete only one business combination with the proceeds of our offering and the sale of the private placement
warrants, which will cause us to be solely dependent on a single business, which may have a limited number of products or services
and limited operating activities. This lack of diversification may negatively impact our operating results and profitability.
Of
the net proceeds from our offering and the sale of the private placement warrants, $230,000,000 will be available to complete
our initial business combination and pay related fees and expenses (which includes up to $8,050,000 for the payment of deferred
underwriting commissions being held in the trust account).
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. 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 risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend
to purchase multiple businesses in unrelated industries in conjunction with 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 an initial business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our initial business combination strategy, we may seek to effectuate our initial business combination with a privately-held company.
Very little public information generally exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in an initial 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
may structure an initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target 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 initial business combination may collectively
own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the
initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares
of Class A 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 our 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 an initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that we will
only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions
(such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
that may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our
initial business combination even though a substantial majority of our public stockholders do not agree with the transaction and
have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, have entered into privately-negotiated
agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed
the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, all
shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search
for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek
to amend our amended and restated certificate of incorporation or governing instruments 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 an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have
amended the definition of business combination, increased redemption thresholds, changed industry focus and extended the time
to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require
the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation
will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders
of at least a majority of the public warrants and, solely with respect to any amendment to the terms of the private placement
warrants or any provision of our warrant agreement with respect to the private placement warrants, a majority of the number of
the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation will require
us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to
our amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation to provide
for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of our offering or (B) with
respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity.
To the extent any such amendments would be deemed to fundamentally change the nature of any of our securities we would register,
or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter
or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business
combination.
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), including an amendment to permit
us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation
is substantially reduced or eliminated, 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 and the trust agreement to facilitate the completion of an initial business combination
that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-initial business combination
activity (including the requirement to deposit proceeds of our 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 and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive
upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, 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 entitled to vote thereon. In all other instances,
our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock
entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional
securities that can vote on amendments to our amended and restated certificate of incorporation. Our initial stockholders, who
collectively beneficially own approximately 20% of our common stock as of the completion of our offering, 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-initial business combination behavior more easily than some other blank check companies,
and this may increase our ability to complete an initial business combination with which you do not agree. Our stockholders may
pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation to provide
for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of our offering or (B) with
respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity,
unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
(including interest, net of taxes), divided by the number of then outstanding public shares. These agreements are contained in
a letter agreement that we have entered into with our sponsor, officers and directors. 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, 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.
If
the cash portion of the purchase price of any business combination exceeds the amount available from the trust account, net of
amounts needed to satisfy any redemption by public stockholders, we may be required to seek additional financing to complete such
proposed initial business combination. We cannot assure you that such financing will be available on acceptable terms, if at all.
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. Further, we may be required to obtain additional financing in connection with the closing of our initial
business combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses,
the payment of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the
purchase of other companies. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share plus any pro rata interest earned on the funds held in the trust account
and not previously released to us to pay our taxes on the liquidation of our trust account and our warrants will expire worthless.
In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our sponsor, officers, directors or stockholders
is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete
our initial business combination, our public stockholders may only receive approximately $10.00 per share on the liquidation of
our trust account, and our warrants will expire worthless. Furthermore, as described in the risk factor entitled “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share,” under certain circumstances our public stockholders
may receive less than $10.00 per share upon the liquidation of the trust account.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you
do not support.
Our
initial stockholders owned shares representing 20% of our issued and outstanding shares of common stock as of the completion of
our offering. 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 and approval of major corporate
transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately-negotiated transactions,
this would increase their control. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected
by our initial stockholders, is divided into three classes, each of which will generally serve for a term of three years with
only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our initial business combination, in which case all of the current directors will continue in office
until at least the completion of the initial business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election 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 initial business combination.
Our
sponsor paid a nominal price for the founder shares, and, accordingly, you will experience immediate and substantial dilution
from the purchase of our Class B common stock.
The
difference between the public offering price per share (allocating all of the unit purchase price to the Class A common stock
and none to the warrant included in the unit) and the pro forma net tangible book value per share of our Class A common stock
after our offering constitutes the dilution to you and the other investors in our offering. Our sponsor acquired the founder shares
at a nominal price, significantly contributing to this dilution. Upon the closing of our offering, and assuming no value is ascribed
to the warrants included in the units, you and the other public stockholders will incur an immediate and substantial dilution
of approximately 91.8% (or $9.18 per share, assuming no exercise of the underwriters’ over-allotment option), the difference
between the pro forma net tangible book value per share of $0.82 and the initial offering price of $10.00 per unit. In addition,
because of the anti-dilution rights of the founder shares, any equity or equity-linked securities issued or deemed issued
in connection with our initial business combination would be disproportionately dilutive to our Class A common stock and
would be exacerbated to the extent the public stockholders seek redemptions from the trust account.
A
provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
Unlike
most blank check companies, if (i) we issue additional Class A common stock or equity-linked securities, excluding
the forward purchase securities, for capital raising purposes in connection with the closing of our initial business combination
at a Newly Issued Price of less than $9.20 per share, (ii) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on
the date of the consummation of our initial business combination (net of redemptions), and (iii) the Market Value is below
$9.20 per share, then the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value
and the Newly Issued Price, and the $18.00 per share redemption trigger prices described in the prospectus for our offering under
“Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption
of warrants when the price per Class A common share equals or exceeds $18.00” and “Redemption of
warrants when the price per Class A common share equals or exceeds $10.00” will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger
price described below under “Description of Securities — Warrants — Public Stockholders’ Warrants —
Redemption of warrants when the price per Class A common share equals or exceeds $10.00” will be adjusted
(to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult
for us to consummate an initial business combination with a target business.
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 the proxy statement with respect to the vote on an initial business combination include historical
and pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender
offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to
be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America
(“GAAP”) or international financial reporting standards as issued by the International Accounting Standards Board
(“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) (“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 financial 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.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated
filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to 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 initial business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such
entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business
combination.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (“COVID-19”) outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to
spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health
Organization declared the outbreak of COVID-19 a “Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to
aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. The COVID-19 outbreak has resulted in, and a significant outbreak of other infectious
diseases could result in, a widespread health crisis that could adversely affect the economies and financial markets worldwide,
and the business of any potential target business with which we consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 continue
to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or
treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive
period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately
consummate a business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing, which may
be impacted by COVID-19 and other events, including increased market volatility, decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate
and complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed
in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability
coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become
less favorable. These trends may continue into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more
expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or
modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater
expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance
could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and
directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to
potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a
result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional
insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be
an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate
an initial business combination on terms favorable to our investors.
Risks
Relating to our Sponsor and Management Team
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in the Company.
Information
regarding performance by, or businesses associated with, our management team, is presented for informational purposes only. Past
performance by our management team or businesses associated with sponsor 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 performance of our management team or businesses associated
with them as indicative of our future performance of an investment in the Company or the returns the Company will, or is likely
to, generate going forward.
We
may seek business combination opportunities in industries or sectors that may or may not be outside of our management’s
area of expertise.
Although
our management team has expertise across a variety of industries and sectors, we will consider an initial business combination
outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine
that such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable
candidate in a sector or industry in which a member of our management team has expertise after having expanded a reasonable amount
of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular
business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors.
We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in our offering
than a direct investment, if such an opportunity were available, in an initial business combination candidate. In the event we
elect to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise
may not be directly applicable to its evaluation or operation, and the information contained in this Form 10-K regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result,
our management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders
who choose to remain stockholders following our initial 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.
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 initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management or advisory positions following our initial business combination, it is likely that
some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements. In addition, the officers and
directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure
of an initial business combination target’s key personnel could negatively impact the operations and profitability of our
post-combination business. The role of an initial business combination candidate’s key personnel upon the completion
of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial
business combination candidate’s management team will remain associated with the initial business combination candidate
following our initial business combination, it is possible that members of the management of an initial business combination 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.
We
are dependent upon our 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 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
initial business combination. In addition, our 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 their business activities,
including identifying potential business combinations and monitoring the related due diligence, negotiations and other activities.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected
loss of the services of one or more of our directors or officers could have a detrimental effect on us.
Our
key personnel may negotiate employment or consulting agreements as well as reimbursement of out-of-pocket expenses, if any, with
a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
or reimbursement for out-of-pocket expenses, if any, following our initial 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 combined company after the completion of our initial business combination only if
they are able to negotiate employment or consulting agreements in connection with the initial business combination. Additionally,
they may negotiate reimbursement of any out-of-pocket expenses incurred on our behalf prior to the consummation of our initial
business combination, should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the
initial 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 initial business combination, or as reimbursement
for such out-of-pocket expenses. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the
completion of our initial business combination will not be the determining factor in our decision as to whether or not we will
proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with
us after the completion of our initial 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.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
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 an initial business combination and their other
businesses. Each of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation
and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors
may also serve as officers or board members for other entities. If our officers’ and directors’ other business affairs
require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit
their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this Form
10-K entitled “Management — Directors and Officers.”
Certain
of our 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 allocating their
time and determining to which entity a particular business opportunity should be presented.
Following
the completion of our offering and until we consummate our initial business combination, we intend to engage in the business of
identifying and combining with one or more businesses. Our sponsor and officers and directors are, and may in the future become,
affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business. Our sponsor
may form, and our officers and directors may become an officer or director of, another special purpose acquisition company with
a class of securities intended to be registered under the Exchange Act prior to the completion of our initial business combination.
Our
officers and directors also may become aware of business opportunities that 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. 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, and to the extent the director or officer is permitted to refer that opportunity to
us without violating another legal obligation.
For
a complete discussion of our officers’ and directors’ business conflict of interests and the potential conflicts of
interest that you should be aware of, please see the sections of this Form 10-K entitled “Management — Officers,
Directors and Directors,” “Management — Conflicts of Interest” and “Certain Relationships and
Related Party Transactions.”
Our
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, 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 an initial business combination with a target business that is
affiliated with our sponsor, our directors or officers. We do not have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may
have a conflict between their interests and ours.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in
identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms,
conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. If this
were the case, it would be a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might
have a claim against such individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful
in any claim we may make against them for such reason.
Our
letter agreement with our sponsor, directors, and officers may be amended without stockholder approval.
Our
letter agreement with our sponsor, directors, directors, and officers contains provisions relating to transfer restrictions of
our founder shares and sponsor warrants, indemnification of the trust account, waiver of redemption rights and participation in
liquidation distributions from the trust account. This letter agreement may be amended without stockholder approval (although
releasing the parties from the restriction not to transfer our founder shares for 180 days following the date of our prospectus
for our offering, or January 28, 2021, will require the prior written consent of the underwriters). While we do not expect our
board to approve any amendment to this agreement prior to our initial business combination, it may be possible that our board,
in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to this agreement.
Any such amendments to the letter agreement would not require approval from our stockholders and may have an adverse effect on
the value of an investment in our securities.
Risks
Relating to Our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days
or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which
invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently
yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe
and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled
out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable
to complete our initial business combination or make certain amendments to our amended and restated memorandum and articles of
association, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account,
plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination,
$100,000 of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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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 initial 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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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete an initial business combination and thereafter to operate the post-transaction business
or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We
do not plan to buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in U.S. “government securities,” within the meaning of Section 2(a)(16)
of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S. government treasury obligations.
Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment
of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long
term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid
being deemed an “investment company” within the meaning of the Investment Company Act. Our offering is not intended
for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended
as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate
of incorporation to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares
in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of our offering or (B) with respect to any other material provisions relating
to stockholders’ rights or pre-initial business combination activity,; or (iii) absent an initial business combination
within 24 months from the closing of our offering, our return of the funds held in the trust account to our public stockholders
as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject
to 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
an initial business combination or may result in our liquidation. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances described herein, on
the liquidation of our trust account and our warrants will expire worthless.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or
any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants,
thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares
upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant
will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or
any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable,
but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts
to file with the SEC a registration statement for the registration under the Securities Act of the shares of Class A common
stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within
60 business days following our initial business combination and to maintain a current prospectus relating to the Class A
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, we will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to
issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered
or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.
Notwithstanding the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the
warrants is not effective within a specified period following the consummation of our initial business combination, warrantholders
may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain
an effective registration statement, exercise warrants on a “cashless basis” pursuant to the exemption provided by
Section 3(a)(9) of the Securities Act; provided that such exemption is available. If that exemption, or another exemption,
is not available, holders will not be able to exercise their warrants on a cashless basis. In no event will we be required to
net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable
to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we
may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from
registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.
We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence
in those states in which the warrants were initially offered by us in our offering. However, there may be instances in which holders
of our public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise
such private warrants.
If
you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock
from such exercise than if you were to exercise such warrants for cash.
Under
the following circumstances, the exercise of the public warrants may be required or permitted to be made on a cashless basis:
(i) If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is
not effective by the 60th business day after the closing of our initial business combination, warrantholders may,
until such time as there is an effective registration statement and during any period when we shall have failed to maintain an
effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act or another exemption; (ii) if our common stock is at the time of any exercise of a warrant not listed
on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1)
of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless
basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required
to file or maintain in effect a registration statement; and in the event we do not so elect, we will use our best efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available; and (iii) if we call the
public warrants for redemption, our management will have the option to require all holders that wish to exercise warrants to do
so on a cashless basis. In the event of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering
the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product
of the number of shares of Class A common stock underlying the warrants multiplied by the excess of the “fair market
value” (as defined in the next sentence) over the exercise price of the warrants by (y) the fair market value. The
“fair market value” is the average reported closing price of the Class A common stock for the 10 trading days
ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or the volume
weighted average price of the Class A common stock during the 10 trading days immediately following the date on which the
notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A
common stock from such exercise than if you were to exercise such warrants for cash.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement to be entered into concurrently with the issuance and sale of the securities in our offering, our initial stockholders
and their permitted transferees can demand that we register the resale of private placement warrants, the shares of Class A
common stock issuable upon exercise of the founder shares and the private placement warrants held, or to be held, by them and
holders of warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such
warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these
securities. The registration and availability of such a significant number of securities for trading in the public market may
have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights
may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target
business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative
impact on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders
or holders of working capital loans or their respective permitted transferees are registered for resale.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under
an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common
stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business
combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any
such issuances would dilute the interest of our stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 300,000,000 shares of Class A common
stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares
of preferred stock, par value $0.0001 per share. Immediately after our offering, there will be 277,000,000 and 14,425,000 (assuming,
in each case, that the underwriters have not exercised their over-allotment option) authorized but unissued shares of Class A
common stock and Class B common stock, respectively, available for issuance, which amount does not take into account the
shares of Class A common stock reserved for issuance upon exercise of outstanding warrants or the shares of Class A
common stock issuable upon conversion of Class B common stock. Immediately after the consummation of our offering, there
will be no shares of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares of
our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including in
certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial business
combination.
We
may issue a substantial number of additional shares of Class A common stock or preferred stock to complete our initial business
combination or under an employee incentive plan after completion of our initial business combination (although our amended and
restated certificate of incorporation provides that we may not issue additional shares of capital stock that would entitle the
holders thereof to receive funds from the trust account or vote on any initial business combination or on matters related to our
pre-initial business combination activity). We may also issue shares of Class A common stock upon conversion of the
Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result
of the anti-dilution provisions contained in our amended and restated certificate of incorporation. 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,
(ii) vote on any initial business combination or (iii) vote on matters related to our pre-initial business combination
activity. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated
certificate of incorporation, may be amended with the approval of our stockholders. However, our executive officers, directors
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 to (A) modify the substance or timing of our obligation to provide for the redemption
of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of our offering or (B) with respect to any other
material provisions relating to stockholders’ rights or pre-initial business combination activity, 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.
The
issuance of additional shares of common or preferred stock:
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may
significantly dilute the equity interest of investors in our 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 of control if a substantial number of shares of our common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and
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may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial 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 March 26, 2021 to issue any notes or other debt securities, or to otherwise incur outstanding debt
following our offering, we may choose to incur substantial debt to complete our initial business combination. We have agreed that
we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of
any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available
for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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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, our ability to pay expenses, make capital expenditures and acquisitions, and fund 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;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution
of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least a majority of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of
a warrant could be decreased, all without your approval.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority
of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public
warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder of public warrants if holders
of at least a majority of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms
of the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited, examples
of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants
into cash or stock, shorten the exercise period or decrease the number of shares of our Class A 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 the outstanding public warrants at any time after they become exercisable and prior to their expiration,
at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds
$18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant
as described under the heading “Description of Securities — Warrants — Public Stockholders’
Warrants — Anti-dilution Adjustments”) for any 20 trading days within a 30 trading-day period
ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions
are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register
or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the warrants
as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could
force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for
you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants
or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect
would be substantially less than the market value of your warrants.
In
addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to
their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that
the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number
of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities —
Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”) for any 20
trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that
certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption for a number
of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock.
Please see “Description of Securities — Warrants — Public Stockholders’ Warrants —
Redemption of warrants when the price per Class A common share equals or exceeds $10.00.” The value received
upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their
warrants at a later time where the underlying share price is higher and (2) may not compensate the holders.
None
of the private placement warrants will be redeemable by us so long as they are held by our sponsor, Jefferies or their respective
permitted transferees.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our initial business combination.
We
issued warrants to purchase 7,666,667 shares of our Class A common stock as part of the units offered in our offering
and, simultaneously with the closing of our offering, we issued in a private placement warrants to purchase an aggregate of 4,733,333
shares of Class A common stock at $11.50 per share. Our initial stockholders currently own an aggregate of 5,750,000 founder
shares. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment
as set forth herein. In addition, if our sponsor or an affiliate of our sponsor or certain of our officers and directors make
any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at
the option of the lender. Such warrants would be identical to the private placement warrants, including as to exercise price,
exercisability and exercise period.
To
the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential for the issuance
of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights
could make us a less attractive business combination vehicle to a target business.
Any
such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value
of the shares of Class A common stock issued to complete the initial business combination. Therefore, our warrants and founder
shares may make it more difficult to effectuate an initial business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our offering except that, so long as they
are held by our sponsor, Jefferies or their respective permitted transferees, (i) they will not be redeemable by us, (ii) they
(including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions,
be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination, (iii) they
may be exercised by the holders on a cashless basis and (iv) the holders thereof (including with respect to shares of Class A
common stock issuable upon exercise of such warrants) are entitled to registration rights.
Because
each unit contains one-third of one redeemable warrant and only a whole warrant may be exercised, the units may be worth
less than units of other blank check companies.
Each
unit contains one-third of one redeemable warrant. No fractional warrants will be issued upon separation of the units and
only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade
a whole warrant. This is different from other offerings similar to ours whose units include one share of common stock and one
warrant to purchase one share. We have established the components of the units in this way in order to reduce the dilutive effect
of the warrants upon completion of an initial business combination since the warrants will be exercisable in the aggregate for
one-third of the number of shares compared to units that each contain a warrant to purchase one share, thus making us, we
believe, a more attractive business combination partner for target businesses. Nevertheless, this unit structure may cause our
units to be worth less than if they included a warrant to purchase one share.
The
determination of the offering price of our units, the size of our offering and terms of the units is more arbitrary than the pricing
of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore,
that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an
operating company.
Prior
to our offering there has been no public market for any of our securities. The public offering price of the units and the terms
of the warrants were negotiated between us and the underwriters. In determining the size of our offering, management held customary
organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to
the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors
considered in determining the size of our offering, prices and terms of the units, including the Class A common stock and
warrants underlying the units, included:
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the
history and prospects of companies whose principal business is the acquisition of other companies;
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prior
offerings of those companies;
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our
prospects for acquiring an operating business;
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a
review of debt to equity ratios in leveraged transactions;
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an
assessment of our management and their experience in identifying operating companies;
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general
conditions of the securities markets at the time of our offering; and
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other
factors as were deemed relevant.
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Although
these factors were considered, the determination of our offering size, price and terms of the units was more arbitrary than the
pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
Our
warrant agreement will designate the courts of the State of New York or the United States District Court for the Southern
District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by
holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with
our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of
or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts
of the State of New York or the United States District Court for the Southern District of New York, and (ii) that
we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or
claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole
and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed
to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of
which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of
New York or the United States District Court for the Southern District of New York (a “foreign action”)
in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction
of the state and federal courts located in the State of New York in connection with any action brought in any such court
to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon
such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as
agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely
affect our business, financial condition and results of operations and result in a diversion of the time and resources of our
management and board of directors.
An
active market for our securities may not develop, 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 never develop or, if developed, it may not be sustained.
Securityholders may be unable to sell their securities unless a market can be established and sustained.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include 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 the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together
these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our securities.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain
other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s
counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain
other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action
(A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject
to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the
Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court
or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice
of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision
may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such
claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate
of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such
action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest
extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal
jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations
thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created
by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, our amended and
restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the
federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum
for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision
and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22
of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty
or liability created by the Securities Act or the rules and regulations thereunder.
General
Risk Factors
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 no operating results, and we will not commence operations until obtaining funding through our offering.
Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of
completing our initial business combination with one or more target businesses. If we fail to complete our initial business combination,
we will never generate any operating revenues.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination and results of operations.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have
access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our Class A 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 accountant standards used.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market
value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th,
or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common
stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent we take advantage
of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult
or impossible.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If
we effect our initial business combination with a company with locations or 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 with locations or 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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higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and
legal requirements of overseas markets;
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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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longer
payment cycles and challenges in collecting accounts receivable;
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tax
issues, including, but not limited to, 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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cultural
and language differences;
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employment
regulations;
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changes
in industry, regulatory or environmental standards within the jurisdictions where we operate;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States; and
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government
appropriations of assets.
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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.
Investments
in post-restructured equities are subject to various risks.
Business
combinations with post-restructured entities entail special considerations and risks. If we are successful in completing
a business combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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investments
in such companies are speculative, prices are volatile, and market movements are difficult to predict;
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supply
and demand for distressed securities change rapidly and are affected by a variety of market factors over which we have no control
and which may reduce the pool of profitable investment opportunities;
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our
ability to identify undervalued investment opportunities that fit our business strategy involves a high degree of uncertainty,
and no assurance can be given that we will be able to identify such opportunities;
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such
investments may take a substantial period of time before realizing their anticipated value and returns generated from such investments
may not adequately compensate for the business and financial risks assumed; and
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there
is no guarantee that we will be able to achieve our investment objectives or provide any return on invested capital.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to post-restructured entities. Accordingly, if we acquire a target business
that is not a post-restructured entity, it is possible that these specific risks would not affect us in the same manner,
but we would be subject to other risks attendant with the specific industry in which we operate or target business that we acquire,
none of which can be presently ascertained.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there
may be more competition for attractive targets. This could increase the cost of our initial business combination and could even
result in our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential
targets for special purpose acquisition companies have already entered into an initial business combination, and there are still
many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies
currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more
effort and more resources to identify a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with
available targets, the competition for available targets with attractive fundamentals or business models may increase, which could
cause targets companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close
business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate
or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate
an initial business combination on terms favorable to our investors altogether.