Item
1A. Risk Factors.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Form 10-K, before making a decision to invest in our units. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of your investment. For risk factors related to
the Business Combination, see the Form PREM14A initially filed by the Company on February 16, 2021.
Risk
Factor Summary
|
●
|
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.
|
|
●
|
Our
public 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 public stockholders do not support such a combination.
|
|
●
|
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.
|
|
●
|
If
we seek stockholder approval of our initial business combination, the Sponsor, officers and directors have agreed to vote in favor
of such initial business combination, regardless of how our public stockholders vote.
|
|
●
|
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.
|
|
●
|
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.
|
|
●
|
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 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.
|
|
●
|
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 coronavirus (COVID-19) outbreak and the status of debt and equity markets.
|
|
●
|
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.
|
|
●
|
If
we seek stockholder approval of our initial business combination, the Sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination
and reduce the public “float” of our Class A common stock.
|
|
●
|
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.
|
|
●
|
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
|
|
●
|
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.
|
|
●
|
If
the net proceeds of our initial public offering and the sale of the private placement units not being held in the trust account
are insufficient to allow us to operate for at least the 24 months following the closing of our initial public offering, it could
limit the amount available to fund our search for a target business or businesses and complete our initial business combination,
and we will depend on loans from the Sponsor or management team to fund our search and to complete our initial business combination.
|
|
●
|
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
|
|
●
|
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.
|
|
●
|
The
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.
|
|
●
|
Unlike
some other similarly structured special purpose acquisition companies, our initial stockholders will receive additional shares
of Class A common stock if we issue certain shares to consummate an initial business combination.
|
Risks
Relating to our Search for, Consummation of, or Inability to Consummate, a Business Combination
Our
public 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 public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require
stockholder approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock
exchange requirement, the decision as to whether we will seek stockholder approval of a proposed business combination or will
allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require
us to seek stockholder approval. Even if we seek stockholder approval, the holders of our founder shares will participate in the
vote on such approval. Accordingly, we may complete our initial business combination even if a majority of our public stockholders
do not approve of the business combination we complete.
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.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our
initial business combination. Since our board of directors may complete a business combination without seeking stockholder approval,
public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder
vote. Accordingly, your only opportunity to affect the investment decision regarding our initial business combination may be limited
to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender
offer documents mailed to our public stockholders in which we describe our initial business combination.
If
we seek stockholder approval of our initial business combination, the Sponsor, officers and directors have agreed to vote in favor
of such initial business combination, regardless of how our public stockholders vote.
Pursuant
to the letter agreement, the Sponsor, officers and directors have agreed to vote any founder shares and private placement shares
held by them and any public shares they may acquire during or after our initial public 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 and the private placement shares issued to the Sponsor, we would need only 9,004,376, or 36.02%, of the 25,000,000
public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming all outstanding
shares are voted and the private placement shares to be issued to the underwriters are voted in favor of the transaction) in order
to have our initial business combination approved. Our initial stockholders own shares representing 20% of our outstanding shares
of common stock (not including the shares of Class A common stock underlying the private placement units). 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 a 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, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
(so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or
cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation of
our initial business combination and after payment of underwriters’ fees and commissions or such greater amount necessary
to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may
be reluctant to enter into an initial business combination 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 result 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 the consummation
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
will not 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 the deferred underwriting
commission and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation
to pay the full 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 shares.
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 our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating an initial business combination and may limit the time we have in which to conduct due diligence
on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability
to complete our initial business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination by August 21, 2022. Consequently, such target business may obtain leverage over
us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with that
particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
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 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 the coronavirus disease (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 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 continues
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 as a result of increased market volatility, decreased market liquidity in
third-party financing being unavailable on terms acceptable to us or at all.
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
second amended and restated certificate of incorporation provides that we must complete our initial business combination by August
21, 2022. We may not be able to find a suitable target business and complete our initial business combination within such time
period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility
in the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow
both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it
could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased
market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of
COVID-19 may negatively impact businesses we may seek to acquire.
If
we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
(which interest shall be net of taxes payable and 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, or less than $10.00 per share, on the redemption
of their shares, and our warrants will expire worthless.
If
we seek stockholder approval of our initial business combination, the Sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination
and reduce the public “float” 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, the Sponsor, directors, officers, advisors or their affiliates may purchase
public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination, although they are under no obligation 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 public shares or public warrants in
such transactions.
In
the event that the 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 or submitted a proxy to vote against our
initial business combination, such selling stockholders would be required to revoke their prior elections to redeem their shares
and any proxy to vote against our initial business combination. The price per share paid in any such transaction may be different
than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial
business combination. The purpose of such purchases could be to vote such shares in favor of the 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. We expect that 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 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 date on which the vote on the proposal to approve the initial business combination is to be
held. 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 redemption rights will also include
the requirement that a beneficial holder must identify itself in order to validly redeem its shares. 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.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement units are intended to be used to complete
an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the
completion of our initial public offering and the sale of the private placement units and have filed 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 do companies subject to Rule 419. Moreover, if our initial public 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.
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 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 or more industry knowledge than we do, and
our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there
are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale
of the private placement units, 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, we are obligated to offer holders of our public shares the right to
redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or via a tender
offer. 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 and completing 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.
If
the net proceeds of our initial public offering and the sale of the private placement units not being held in the trust account
are insufficient to allow us to operate for at least the 24 months following the closing of our initial public offering, it could
limit the amount available to fund our search for a target business or businesses and complete our initial business combination,
and we will depend on loans from the Sponsor or management team to fund our search and to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement units, only $1,662,500 were available to
us initially outside the trust account to fund our working capital requirements. We believe that the funds available to us outside
of the trust account will be sufficient to allow us to operate for at least the 24 months following such closing; 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.
In
the event that our offering expenses exceed our estimate of $750,000, 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 $750,000, the amount of funds we intend
to be held outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be
impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds
from the Sponsor, management team or other third parties to operate or may be forced to liquidate. None of the Sponsor, members
of our management team nor any of their affiliates 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 $1,200,000 of such working capital loans may be convertible into private placement-equivalent units
at a price of $10.00 per unit at the option of the lender. Prior to the completion of our initial business combination, we do
not expect to seek loans from parties other than the Sponsor or an affiliate of the 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 because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive an estimated
$10.00 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
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 execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
The underwriters of our initial public offering will not execute agreements with us waiving such claims to the monies held in
the trust account. Making such a request of potential target businesses may make our acquisition proposal less attractive to them
and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses
that we might pursue.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where 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 the letter agreement, the 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 public share due to reductions in the value of the trust assets, less taxes payable, provided that such
liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked the Sponsor to reserve for such indemnification obligations, nor have we independently verified
whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets
are securities of our company. Therefore, we cannot assure you that the 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.
Our
directors may decide not to enforce the indemnification obligations of the 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 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 public share due to reductions in the value of the trust assets, less taxes payable, and the 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 the Sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against the 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.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public
stockholders from the trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive
damages.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
|
●
|
restrictions
on the nature of our investments; and
|
|
●
|
restrictions
on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
|
In
addition, we may have imposed upon us burdensome requirements, including:
|
●
|
registration
as an investment company with the SEC;
|
|
●
|
adoption
of a specific form of corporate structure; and
|
|
●
|
reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not subject to.
|
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading 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 United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
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 initial public offering
was 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 second
amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our
public shares if we do not complete our initial business combination by August 21, 2022 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 by August 21, 2022, 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 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.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to
comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may
be difficult, time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination and results of operations.
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 by August 21, 2022 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 initial public 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 by August 21, 2022 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.
In
accordance with the Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after
our first fiscal year end following our listing on the Nasdaq. Under Section 211(b) of the DGCL, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of
the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court
of Chancery in accordance with Section 211(c) of the DGCL.
Because
we are not limited to evaluating a target business in a particular industry sector, you will be unable to ascertain the merits
or risks of any particular target business’s operations.
We
may pursue business combination opportunities in any industry or geographic region, except that we will not, under our second
amended and restated certificate of incorporation, be permitted to effectuate our initial business combination with another blank
check company or similar company with nominal operations. To the extent we complete our initial business combination, we may be
affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in
the business and operations of a financially unstable or a development stage entity. Although our officers and directors will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some
of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more
favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders or warrantholders who choose to remain stockholders or warrantholders following our initial business combination
could suffer a reduction in the value of their securities. Such stockholders or warrantholders are unlikely to have a remedy for
such reduction in value.
We
may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We
will consider an initial business combination outside of our management’s areas 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 these areas of 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 initial
public offering than a direct investment, if an opportunity were available, in an initial business combination candidate.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these criteria and guidelines, such combination
may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition,
if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater
number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition
with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval
of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval
for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination
if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination,
our public stockholders may 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.
We
are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders
from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market
value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm
that is a member of FINRA or from an independent valuation or appraisal firm that the price we are paying is fair to our company
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We
may issue additional shares of Class A common stock or shares of 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 founder shares 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 second amended and restated certificate of incorporation.
Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our
second amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common
stock, par value $0.0001 per share, 10,000,000 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 initial public offering, there were 65,678,334 and 3,750,000
authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance, which amount
takes into account the shares of Class A common stock reserved for issuance upon exercise of outstanding warrants but not the
shares of Class A common stock issuable upon conversion of Class B common stock. Immediately after the consummation of our initial
public offering, there were 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 shares of 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 in connection with the redemption of our warrants or 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 as set forth therein. However, our second amended and restated certificate of incorporation provides,
among other things, that prior to our initial business combination, we may not issue additional shares 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 second 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 initial public offering or (y)
amend the foregoing provisions. These provisions of our second amended and restated certificate of incorporation, like all provisions
of our second amended and restated certificate of incorporation, may be amended with a stockholder vote.
The
issuance of additional shares of common stock or shares of preferred stock:
|
●
|
may
significantly dilute the equity interest of investors in our initial public offering,
which dilution would increase if the anti-dilution provisions in the Class B common stock
resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion
of the Class B common stock;
|
|
●
|
may
subordinate the rights of holders of our common stock if preferred stock is issued with
rights senior to those afforded our common stock;
|
|
●
|
could
cause a change of control if a substantial number of shares of our common stock is issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors;
|
|
●
|
may
have the effect of delaying or preventing a change of control of us by diluting the stock
ownership or voting rights of a person seeking to obtain control of us; and
|
|
●
|
may
adversely affect prevailing market prices for our units, Class A common stock and/or
warrants.
|
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 upon
our liquidation.
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 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 has increased substantially. A number of potential targets for
special purpose acquisition companies have already been acquired, and there are still many special purpose acquisition companies
pursuing an initial business combination. As a result, fewer attractive targets may be available 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 targets may increase and, as a result, the terms of business combination
transactions with available targets could become less favorable to us. Attractive transactions 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 us.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with the Sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of the Sponsor, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with the Sponsor, executive officers, directors or existing holders. Our directors also serve as officers
and board members for other entities. Such entities may compete with us for business combination opportunities. The 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 a 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 a business combination
and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain
an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding the
fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses
affiliated with the Sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Since
the Sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not
completed (other than with respect to public shares they may acquire during or after our initial public offering), a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business
combination.
On
June 26, 2019, the Sponsor purchased an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately
$0.004 per share. On July 1, 2020, we effected a 1:1.25 stock split of our Class B common stock, resulting in the Sponsor holding
an aggregate of 7,187,500 founder shares. On October 5, 2020, the underwriters’ over-allotment option expired unexercised,
and, as a result, the Sponsor forfeited 937,500 founder shares, resulting in the Sponsor holding an aggregate of 6,250,000 founder
shares. 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 initial public offering (not including the shares of Class A common stock underlying the private
placement units). The founder shares will be worthless if we do not complete an initial business combination. In addition, the
Sponsor and the underwriters purchased an aggregate of 741,250 units at a price of $10.00 per unit, consisting of 616,250 units
by the Sponsor and 125,000 units by the underwriters for an aggregate purchase price of $7,412,500, or $10.00 per unit, that will
also be worthless if we do not complete an initial business combination. The Sponsor, officers and directors 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 or
private placement shares held by them in connection with a stockholder vote to approve a proposed initial business combination
or in connection with a tender offer. In addition, we may obtain loans from the Sponsor, affiliates of the 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. This risk may become more acute as the 24-month anniversary of the closing of our
initial public offering nears, which is the deadline for our completion of an initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial
public offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers have
agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount
available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects,
including:
|
●
|
default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations;
|
|
●
|
acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
|
|
●
|
our
immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
|
|
●
|
our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding;
|
|
●
|
our
inability to pay dividends on our Class A common stock;
|
|
●
|
using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes;
|
|
●
|
limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
|
|
●
|
increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation;
|
|
●
|
limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
|
|
●
|
other
disadvantages compared to our competitors who have less debt.
|
We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement units, which will cause us to be solely dependent on a single business which may have a limited number of products or
services. This lack of diversification may negatively impact our operations and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement units, $250,000,000 were available to
complete our initial business combination and pay related fees and expenses (which included up to $8,750,000 for the payment of
deferred underwriting commissions).
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:
|
●
|
solely
dependent upon the performance of a single business, property or asset, or
|
|
●
|
dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
|
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our 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 a business combination
with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete our initial business combination with which a substantial majority of our stockholders do not agree.
Our
second amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that
in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we
do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete
our initial business combination even though a substantial majority of our public stockholders or warrantholders 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 the 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, special purpose acquisition 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 second 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 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 second amended and restated certificate of incorporation will require the approval
of holders of at least 65% of our common stock, and amending our warrant agreement will require a vote of holders of at least
50% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision
of the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement
warrants. In addition, our second amended and restated certificate of incorporation requires us to provide our public stockholders
with the opportunity to redeem their public shares for cash if we propose an amendment to our second amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by August 21, 2022 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 securities offered through this registration statement, 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 second amended and restated certificate of incorporation that relate to our pre-initial 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 at least 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 second 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
second 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 initial public offering and the sale of the private placement units
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 at least 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 at least 65% of our common stock entitled
to vote thereon. In all other instances, our second 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 shares 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 second amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination
beyond 24 months from the closing our initial public offering or (y) amend the foregoing provisions. Our initial stockholders,
who collectively beneficially own 20% of our common stock (not including the shares of Class A common stock underlying the private
placement units and assuming they did not purchase any units in our initial public offering), may participate in any vote to amend
our second 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 second 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 second amended and restated certificate of incorporation.
The
Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our second amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by August 21, 2022 or (ii) 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
(which interest will be net of taxes payable) divided by the number of then outstanding public shares. These agreements are contained
in a letter agreement that we have entered into with the 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 the 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.
Certain
agreements related to our initial public offering may be amended without stockholder approval.
Each
of the agreements related to our initial public offering to which we are a party, other than the warrant agreement and the investment
management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the
letter agreement among us and our initial stockholders, Sponsor, officers and directors; the registration rights agreement among
us, our initial stockholders and the underwriters; the private placement units purchase agreements among us, the Sponsor and the
underwriters; and the administrative services agreement among us and an affiliate of the Sponsor. These agreements contain various
provisions that our public stockholders might deem to be material. For example, our letter agreement and the underwriting agreement
contain certain lock-up provisions with respect to the founder shares, private placement warrants and other securities held by
the Sponsor, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto
and would need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our
initial business combination. While we do not expect our board of directors to approve any amendment to any of these agreements
prior to our initial business combination, it may be possible that our board of directors, in exercising its business judgment
and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into
in connection with the consummation of our initial business combination will be disclosed in our proxy solicitation or tender
offer materials, as applicable, related to such initial business combination, and any other material amendment to any of our material
agreements will be disclosed in a filing with the SEC. Any such amendments would not require approval from our stockholders, may
result in the completion of our initial business combination that may not otherwise have been possible, and may have an adverse
effect on the value of an investment in our securities. For example, amendments to the lock-up provision discussed above may result
in our initial stockholders selling their securities earlier than they would otherwise be permitted, which may have an adverse
effect on the price of our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
We
have not selected any specific business combination target, but intend to target businesses larger than we could acquire with
the net proceeds of our initial public offering and the sale of the private placement units. As a result, 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, the amount of additional financing we may be required
to obtain could increase as a result of future growth capital needs for any particular transaction, the depletion of the available
net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders
who elect redemption in connection with our initial business combination and/or the terms of negotiated transactions to purchase
shares in connection with our initial business combination. 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 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 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.
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 own shares representing 22.0% of our issued and outstanding shares of common stock (including the shares
of Class A common stock underlying the private placement units and assuming they did not purchase any units in our initial public
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 second amended and restated certificate of incorporation and approval of
major corporate transactions. If our initial stockholders purchased any units in our initial public offering or if our initial
stockholders purchased 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 and will be divided into two classes, each of which will generally serve for a term of two years with
only one class of directors being elected in each year. 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.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on 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. 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
initial business combination and our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As
a result of our business combination, our tax obligations may be more complex, burdensome and uncertain.
Although
we will attempt to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex,
the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
For example, in connection with our initial business combination and subject to any requisite stockholder approval, we may structure
our business combination in a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes,
effect a business combination with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including,
but not limited to, the jurisdiction in which the target company or business is located). We do not intend to make any cash distributions
to stockholders or warrant holders to pay taxes in connection with our business combination or thereafter. Accordingly, a stockholder
or a warrant holder may need to satisfy any liability resulting from our initial business combination with cash from its own funds
or by selling all or a portion of the shares received. In addition, stockholders and warrant holders may also be subject to additional
income, withholding or other taxes with respect to their ownership of us after our initial business combination.
In
addition, we may effect a business combination with a target company that has business operations outside of the United States,
and possibly, business operations in multiple jurisdictions. If we effect such a business combination, we could be subject to
significant income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and
subsidiaries related to those jurisdictions. Due to the complexity of tax obligations and filings in other jurisdictions, we may
have a heightened risk related to audits or examinations by U.S. federal, state, local and non-U.S. taxing authorities. This additional
complexity and risk could have an adverse effect on our after-tax profitability and financial condition.
The
Sponsor paid an aggregate of $25,000, or approximately $0.004 per founder share, 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 initial public offering constitutes the dilution to you and the other investors in our initial public offering. The
Sponsor acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of our initial
public offering, and assuming no value is ascribed to the warrants included in the units, the public stockholders incurred an
immediate and substantial dilution of approximately 93.9% (or $9.39 per share), the difference between the pro forma net tangible
book value per share of $0.61 and the initial offering price of $10.00 per unit. This dilution would increase to the extent that
the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater than
one-to-one basis upon conversion of the founder shares at the time of our initial business combination. In addition, because of
the anti-dilution protection in 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.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the warrants could be converted into cash or stock, the exercise period could be shortened and the number of shares of 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 for the purpose of curing any ambiguity or to correct any defective provision or mistake, including to conform the provisions
of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this Form 10-K,
provided that the approval by the holders of at least 50% of the then outstanding public warrants is required to make any change
that adversely affects the interests of the registered holders of the public warrants. Accordingly, we may amend the terms of
the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve
of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then
outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the
exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of
shares of Class A common stock purchasable upon exercise of a warrant.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, which may
include acting as financial advisor in connection with an initial business combination or as placement agent in connection with
a related financing transaction. Our underwriters are entitled to receive deferred commissions that will released from the trust
only on a completion of an initial business combination. These financial incentives may cause them to have potential conflicts
of interest in rendering any such additional services to us, for example, in connection with the sourcing and consummation of
an initial business combination.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, for example,
identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging
debt financing. We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined
at that time in an arm’s length negotiation. The underwriters are also entitled to receive deferred commissions that are
conditioned on the completion of an initial business combination. The underwriters’ or their respective affiliates’
financial interests tied to the consummation of a business combination transaction may give rise to potential conflicts of interest
in providing any such additional services to us, including potential conflicts of interest in connection with the sourcing and
consummation of an initial business combination.
Risks
Relating to the Post Business Combination Company
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
the price of our securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
identify all material issues that may be present with a particular target business, that it would be possible to uncover all material
issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control
will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our
operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial
business combination or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant
holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant
holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able
to successfully bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of
a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our
management may not maintain control of a target business after our initial business combination. We cannot provide assurance that,
upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure 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 business sufficient for us not to be required to register as an investment company under
the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to 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 the company’s stock than we initially acquired. Accordingly, this may
make it more likely that our management will not be able to maintain our control of the target business. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary
to profitably operate such business.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrantholders who choose to remain stockholders or warrantholders following the initial business combination
could suffer a reduction in the value of their securities. Such stockholders or warrantholders are unlikely to have a remedy for
such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or
directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under
securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained
an actionable material misstatement or material omission.
Risks
Relating to Acquiring and Operating a Business in Foreign Countries
If
we effect our initial business combination with a company located outside of the United States, we would be subject to a variety
of additional risks that may adversely affect us.
If
we pursue a target company with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination,
and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact
our operations.
If
we pursue a target a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
|
●
|
costs
and difficulties inherent in managing cross-border business operations;
|
|
●
|
rules
and regulations regarding currency redemption;
|
|
●
|
complex
corporate withholding taxes on individuals;
|
|
●
|
laws
governing the manner in which future business combinations may be effected;
|
|
●
|
exchange
listing and/or delisting requirements;
|
|
●
|
tariffs
and trade barriers;
|
|
●
|
regulations
related to customs and import/export matters;
|
|
●
|
local
or regional economic policies and market conditions;
|
|
●
|
unexpected
changes in regulatory requirements;
|
|
●
|
challenges
in managing and staffing international operations;
|
|
●
|
tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
|
|
●
|
currency
fluctuations and exchange controls;
|
|
●
|
challenges
in collecting accounts receivable;
|
|
●
|
cultural
and language differences;
|
|
●
|
employment
regulations;
|
|
●
|
underdeveloped
or unpredictable legal or regulatory systems;
|
|
●
|
protection
of intellectual property;
|
|
●
|
social
unrest, crime, strikes, riots and civil disturbances;
|
|
●
|
regime
changes and political upheaval;
|
|
●
|
terrorist
attacks and wars; and
|
|
●
|
deterioration
of political relations with the United States.
|
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial
business combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely
impact our business, financial condition and results of operations.
Risks
Relating to The Sponsor and Management Team
We
are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our
initial business combination. In addition, our executive officers and directors are not required to commit any specified amount
of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities,
including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of
one or more of our directors or executive officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be 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.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These
agreements may provide for them to receive compensation 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 our company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to agreement. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
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. We do not intend to have any full-time employees prior to the completion of our initial business combination. 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.
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 initial public 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. Each of our officers and directors presently has, and any
of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer
or director is or will be required to present a business combination opportunity to such entity. 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 second amended
and restated certificate of incorporation will provide 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 the 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. In addition, the Sponsor and our officers and directors may sponsor or form other special
purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we
are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of
interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially
affect our ability to complete our initial business combination. If any of our officers or directors becomes aware of a business
combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such
other entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will
materially affect our ability to complete our initial business combination.
In
addition, the Sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to
ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination.
Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination.
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, executive officers, security holders or affiliates from having
a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is
affiliated with the Sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a policy
that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by
us. Accordingly, such persons or entities may have a conflict between their interests and ours.
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.
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 any right, title, interest or claim of any kind in or to any monies in the trust account and to not 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.
Risks
Relating to our Securities
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.
Our
public stockholders will be entitled to receive funds from the trust account only upon the occurrence of each of the following:
(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 second amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial
business combination by August 21, 2022 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 by August 21, 2022, subject to applicable law and as further described herein. In addition, if we are unable
to complete an initial business combination by August 21, 2022 for any reason, compliance with Delaware law may require that we
submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in
our trust account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of our initial public
offering before they receive funds from our trust account. In no other circumstances will a public stockholder have any right
or interest of any kind in the trust account. 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.
The
securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce
the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption
amount received by shareholders may be less than $10.00 per share.
The
net proceeds of our initial public offering and certain proceeds from the sale of the private placement warrants, in the amount
of $250,000,000, will be held in an interest-bearing trust account. The proceeds held in the trust account may only be invested
in direct U.S. Treasury obligations having a maturity of 185 days or less, or in certain money market funds which invest only
in direct U.S. Treasury obligations. While short-term U.S. Treasury obligations currently yield a positive rate of interest, they
have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero
in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future
adopt similar policies in the United States. In the event of very low or negative yields, the amount of interest income (which
we may withdraw to pay income taxes, if any) would be reduced. In the event that we are unable to complete our initial business
combination, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus
any interest income. If the balance of the trust account is reduced below $250,000,000 as a result of negative interest rates,
the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.00 per
share.
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.
We
have been approved to have our units listed on Nasdaq on or promptly after the date of this Form 10-K. Following the date the
shares of our Class A common stock and warrants are eligible to trade separately, we anticipate that the shares of our Class A
common stock and warrants will be separately listed on Nasdaq. Although after giving effect to our initial public offering we
expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot
assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business
combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain
certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity
(generally $2,500,000) and a minimum number of holders of our securities (generally 300 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 $4.00 per share, our stockholders’
equity would generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders
of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
Nasdaq delists any of our securities from trading on its exchange and we are not able to list 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:
|
●
|
a
limited availability of market quotations for our securities;
|
|
●
|
reduced
liquidity for our securities;
|
|
●
|
a
determination that our Class A common stock is a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
|
|
●
|
a
limited amount of news and analyst coverage; and
|
|
●
|
a
decreased ability to issue additional securities or obtain additional financing in the
future.
|
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and
eventually our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will qualify
as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a
state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the
State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten
to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer
listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation
in each state in which we offer our securities.
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 second amended and restated certificate of incorporation will provide
that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public 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..
The
Sponsor paid an aggregate of $25,000, or approximately $0.004 per founder share, 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 initial public offering constitutes the dilution to you and the other investors in our initial public offering. The
Sponsor acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of our initial
public 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 93.9% (or $9.39 per share), the difference between the pro forma
net tangible book value per share of $0.61 and the initial offering price of $10.00 per unit. This dilution would increase to
the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on
a greater than one-to-one basis upon conversion of the founder shares at the time of our initial business combination. In addition,
because of the anti-dilution protection in 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.
Provisions
in our second 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 shares of Class A common stock and could entrench management.
Our
second 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 stock, which may make more difficult
the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market
prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make 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
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the warrants could be converted into cash or stock, the exercise period could be shortened and the number of shares of Class A
common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our
warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
for the purpose of curing any ambiguity or to correct any defective provision or mistake, including to conform the provisions
of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this Form 10-K,
provided that the approval by the holders of at least 50% of the then outstanding public warrants is required to make any change
that adversely affects the interests of the registered holders of the public warrants. Accordingly, we may amend the terms of
the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve
of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then
outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the
exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of
shares of Class A common stock purchasable upon exercise of a warrant.
Our
warrant agreement designates 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.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as
adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading
days within a 30-trading day period ending on the third trading day prior to the date on which we send notice of such redemption
to the warrant holders and provided 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, is likely to 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) 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 shares of Class A common stock determined
based on the redemption date and the fair market value of our shares of Class A common stock. 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 for the value of the warrants, including
because the number of shares of Class A common stock received is capped at 0.361 shares of Class A common stock per warrant (subject
to adjustment) irrespective of the remaining life of the warrants.
None
of the private placement warrants will be redeemable by us so long as they are held by the Sponsor or the underwriters or their
permitted transferees.
You
will not be permitted to exercise your warrants unless we register and qualify the underlying Class A common stock or certain
exemptions are available.
If
the issuance of the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration
or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise
such warrants and such warrants 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 Class A common stock included in the
units.
We
are not registering the 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 covering the registration under the Securities Act of the 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 of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under
the terms of the warrant agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for
cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act
or another exemption.
In
no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
If
our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange
such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we
may, at our option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require
them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we
will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the warrants
under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify
the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In
no event will we be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described
above) or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying
the warrants under the Securities Act or applicable state securities laws.
The
grant of registration rights to our initial stockholders and the underwriters 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 entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
stockholders and the underwriters and their permitted transferees can demand that we register the resale of the private placement
units, the private placement shares, the private placement warrants, the shares of Class A common stock issuable upon conversion
of the founder shares and exercise of the private placement warrants held, or to be held, by them and holders of securities that
may be issued upon conversion of working capital loans may demand that we register the resale of such warrants or the Class A
common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business
combination more costly or difficult to complete. This is because the stockholders of the target business may increase the equity
stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of
our Class A common stock that is expected when the securities owned by our initial stockholders, the underwriters or holders of
working capital loans or their respective permitted transferees are registered for resale.
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 8,333,333 shares of our Class A common stock as part of the units offered in our initial public offering
and, simultaneously with the closing of our initial public offering, we issued in a private placement units, which consist of
(i) an aggregate of 741,250 private placement shares and (ii) private placement warrants to purchase an aggregate of 247,083 shares
of Class A common stock at $11.50 per share, subject to adjustments as provided herein. Our initial stockholders currently own
an aggregate of 6,250,000 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 the Sponsor or its affiliates, or any of our officers or directors,
makes any working capital loans, up to $1,200,000 of such loans may be converted into private placement-equivalent units at a
price of $10.00 per unit at the option of the lender. Such units would be identical to the private placement units, including
as to exercise price, exercisability and exercise period of the underlying warrants. We may also issue shares of Class A common
stock in connection with our redemption of warrants.
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 initial public offering except that,
so long as they are held by the Sponsor or the underwriters or their permitted transferees, the private placement warrants (i)
will not be redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject
to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial
business combination, (iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights
and (v) for so long as they are held by the underwriters, will not be exercisable more than five years from the effective date
of the registration statement in accordance with FINRA Rule 5110(f)(2)(G)(i).
Because
each unit contains one-third of one warrant and only a whole warrant may be exercised, the units may be worth less than units
of other special purpose acquisition companies.
Each
unit contains one-third of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation
of the units, and only whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock
to be issued to the warrant holder. This is different from other offerings similar to ours whose units include one share of common
stock and one warrant to purchase one whole 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 a 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 whole warrant to purchase one share, thus making us,
we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be
worth less than if it included a warrant to purchase one whole share.
The
determination of the offering price of our units, the size of our initial public 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 initial public 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 initial public 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 initial public offering, prices and terms of the units, including
the Class A common stock and warrants underlying the units, include:
|
●
|
the
history and prospects of companies whose principal business is the acquisition of other companies;
|
|
●
|
prior
offerings of those companies;
|
|
●
|
our
prospects for acquiring an operating business at attractive values;
|
|
●
|
a
review of debt to equity ratios in leveraged transactions;
|
|
●
|
an
assessment of our management and their experience in identifying operating companies;
|
|
●
|
general
conditions of the securities markets at the time of our initial public offering; and
|
|
●
|
other
factors as were deemed relevant.
|
Although
these factors were considered, the determination of our offering size, price and terms of the units is more arbitrary than the
pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
There
is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity
and price of our securities.
There
is currently no market for our securities. Stockholders therefore have no access to information about prior market history on
which to base their investment decision. Following our initial public offering, 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. You may be unable to sell your securities unless
a market can be established and sustained.
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 incorporated under the laws of the State of Delaware with no operating results, and we will not commence
operations until obtaining funding through our initial public 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. We have no
plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable
to complete our initial business combination. If we fail to complete our initial business combination, we will never generate
any operating revenues.
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team or businesses associated with them, including Forum
II, is presented for informational purposes only. Past performance of our management team is not a guarantee either (i) that we
will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business
combination we may consummate. You should not rely on the historical record of the performance of our management team or businesses
associated with them, including Forum I, as indicative of our future performance of an investment in us or the returns we will,
or are likely to, generate going forward.
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.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders
may not have access to certain information they may deem important. We could be an emerging growth company for up to five years,
although circumstances could cause us to lose that status earlier, including if the market value of our 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 accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 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. 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. Our status as a smaller reporting company is determined annually.
We will continue to qualify as a smaller reporting company through the following fiscal year as long as (i) the market value of
our common stock held by non-affiliates (measured as of the end of the second quarter of the then current fiscal year) does not
exceed $250 million or (ii) our annual revenues for the most recently completed fiscal year do not exceed $100 million
and the market value of our common stock held by non-affiliates (measured as of the end of the second quarter of the then current
fiscal year) does not exceed $700 million. If we exceed these thresholds, we will cease to be a smaller reporting company
as of the first day of the following fiscal year.
Provisions
in our second amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits
against our directors and officers.
Our
second amended and restated certificate of incorporation will require, unless we consent in writing to the selection of an alternative
forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach
of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting
a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our second amended and
restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers
or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware,
except any claim (A) as to which the Court of Chancery of 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, (C) for which the Court of Chancery does not have subject matter jurisdiction,
or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District
of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit
will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision
benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies,
a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect
of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance
with federal securities laws and the rules and regulations thereunder.
Notwithstanding
the foregoing, our second amended and restated certificate of incorporation provides that the exclusive forum provision will not
apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts
have exclusive jurisdiction. 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. Although we believe this provision
benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies,
the provision may have the effect of discouraging lawsuits against our directors and officers.