Overview
We
are an early stage blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this report as our initial business combination. While we may pursue an initial business combination
target in any stage of its corporate evolution or in any industry or sector, we have focused our search on software companies,
especially those targeting enterprise vertical sectors owned by private equity and venture capital firms as well as corporate
carve-outs. Our management team has had significant success sourcing, acquiring, growing and monetizing these types of companies.
We believe this experience makes us well suited to identify, source, negotiate and execute an initial business combination with
the ultimate goal of pursuing attractive risk-adjusted returns for our stockholders.
Management
Team and Board of Directors
We
believe our management team is well positioned to identify and evaluate businesses within the technology industry that would benefit
from being a public company and from access to our expertise. We believe we can achieve this mission by utilizing our team’s
extensive experience in growing and operating software companies as well as our broad network of contacts in the technology sector.
Jonathan
Huberman, our Chairman, Chief Executive Officer and Chief Financial Officer, has over 25 years of high-tech business
leadership experience. He has served as a director of CuriosityStream Inc. (NASDAQ: CURI) (formerly named Software Acquisition
Group Inc.), a global streaming media service that provides factual content on demand, since October 2020. From May 2019 to October
2020, Mr. Huberman was the Chairman, Chief Executive Officer and Chief Financial Officer of Software Acquisition Group Inc. (NASDAQ:
SAQN), a blank check company which raised an aggregate of $149.5 million in its initial public offering in November 2019
and which consummated a business combination with CuriosityStream in October 2020. From 2017 to 2019, Mr. Huberman was Chief
Executive Officer of Ooyala (“Ooyala”), a provider of media workflow automation, delivery and monetization solutions,
which he and Mike Nikzad, our Vice President of Acquisitions and director, acquired from Telstra in 2018. Together with Mr. Nikzad,
they turned around an underperforming company and sold Ooyala’s three core business units to Invidi Technologies, Brightcove
(NASDAQ: BCOV) and Dalet (EPA: DLT), major players in the same sector. Previously, Mr. Huberman served as the Chief Executive
Officer of Syncplicity, a SaaS enterprise data management company, which he sourced and acquired from EMC and engineered an exit
to Axway (EPA: AXW). Prior to this, Mr. Huberman was the Chief Executive Officer of Tiburon, an enterprise software company
serving the public safety sector which he sold to Tritech Systems, and before that he was the Chief Executive Officer at Iomega
Corporation (NYSE: IOM), a consumer and distributed enterprise storage solutions provider. After Iomega was acquired by EMC Corporation
in 2008, Mr. Huberman served as President of the Consumer and Small Business Division of EMC. In addition to his experience
leading turnarounds and exits at five technology companies, Mr. Huberman spent nine years as an investor for the Bass Family
interests where he led investments in private and public companies. He also had senior roles leading the operations of the technology
investments of the Gores Group and Skyview Capital.
Mike
Nikzad, our Vice President of Acquisitions and a director, has over two decades of business leadership experience in software,
technology and consumer electronics companies, where he has worked on numerous corporate turnarounds and exits. Mr. Nikzad has
served as a director of CuriosityStream Inc. (NASDAQ: CURI) (formerly named Software Acquisition Group Inc.), a global streaming
media service that provides factual content on demand, since October 2020. He was the Vice President of Acquisitions and a Director
of Software Acquisition Group Inc. (NASDAQ: SAQN) from May 2019 to October 2020. Mr. Nikzad was President and Chief Operating
Officer at Ooyala until its sale. Prior to Ooyala, in the last five years Mr. Nikzad has held C-suite positions and
led company operations at Syncplicity, a SaaS enterprise data management company, and NewNet Communication Technologies, a telecommunications
company, as well as serving as an Operating Partner at SilverStream Capital. Prior to this, he also held management and executive
positions in EMC Corp’s (NYSE: EMC) Consumer and Small Business division and at Iomega Corporation, a consumer and distributed
enterprise storage solutions provider.
Our
board of directors also includes Andrew Nikou, Founder and Chief Executive Officer of OpenGate Capital Management, LLC (“OpenGate”),
a global private equity firm specializing in the acquisition and operation of businesses to create new value through operational
improvements, innovation and growth; C. Matthew Olton, the Senior Vice President, Strategy and Corporate Development at Tenable
Holdings, Inc. (NASDAQ: TENB), a cyber exposure protection provider and previously Senior Vice President, Corporate Development
and Ventures, at Symantec Corporation (NASDAQ: SYMC); Stephanie Davis, a Senior Client Partner at Korn Ferry where she leads the
Private Equity/Technology practice in North America and is a member of the Chief Executive Officer & Board practices;
Steven Guggenheimer, a Corporate Vice President of Microsoft Corporation (NASDAQ: MSFT) responsible for its artificial intelligence
business as well as Microsoft’s engagement with its independent software vendor partners; and Dr. Peter H. Diamandis,
Founder and Executive Chairman of the XPRIZE Foundation, which designs and operates large-scale incentive competitions and
the Executive Founder and Director of Singularity University, a global learning and innovation community. Each of our directors
was a director of Software Acquisition Group Inc.
Past
performance of our management team and its affiliates is not a guarantee either (i) of success with respect to any business
combination we may consummate, or (ii) that we are able to identify a suitable candidate for our initial business combination.
You should not rely on the historical performance record of our management team or its affiliates as indicative of our future
performance.
Business
Combination
On
January 31, 2021, we entered into a business combination agreement (the “Business Combination Agreement”) with Otonomo
Technologies Ltd., a company organized under the laws of the State of Israel (“Otonomo”) and Butterbur Merger Sub
Inc., a Delaware corporation and wholly owned subsidiary of Otonomo (“Merger Sub”). Pursuant to the Business Combination
Agreement, Merger Sub will merge with and into us, with us surviving the merger (the “Otonomo Business Combination”).
As a result of the Otonomo Business Combination, and upon consummation of the Otonomo Business Combination and the other transactions
contemplated by the Business Combination Agreement (the “Transactions”) we will become a wholly owned subsidiary of
Otonomo, with our securityholders becoming securityholders of Otonomo. The pro forma equity valuation of the Company upon consummation
of the Transactions is expected to be approximately $1.4 billion.
Upon
consummation of the Transactions (the “Effective Time”), assuming none of the Company’s public stockholders
demand redemption (“SPAC Redemptions”) pursuant to the Company’s amended and restated certificate of incorporation,
the securityholders of Otonomo and certain members of Otonomo’s management (“Otonomo Management”) will own approximately
74% of the outstanding ordinary shares of Otonomo (“Otonomo Ordinary Shares”) and the securityholders of the Company
and the Investors purchasing PIPE shares (as defined below) will own the remaining Otonomo Ordinary Shares.
The
following securities issuances will be made by Otonomo to Company securityholders at the Effective Time and in each case assume
the Stock Split (as defined below) has occurred: (i) each share of Class A common stock of the Company and each share of Class
B common stock of the Company will be exchanged for one Otonomo Ordinary Share and (ii) each outstanding warrant of the Company
will be assumed by Otonomo and will become a warrant of Otonomo (“Otonomo Warrant”) (with the number of Otonomo Ordinary
Shares underlying the Otonomo Warrant and the exercise price of such Otonomo Warrants subject to adjustment in accordance with
the terms of the Business Combination Agreement).
Immediately
prior to the Effective Time, each preferred share of Otonomo will be converted into one Otonomo Ordinary Share. Additionally,
Otonomo will issue securities pursuant to the Subscription Agreements, as described in more detail below.
Prior
to the Effective Time, Otonomo intends to effect a stock split to cause the value of the outstanding Otonomo Ordinary Shares immediately
prior to the Effective Time to equal $10.00 per share (the “Stock Split”).
Conditions
to the Consummation of the Otonomo Business Combination
The
consummation of the Transactions is conditioned upon, among other things: no order, judgment, injunction, decree, writ, stipulation,
determination or award, in each case, entered by or with any governmental authority or statute, rule or regulation that is in
effect and prohibits or enjoins the consummation of the Transactions; the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act of 1933, as amended (“Securities Act”), no stop order shall have
been issued by the SEC that remains in effect with respect to the Otonomo Registration Statement, and no proceeding seeking such
a stop order shall have been threatened or initiated by the SEC which remains pending; the requisite approvals of the holders
of Otonomo Ordinary Shares and Otonomo preferred stock shall have been obtained; the requisite approvals of Company stockholders
shall have been obtained; the Company having at least $5,000,001 of net tangible assets remaining prior to the Transactions after
taking into account the redemptions; Otonomo’s application to list the Otonomo Ordinary Shares (including the Otonomo Ordinary
Shares to be issued pursuant to the Business Combination) shall have been approved by Nasdaq, subject to official notice thereof
and public holder requirements; and certain ancillary agreements shall have been executed and delivered by the parties thereto
and shall be in full force and effect, including the Registration Rights Agreement (as defined below), certain transaction support
agreements, the Confidentiality and Lockup Agreement (as defined below) and an amended and restated warrant agreement.
The
obligations of the Company to consummate the Transactions are also conditioned upon, among other things: the accuracy of the representations
and warranties of the Otonomo and Merger Sub (subject to certain bring-down standards); performance in all material respects of
the covenants of Otonomo required by the Business Combination Agreement to be performed on or prior to the closing; no material
adverse effect with respect to Otonomo shall have occurred between the date of the Business Combination Agreement and the closing
of the Transactions; Otonomo having delivered certain customary officer’s certificates; and Otonomo’s board consisting
of certain agreed persons.
The
obligations of Otonomo and Merger Sub to consummate the Transactions are also conditioned upon, among other things: the accuracy
of the representations and warranties of the Company (subject to certain bring-down standards); performance in all material respects
of the covenants of the Company required by the Business Combination Agreement to be performed on or prior to the closing; the
aggregate amount remaining in the Company’s trust account after taking into account the SPAC Redemptions, plus the aggregate
amount sold in the PIPE being equal to or greater than $150,000,000; the Company having delivered certain customary officer’s
certificates; and each officer and director of the Company having resigned as of the closing date.
Confidentiality
and Lockup Agreement
Concurrently
with the execution of the Business Combination Agreement, our sponsor, management of Otonomo and certain securityholders of Otonomo
entered into a Confidentiality and Lockup Agreement Otonomo (the “Confidentiality and Lockup Agreement”), pursuant
to which such persons agreed (i) to keep confidential certain Otonomo information furnished to them and (ii) not to transfer certain
Otonomo Ordinary Shares, except to certain permitted transferees, beginning at the Effective Time and continuing a period of one
hundred eighty (180) days, in the case of certain securityholders of Otonomo, and the earlier of (x) one year and (y) if the last
sale price of the Otonomo Ordinary Shares equals or exceeds $12.00 per share (on a post-Stock Split basis) for any 20 trading
days within any 30 trading day period commencing at least 150 days after the Closing Date, in the case of our sponsor and management
of Otonomo.
At
the Effective Time, the transfer restrictions relating to the Class B common stock set forth in the insider letter agreement among
the Company and our sponsor will terminate.
Registration
Rights Agreement
Concurrently
with the execution of the Business Combination Agreement, Otonomo, our sponsor and certain securityholders of Otonomo entered
into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which Otonomo agreed to file
a registration statement with respect to the registrable securities under the Registration Rights Agreement within twenty (20)
days of the Effective Time to register the resale under the Securities Act of Otonomo Ordinary Shares, including Otonomo Ordinary
Shares issuable upon the exercise of the Otonomo Warrants to be held by such securityholders, subject to certain conditions set
forth therein. Otonomo also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement
also provides that Otonomo will pay certain expenses relating to such registrations and indemnify the securityholders against
certain liabilities. The rights granted under the Registration Rights Agreement supersede any prior registration, qualification,
or similar rights of the parties with respect to their Otonomo securities, and all such prior agreements shall be terminated.
Sponsor
Support Agreement
Concurrently
with the execution of the Business Combination Agreement, our sponsor entered into a letter agreement (the “Sponsor Support
Agreement”) in favor of Otonomo and the Company, pursuant to which they have agreed to (i) vote all shares of common stock
of the Company beneficially owned by it in favor of the Business Combination and each other proposal related to the Business Combination
proposed by the board of directors at the meeting of Company shareholders called to approve the Business Combination, (ii) appear
at such shareholder meeting for the purpose of establishing a quorum, (iii) vote all such shares against any action that would
reasonably be expected to materially impede, interfere with, delay, postpone, or adversely affect the Business Combination or
any of the other transactions contemplated by the Business Combination Agreement, and (iv) not to transfer, assign, or sell such
shares, except to certain permitted transferees, prior to the consummation of the Transactions.
Company
Transaction Support Agreement
Concurrently
with the execution of the Business Combination Agreement, the Company, Otonomo, holders of Otonomo Ordinary Shares who held a
majority of the then-outstanding Otonomo Ordinary Shares and holders of a majority of Otonomo’s preferred shares entered
into an agreement (the “Transaction Support Agreement”) pursuant to which they agreed to (i) appear at a shareholder
meeting called by Otonomo for the purpose of approving the Business Combination and other transactions contemplated by the Business
Combination, for the purpose of establishing a quorum, (ii) execute a written consent in favor of the Business Combination and
against all other action that would reasonably be expected to materially impede the Business Combination, (iii) not to solicit,
initiate, encourage, or facilitate certain alternate business combinations, and (iv) not to transfer, assign, or sell their respective
shares, except to certain permitted transferees, prior to the consummation of the Transactions.
PIPE
Financing
On
January 31, 2021, Otonomo entered into subscription agreements (each, a “Subscription Agreement”) with certain investors
(the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and
purchase, and Otonomo has agreed to issue and sell to the PIPE Investors, an aggregate of 14,250,000 Otonomo Ordinary Shares (on
a post-Stock Split basis) for an aggregate purchase price of $142,500,000.00 immediately following the Effective Time, on the
terms and subject to the conditions set forth therein. The Subscription Agreement contains customary representations and warranties
of Otonomo, on the one hand, and each PIPE Investor, on the other hand, and customary conditions to closing, including the consummation
of the Transactions. In addition, on January 31, 2021, certain Otonomo shareholders (the “Selling Holders”) entered
into a share purchase agreement (the “Share Purchase Agreement”) with an investor (the “Secondary Investor”)
pursuant to which, among other things, the Secondary Investor agreed to purchase 3,000,000 Company Ordinary Shares (on a post-Stock
Split basis) from the Selling Holders for an aggregate purchase price of $30,000,000. The Share Purchase Agreement contains customary
representations and warranties of the Selling Holders, on the one hand, and the Secondary Investor, on the other hand, and customary
conditions to closing, including the consummation of the Transactions.
The
Business Combination Agreement and related agreements are further described in our Current Report on Form 8-K filed on February
1, 2021.
Other
than as specifically discussed, this report does not assume the closing of the proposed Transactions.
Business
Strategy
Our
business strategy is to leverage our management team’s industry knowledge, strategic vision, operational expertise and business
connections built up over decades in the technology industry in combination with our sponsor’s and its affiliates’
investment sourcing and evaluation platform to identify and complete our initial business combination with a company that our
management and Board believes has compelling potential for value creation through our involvement. Mr. Huberman and Mr. Nikzad,
with the support of Mr. Nikou, leverage their partnership, investment experience, deep network and technology industry expertise
to identify and generate attractive acquisition opportunities among lower middle-market software companies.
Our
management team has experience in:
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Operating
companies, setting and changing strategies, and identifying, mentoring and recruiting exceptional talent;
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Developing
and growing companies, both organically and through strategic transactions and acquisitions, and expanding the product range and
geographic footprint of a number of target businesses;
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Investing
in private and public technology companies to accelerate their growth and maturation;
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Sourcing,
structuring, acquiring, and selling businesses;
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Accessing
the capital markets; and
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Fostering
relationships with sellers, capital providers and target management teams.
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Business
Combination Criteria
Our
business combination criteria are not limited to a particular industry or geographic sector; however, given the experience of
our management team and board, we focus our search on software companies with an enterprise value of approximately $300 million
to $750 million.
We
have identified the following general criteria and guidelines that we believe are consistent with our acquisition philosophy and
our management’s experience, and that we believe are important in evaluating prospective business combination opportunities.
We use these criteria and guidelines to evaluate business combination opportunities, such as the Otonomo Business Combination,
but we may decide to consummate our initial business combination with a target business that does not meet one or more of these
criteria and guidelines.
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Large
and growing market. We focus on investments in industry segments that we believe demonstrate attractive
long-term growth prospects and reasonable overall size or potential;
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Attractive,
inherently profitable business with high operating leverage. We seek to invest in companies that we
believe possess not only established business models and sustainable competitive advantages, but also inherently profitable unit
economics;
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Strong
management teams. We spend significant time assessing a company’s leadership and personnel and
evaluating what we can do to augment and/or upgrade the team over time if needed;
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Opportunity for
operational improvements. We seek to identify businesses that we believe are stable but at an inflection point and would
benefit from our ability to drive improvements in the company’s processes, go-to-market strategy, product or
service offering, sales and marketing efforts, geographical presence and/or leadership team;
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Differentiated
products or services. We evaluate metrics such as recurring revenues, product life cycle, cohort consistency,
pricing per product or customer, cross-sell success and churn rates to focus on businesses whose products or services are
differentiated or where we see an opportunity to create value by implementing best practices;
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Compelling
growth prospects. We view growth as an important driver of value and seek companies whose growth potential
can generate meaningful upside;
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Limited
technology risk. We seek to invest in companies that have established market-tested product or
service offerings;
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Appropriate
valuations. We seek to be a disciplined and valuation-centric investor that invests on terms that
we believe provide significant upside potential with limited downside risk; and
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Benefit
from Being a Public Company. We are pursuing a business combination with a company that we believe
will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are
associated with being a publicly traded company.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management team may deem relevant. In the event that we do not consummate the Otonomo Business Combination and find an opportunity
that has characteristics more compelling to us than the characteristics described above, we would pursue such opportunity.
Competitive
Strengths
We
intend to leverage the following sources of competitive strength in seeking to achieve our business strategy:
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Management
team’s industry knowledge and contacts.
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Deal
flow and business development resources available to our sponsor and its affiliates.
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Management
team’s experience and reputation in sourcing opportunities.
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Extensive
relationships within the private equity community (a likely source of deal flow).
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Management
team’s demonstrated ability to create value for their shareholders.
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Strong
track record of operational excellence.
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Our
Acquisition, Investment and Post-Closing Process
In
evaluating prospective business combinations, we have conducted and will continue to conduct a thorough due diligence review process
that encompass, among other things: an analysis of overall industry and competitive conditions, a review of historical financial
and operating data, meetings with incumbent management and employees, interaction with third-parties who are industry experts,
on-site inspection of facilities and assets, discussion with customers and suppliers, legal and other reviews as we deem
appropriate. We have also utilized and will continue to utilize the expertise of our management team and our sponsor’s and
its affiliates’ resources in analyzing and evaluating operating plans, financial projections and determining the appropriate
return expectations given the risk profile of the target business as well as the suitability of the target to become a public
company.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers,
directors or OpenGate (including any investment vehicle advised by OpenGate or its affiliates), subject to certain approvals and
consents. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers, directors or OpenGate (including any investment vehicle advised by OpenGate or its affiliates), we, or a committee of
independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly
renders fairness opinions that our initial business combination is fair to us from a financial point of view.
Our
Business Combination Process
Certain
members of our management team directly or indirectly own our founders shares, common stock and/or private placement warrants,
and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of
interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and
directors were to be included by a target business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual
obligations of our officers or directors will not materially affect our ability to complete our initial business combination,
as we believe any such opportunities presented would be smaller than what we are interested in, in different fields than what
we would be interested in, or to entities that are not themselves in the business of engaging in business combinations. Our amended
and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer
of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable
for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another
legal obligation.
Our
officers and directors may become an officer or director of another special purpose acquisition company with a class of securities
intended to be registered under the Exchange Act even before we have entered into a definitive agreement regarding our initial
business combination.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters but they have devoted and will
continue to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that any member of our management team devotes in any time period varies based on whether a target business
has been selected for our initial business combination and the current stage of the business combination process. We believe our
management team’s operating and transaction experience and relationships with companies provide us with a substantial number
of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships in many industries. This network has grown through the activities of our
management team sourcing, acquiring and financing businesses, our management team’s relationships with sellers, financing
sources and target management teams and the experience of our management team in executing transactions under varying economic
and financial market conditions.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As a public company, we offer
a target business an alternative to the traditional initial public offering through a merger or other business combination with
us. Following an initial business combination, we believe the target business would have greater access to capital and additional
means of creating management incentives that are better aligned with stockholders’ interests than it would as a private
company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in
attracting talented employees. In a business combination transaction with us, the owners of the target business may, for example,
exchange their shares of stock in the target business for our shares of Class A common stock (or shares of a new holding
company) or for a combination of our shares of Class A common stock and cash, allowing us to tailor the consideration to
the specific needs of the sellers.
Although
there are various costs and obligations associated with being a public company, we believe target businesses will find this method
a more expeditious and cost effective method to becoming a public company than the typical initial public offering. The typical
initial public offering process takes a significantly longer period of time than the typical business combination transaction
process, and there are significant expenses in the initial public offering process, including underwriting discounts and commissions,
marketing and road show efforts that may not be present to the same extent in connection with an initial business combination
with us.
Furthermore,
once a proposed initial business combination is completed, the target business will have effectively become public, whereas an
initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market
conditions, which could delay or prevent the offering from occurring or could have negative valuation consequences. Following
an initial business combination, we believe the target business would then have greater access to capital and an additional means
of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency
for acquisitions. Being a public company can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
While
we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a
less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition
period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following September
17, 2025, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market
value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th,
or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common
stock held by non-affiliates exceeds $700 million as of the prior June 30th.
Financial
Position
With
funds available for an initial business combination initially in the amount of $166,462,500 after payment of $6,037,500 of deferred
underwriting fees and before fees and expenses associated with our initial business combination, we offer a target business, such
as Otonomo, a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth
and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able
to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we
have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target
business to fit its needs and desires.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate
our initial business combination using cash from the proceeds of our initial public offering and the private placement of the
private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant
to forward purchase agreements or backstop agreements we may enter into following the consummation of our initial public offering
or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or
a combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be
financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in
such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our initial business combination or used for redemptions
of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal
or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies
or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with
the net proceeds of our initial public offering and the sale of the private placement warrants, and may as a result be required
to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities
laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination.
In the case of an initial business combination funded with assets other than the trust account assets, our proxy materials or
tender offer documents disclosing the initial business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately
or through loans in connection with our initial business combination.
See
“Otonomo Business Combination” above for more information regarding the financing of and the agreements related to
the Otonomo Business Combination.
Sources
of Target Businesses
Target
business candidates are brought to our attention from various unaffiliated sources, including investment bankers and investment
professionals, as a result of being solicited by us by calls or mailings. These sources may introduce us to target businesses
in which they think we may be interested on an unsolicited basis, since many of these sources will have read our public filings
and know what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates, also
bring to our attention target business candidates that they become aware of through their business contacts as a result of formal
or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we may receive
a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business
relationships of our officers and directors and our sponsor and their respective industry and business contacts as well as their
affiliates. We have engaged the services of professional firms or other individuals that specialize in business acquisitions on
any formal basis and we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an
arm’s length negotiation based on the terms of the transaction, only to the extent our management determines that the use
of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited
basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s
fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the
trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any entity with which our
sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment
of a loan or other compensation by the company prior to, or in connection with any services rendered for any services they render
in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is).
Although none of our sponsor, executive officers or directors, or any of their respective affiliates, are allowed to receive any
compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated
initial business combination, we do not have a policy that prohibits our sponsor, executive officers or directors, or any of their
respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. We have agreed
to pay our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support and to
reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business
combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company
following our initial business combination. The presence or absence of any such fees or arrangements are not used as a criterion
in our selection process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared
ownership with our sponsor, officers or directors. While Otonomo is not affiliated with our sponsor, officers or directors, in
the event we do not consummate the Otonomo Business Combination and we seek to complete our initial business combination with
an initial business combination target that is affiliated with our sponsor, officers or directors, we, or a committee of independent
directors, would obtain an opinion from an independent investment banking firm or from another independent entity that commonly
renders valuation opinions that such an initial business combination is fair to our company from a financial point of view. We
are not required to obtain such an opinion in any other context.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
The fair market value of our initial business combination will be determined by our board of directors based upon one or more
standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading
multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable
businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination,
we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not
be able to make an independent determination of the fair market value of our initial business combination, it may be unable to
do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination
must be approved by a majority of our independent directors.
We
do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject
to this requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses, although we are not permitted to effectuate our initial business combination with another blank check company
or a similar company with nominal operations. We anticipate structuring our initial business combination either (i) in such
a way so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity
interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company
owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders. However, we will only complete an initial business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended, or the “Investment Company Act”. Even if the post-transaction company owns or acquires 50% or more
of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority
interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the
issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion
of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80%
fair market value test. If the initial business combination involves more than one target business, the 80% fair market value
test will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial
business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth we may be affected by numerous risks inherent in such company or business. Although our management
endeavors to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our initial business combination with only a single entity, our lack of diversification
may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on
the particular industry in which we operate after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business, including management of Otonomo, when evaluating
the desirability of effecting our initial business combination with that business, and plan to continue to do so if the Otonomo
Business Combination is not consummated and we seek other business combination opportunities, our assessment of the target business’
management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or
abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business
cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will
remain with the combined company will be made at the time of our initial business combination. While it is possible that one or
more of our directors will remain associated in some capacity with us following our initial business combination, including the
Otonomo Business Combination in which Jonathan Huberman will serve as Director of Otonomo, it is unlikely that any of them will
devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members
of our management team will have significant experience or knowledge relating to the operations of the particular target business.
Other
than the expected appointment of Mr. Huberman to the board of Otonomo, we cannot assure you that any of our key personnel will
remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company, including Otonomo if the Otonomo Business Combination is consummated, will be made at the
time of our initial business combination.
Following
an initial business combination, such as the Otonomo Business Combination, we may seek to recruit additional managers to supplement
the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers,
or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
Type of Transaction
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Whether
Stockholder
Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A
common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power
of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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See
“Otonomo Business Combination” above for more information regarding the requisite approvals needed in the Otonomo
Business Combination.
Permitted
Purchases of our Securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases
when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited
by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and
Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds
held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial
business combination.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may
result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases
are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the number
of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing
or trading of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates may identify the stockholders with whom our sponsor, officers, directors
or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt
of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business
combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase,
they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for
a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already
submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates
will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which
is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination, such as the Otonomo Business Combination, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation
of the initial business combination including interest earned on the funds held in the trust account and not previously released
to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein.
The amount in the trust account as of December 31, 2020 was approximately $10.00 per public share. The per-share amount we
will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we
will pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself
in order to validly redeem its shares. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them
in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve
the initial business combination, such as the Otonomo Business Combination, or (ii) by means of a tender offer. The decision
as to whether we will seek stockholder approval of a proposed initial business combination or conduct a tender offer will be made
by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the
terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement. Under
Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek
to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial
business combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether
to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements
or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for
our securities on Nasdaq, we are required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance
with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public
shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In addition, we will not redeem any public shares unless our net
tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and
not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power
of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count
toward this quorum and pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder
shares and any public shares purchased during or after our initial public offering (including in open market and privately negotiated
transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding
shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum
is obtained. As a result, in addition to our initial stockholders’ founder shares, we would need only 6,468,751, or 37.5%,
of the 17,250,000 public shares sold in our initial public offering to be voted in favor of an initial business combination in
order to have our initial business combination approved. We intend to give approximately 30 days (but not less than 10 days
nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our
initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make
it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public
shares irrespective of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation provides that we may not redeem our public shares unless our net tangible assets
are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target or its
owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business
combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem
any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
See
“Otonomo Business Combination” above for more information regarding the requisite approvals needed in the Otonomo
Business Combination
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from
seeking redemption rights with respect to an aggregate of 15% or more of the shares sold in our initial public offering, which
we refer to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction
will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability
to exercise their redemption rights against a proposed initial business combination as a means to force us or our management to
purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this
provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could
threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium
to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no
more than 15% of the shares sold in our initial public offering without our prior consent, we believe we will limit the ability
of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly
in connection with an initial business combination with a target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business combination.
See
“Otonomo Business Combination” above for more information regarding the requisite approvals needed in the Otonomo
Business Combination
Tendering
Stock Certificates in Connection with Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights (which requirement is applicable to the Otonomo
Business Combination), whether they are record holders or hold their shares in “street name,” to either tender their
certificates to our transfer agent prior to the meeting held to approve a proposed initial business combination by a date set
forth in the proxy materials mailed to such holders or to deliver their shares to the transfer agent electronically using the
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials
that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether
we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from
the time we send out our proxy materials until the date set forth in such proxy materials to tender its shares if it wishes to
seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed initial business combination and check a
box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial business
combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate
to verify ownership. As a result, the stockholder then had an “option window” after the completion of the initial
business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares
to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before
the stockholder meeting, would become “option” rights surviving past the completion of the initial business combination
until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting
ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides
prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return
the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares
electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until 18 months from the closing of our initial public offering.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 18 months from the closing of our initial
public offering to complete our initial business combination. If we are unable to complete our initial business combination within
such 18-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 18-month time
period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our
initial business combination within 18 months from the closing of our initial public offering. However, if our sponsor, officers
or directors acquire public shares, they will be entitled to liquidating distributions from the trust account with respect to
such public shares if we fail to complete our initial business combination within the allotted 18-month time period.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (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 within 18 months from the closing of our
initial public offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common
stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay
our taxes divided by the number of then outstanding public shares. However, we may not redeem our public shares unless our net
tangible assets are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and
after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot
satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption
of our public shares at such time.
If
we do not consummate the Otonomo Business Combination or any other initial business combination by the deadline set forth in our
amended and restated certificate of incorporation, we expect that all costs and expenses associated with implementing our plan
of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $1,000,000
of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose.
We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may
owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution,
to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the
trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest
to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds
deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority
than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by
stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide
for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient
assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all
creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers (other than our independent registered public
accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
Marcum LLP, our independent registered public accounting firm, and the underwriters of the offering will not execute agreements
with us waiving such claims to the monies held in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services
rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below
the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the
date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets,
less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business
who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations,
nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that
our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able
to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount
per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value
of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor
to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We
seek to reduce the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to
have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor are liable
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. We will have access to up to approximately $1,000,000 from the proceeds of our initial public
offering with which to pay any such potential claims. In the event that we liquidate and it is subsequently determined that the
reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for
claims made by creditors.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 18 months from the closing of
our initial public offering may be considered a liquidating distribution under Delaware law. Delaware law provides that if the
corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination within 18 months from the closing of our initial public offering,
is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete
our initial business combination within 18 months from the closing of our initial public offering, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay
our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 18th month
and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any
claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond
the third anniversary of such date.
Because
we are complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our
operations are 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 and independent registered public accounting firm) or prospective target businesses.
As described above, pursuant to the obligation contained in our underwriting agreement, we have sought and will continue to seek
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of
this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would
result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary
to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount
per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value
of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will
not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against
us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion
of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to offer redemption rights in connection with any proposed initial business combination or to redeem 100% of
our public shares if we do not complete our initial business combination within 18 months from the closing of our initial
public offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination
within 18 months from the closing of our initial public offering, subject to applicable law. In no other circumstances will
a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in
connection with our initial business combination, a stockholder’s voting in connection with the initial business combination
alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account.
Such stockholder must have also exercised its redemption rights as described above. These provisions of our amended and restated
certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with
a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, such as Otonomo, we have encountered
and may continue to encounter competition from other entities having a business objective similar to ours, including other blank
check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly
or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay
cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us
for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not
be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Employees
We
currently have 2 officers. These individuals are not obligated to devote any specific number of hours to our matters but they
devote as much of their time as they deem necessary to our affairs and intend to continue doing so until we have completed our
initial business combination. The amount of time they devote in any time period may vary based on whether a target business has
been selected for our initial business combination and the stage of the initial business combination process we are in. We do
not intend to have any full-time employees prior to the completion of our initial business combination, including the Otonomo
Business Combination.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and we have reporting obligations, including
the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange
Act, this report contains financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business, such as Otonomo, as part of the
tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In
all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending
on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of
the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct an initial business combination
with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with
federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot assure you that
any particular target business identified by us as a potential business combination candidate will have financial statements prepared
in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with
the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed
target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation
will be material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the
Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer
qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target company may
not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following September
17, 2025, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three-year period.
An
investment in our securities involves a high degree of risk. You should carefully consider all of the risks described below, together
with the other information contained in this report, including the financial statements. If any of the following risks occur,
our business, financial condition or results of operations may be materially and adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are
not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business. For risks
relating to Otonomo’s business, see the Otonomo Registration Statement.
Risks
Relating to our Search for, Consummation of, or Inability to Consummate,
a Business Combination and Post-Business Combination Risks
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may
complete our initial business combination even if a majority of our public stockholders do not support such a combination.
If
the Otonomo Business Combination is not consummated and we seek to enter into a business combination with other target companies,
we may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination
would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder
vote for business or other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval
of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made
by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether
the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial
business combination even if holders of a majority of our public shares do not approve of the initial business combination we
complete.
If
we seek stockholder approval of our initial business combination, after approval of our board, our initial stockholders have agreed
to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Pursuant
to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares
purchased 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, we would need only 6,468,751,
or 37.5%, of the 17,250,000 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 our sponsor, officers and directors do not purchase any public shares) in order
to have our initial business combination approved. Our initial stockholders own shares representing 20% of our outstanding shares
of common stock. 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.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
Since
our board of directors may complete an initial business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the initial business combination, unless we seek such stockholder vote.
Accordingly,
if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business
combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business
days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
We
may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. In particular, the Business Combination Agreement provides for a
minimum cash of $150 million in cash and cash equivalents, from funds in the trust account and from any equity financing, as a
closing condition for the Otonomo Business Combination. While we will have access to approximately $150 million committed capital
from gross proceeds from the private placements to be consummated at the closing of the Otonomo Business Combination, we may have
to satisfy a higher minimum cash closing condition if the Otonomo Business Combination is not consummated and we seek to enter
into a business combination with other target companies. Under these circumstances, if too many public stockholders exercise their
redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the
initial business combination. Furthermore, in no event will we redeem our public shares unless our net tangible assets are at
least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such
greater amount necessary to satisfy a closing condition, each as described above, we would not proceed with such redemption and
the related business combination and may instead search for an alternate business combination. Prospective targets will be aware
of these risks and, thus, may be reluctant to enter into an initial business combination 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 (including the Otonomo 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,
such as the $150 million in third-party equity financing to be consummated in connection with the Otonomo Business Combination.
Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than
desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B
common stock results in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B
common stock at the time of our business combination. The above considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable
to the underwriters 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 deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with 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 decrease our ability to conduct due diligence on potential
business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial
business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination by March 17, 2022. Consequently, such target business may obtain leverage over
us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with that
particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not 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 only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination within 18 months
from the closing of our initial public offering, or March 17, 2022. We may not be able to complete the Otonomo Business Combination
or find another suitable target business and complete our initial business combination by such date. If we have not completed
our initial business combination by such date, we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in 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 only receive $10.00
per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per
share on the redemption of their shares.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19) outbreak.
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”. A significant outbreak of COVID-19 and other infectious diseases
could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the
business of any potential target business with which we consummate a business combination could be materially and adversely affected.
Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel,
limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. While vaccines for COVID-19 are being, and have been developed, there is no guarantee that any such vaccine
will be effective, work as expected or be made available or will be accepted on a significant scale and in a timely manner. 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,
such as Otonomo, may be materially adversely affected.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there
may be more competition for attractive targets. This could increase the cost of our initial business combination and could even
result in our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential
targets for special purpose acquisition companies have already entered into an initial business combination, and there are still
many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies
currently in registration. As a result, at times, fewer attractive targets may be available, and if the Otonomo Business Combination
is not completed it may require more time, more effort and more resources to identify a suitable target and to consummate an initial
business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with
available targets, the competition for available targets with attractive fundamentals or business models may increase, which could
cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close
business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate
or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate
an initial business combination, such as the Otonomo Business Combination, on terms favorable to our investors altogether.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate
and complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed
in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability
coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become
less favorable. These trends may continue into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more
expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or
modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater
expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance
could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and
directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to
potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a
result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional
insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be
an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate
an initial business combination on terms favorable to our investors.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or warrants from public 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 (such as the Otonomo Business Combination) and we do not conduct
redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers,
advisors or their affiliates may purchase shares or public warrants or a combination thereof in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination, although they are under
no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have
not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase
shares or public warrants in such transactions.
Such
a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is
no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior
elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the initial business
combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy
a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose
of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants
on any matters submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases
of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number
of beneficial holders of our securities may be reduced, possibly making it difficult to 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 tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, 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 redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to
approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be
redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (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 within
18 months from the closing of our initial public offering, or March 17, 2022 or (B) with respect to any other provision 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 March 17, 2022, subject to applicable law and as further described
herein. 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.
You
will not be entitled to protections normally afforded to investors of certain other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete
an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000, we are
exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors
are not afforded the benefits or protections of those rules. Among other things, this means that we 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
have encountered and expect to continue 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 technical, human and other resources to ours, and our
financial resources are relatively limited when contrasted with those of many of these competitors. While we believe there are
numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the
private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable
is limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the
acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A common
stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware
that this may reduce the resources available to us for our initial business combination. This may place us at a competitive disadvantage
in successfully negotiating an initial business combination. If we are unable to complete the Otonomo Business Combination or
another 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 warrants not being held in the trust account
are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our
initial business combination and we will depend on loans from our sponsor or management team to fund our search for an initial
business combination, to pay our taxes and to complete our initial business combination. If we are unable to obtain these loans,
we may be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, 1,188,000 (as of December 31,
2020) was available to us initially outside the trust account to fund our working capital requirements. If we are required to
seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or
may be forced to liquidate. None of our sponsor, 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 $1,500,000 of such loans may be convertible
into private placement-equivalent warrants at a price of $1.00 per warrant 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 our sponsor or an affiliate of our
sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights
to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable to complete our initial
business combination. If we are unable to complete our initial business combination 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
approximately $10.00 per share on our redemption of our public shares, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets,
restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence
successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent
with our preliminary risk analysis. Although 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. Accordingly, any stockholders who choose to remain stockholders following the initial business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value 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 initial business combination constituted
an actionable material misstatement or omission.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we 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.
Marcum LLP, our independent registered public accounting firm, and the underwriters of the offering, will not execute agreements
with us waiving such claims to the monies held in the trust account.
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. Our sponsor has agreed that it will be liable to us
if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement,
reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount
per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims
by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account
(whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor
to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to
satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, it
is unlikely that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount
per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to
reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor
asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will
also be required to waive) any right, title, interest or claim of any kind in or to any monies in the trust account and not to
seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be
satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers
or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and
our board may be exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would
otherwise be received by our stockholders in connection with our liquidation may be reduced.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination by March 17, 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 March 17, 2022 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, consultants and independent registered public accounting firm)
or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of
stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of
the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the
third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought
against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by March 17, 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 Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one
year after our first fiscal year end following our listing on 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.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our
Annual Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated
filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long
as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance
with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because
a target company with which we seek to complete our initial business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such
entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business
combination.
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
are not limited to completing an initial business combination in any industry or geographical region, although we are not, under
our amended and restated certificate of incorporation, permitted to effectuate our initial business combination with another blank
check company or similar company with nominal operations. There is no basis to evaluate the possible merits or risks of any particular
target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent
we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which
we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment
in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in a business combination target. Accordingly, any stockholders who choose to remain stockholders following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such
reduction in value 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.
If
the Otonomo Business Combination is not consummated, we may seek business combination opportunities in industries or sectors which
may or may not be outside of our management’s area of expertise.
Although
we intend to focus on identifying companies in sectors where we have experience, we will consider an initial business combination
outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine
that such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable
candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management
will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our securities
will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in an
initial business combination candidate. In the event we elect to pursue a business combination outside of the areas of our management’s
expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information
contained herein regarding the areas of our management’s expertise would not be relevant to an understanding of the business
that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant
risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could
suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business, such as Otonomo, with which we enter into our initial business combination will not have all of these positive attributes.
If we complete our initial business combination with a target that does not meet some or all of these guidelines, such combination
may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition,
if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater
number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition
with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval
of the transaction is required by law, or we decide to obtain stockholder approval for business or other 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 on the redemption of their shares.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of
revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we
combine. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although
our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to
properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
We
are not required to obtain a fairness opinion, and consequently, you may have no assurance from an independent source that the
price we are paying for the business is fair to our company from a financial point of view.
Unless
we complete our 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
or from another independent entity that commonly renders valuation opinions that the price we are paying is fair to our company
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on
the liquidation of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on
the redemption of their shares.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
Accordingly, any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction
in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which
may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment
in us.
Although
we have no commitments as of the date of this report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption
from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt
obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general
corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution
of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement warrants which will cause us to be solely dependent on a single business which may have a limited number of services
and limited operating activities. This lack of diversification may negatively impact our operating results and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement warrants, $172,500,000 will be available
to complete our initial business combination and pay related fees and expenses (which includes $6,037,500 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. In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly,
the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend
to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our initial business combination strategy, we may seek to effectuate our initial business combination with a privately
held company. Very little public information generally exists about private companies, and we could be required to make our decision
on whether to pursue a potential initial business combination on the basis of limited information, which may result in an initial
business combination with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
may structure an initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under
the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company
owns 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively
own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the
initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares
of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100%
interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders
immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such
transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or
group obtaining a larger share of 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. New management may not possess the skills,
qualifications or abilities necessary to profitably operate such business.
Risks
Relating to our Sponsor and our Management Team
Past
performance by our management team and its affiliates may not be indicative of future performance of an investment in the Company.
Past
performance by our management team and its affiliates is not a guarantee either (i) of success with respect to any business combination
we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should
not rely on the historical record of our management team or their affiliates’ performance as indicative of our future performance
of an investment in the company or the returns the company will, or is likely to, generate going forward. Additionally, in the
course of their respective careers, members of our management team and their affiliates have been involved in businesses and transactions
that were not successful.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management or advisory positions following our initial business combination, it is likely that
some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we employ after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements. In addition, the officers and
directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure
of an initial business combination target’s key personnel could negatively impact the operations and profitability of our
post-combination business. The role of an initial business combination candidate’s key personnel upon the completion
of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial
business combination candidate’s management team will remain associated with the initial business combination candidate
following our initial business combination, it is possible that members of the management of an initial business combination candidate
will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
We
are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed
our initial business combination. 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
key personnel may negotiate employment or consulting agreements as well as reimbursement of out-of-pocket expenses,
if any, with a target business in connection with a particular business combination. These agreements may provide for them to
receive compensation or reimbursement for out-of-pocket expenses, if any, following our initial business combination and as a
result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the initial business combination. Additionally, they
may negotiate reimbursement of any out-of-pocket expenses incurred on our behalf prior to the consummation of our initial
business combination, should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the
initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the completion of the initial business combination, or as reimbursement
for such out-of-pocket expenses. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the
completion of our initial business combination will not be the determining factor in our decision as to whether or not we will
proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with
us after the completion of our initial business combination. We cannot assure you that any of our key personnel will remain in
senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us
will be made at the time of our initial business combination.
Our
officers and directors 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 do 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.
Until
we consummate our initial business combination, we will continue to engage in the business of identifying and combining with one
or more businesses. Our sponsor and officers and directors are, and may in the future become, affiliated with entities (such as
operating companies or investment vehicles) that are engaged in a similar business, and our officers and directors may become
an officer or director of another special purpose acquisition company with a class of securities intended to be registered under
the Exchange Act even before we have entered into a definitive agreement regarding our initial business combination.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to
us without violating another legal obligation.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into an initial business combination with a target business that is
affiliated with our sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly
prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours.
We
may engage in an initial business combination with one or more target businesses that have relationships with entities that may
be affiliated with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities.
Such entities may compete with us for business combination opportunities. Despite our agreement to obtain an opinion from an independent
investment banking firm or from another independent entity that commonly renders valuation opinions, regarding the fairness to
our stockholders from a financial point of view of an initial business combination with one or more businesses affiliated with
our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the
initial business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
In
June 2020, our sponsor purchased 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006
per share. 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. The founder shares will be worthless if we do not complete an
initial business combination. In addition, our sponsor has purchased an aggregate of 5,200,000 private placement warrants at a
price of $1.00 per warrant ($5,200,000 in the aggregate) that will also be worthless if we do not complete an initial business
combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business
combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business
combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director. The personal
and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business
combination, completing an initial business combination and influencing the operation of the business following the initial business
combination.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete an initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately prior to or upon
consummation of our initial business combination and after payment of underwriters’ fees and commissions (such that we are
not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial
business combination even if a substantial majority of our public stockholders do not agree with the transaction and have redeemed
their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to
sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration
we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required
to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash
available to us, we will not complete the initial business combination or redeem any shares, all shares of Class A common stock
submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek
to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for
us to complete our initial business combination that our stockholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have
amended the definition of business combination, increased redemption thresholds 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. To the extent we seek to amend our organizational documents in a way that 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 amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account), may be amended with the approval
of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It
may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate
the completion of an initial business combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-initial business combination
activity (including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into
the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein and including to permit us to withdraw funds from the trust account such that the per share amount investors
will receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders
of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release
of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In
all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding
common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may
not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation. Our initial
stockholders, who collectively beneficially own up to 20% of our common stock, will participate in any vote to amend our amended
and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our
pre-initial business combination behavior more easily than some other blank check companies, and this may increase our ability
to complete an initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any
breach of our amended and restated certificate of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100%
of our public shares on a business combination if we do not complete our initial business combination by March 17, 2022 or (ii)
with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity,
unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of
any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered
into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these
agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach
of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
We
are targeting businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the
private placement warrants. 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. If we are
unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share plus
any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes on the
liquidation of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing
to complete our initial business combination, we may require such financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material adverse effect on the continued development or growth of the
target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with
or after our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may only receive approximately $10.00 per share on the liquidation of our trust account, and our warrants will expire worthless.
Furthermore, as described in the risk factor entitled “If third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share,”
under certain circumstances our public stockholders may receive less than $10.00 per share upon the liquidation of the trust account.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you
do not support.
Our
initial stockholders own shares representing 20% of our issued and outstanding shares of common stock. Accordingly, they may exert
a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments
to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders
purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase
their control. Factors that would be considered in making such additional purchases would include consideration of the current
trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our initial stockholders,
is divided into three classes, each of which generally serves for a term of three years with only one class of directors being
elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our
initial business combination, in which case all of the current directors will continue in office until at least the completion
of the initial business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors,
only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert
control at least until the completion of our initial business combination.
Risks
Relating to our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00
per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only
in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued
interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility
that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial
business combination or make certain amendments to our amended and restated certificate of incorporation, our public shareholders
are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of
taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000 of interest). Negative
interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public
shareholders may be less than $10.00 per share.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete an initial business combination and thereafter to operate the post-transaction business
or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We
do not plan to buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our principal activities 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. The trust account is intended as a holding place for funds pending the earliest
to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (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 March
17, 2022 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity; or (iii) absent an initial business combination by March 17, 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.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to an aggregate of 15% or more 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.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are currently listed on Nasdaq. However, we cannot assure you that our securities will continue to be listed on Nasdaq
in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 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 (with at least 50% of such round lot holders holding securities
with a market value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common
stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units, our
Class A common stock and public warrants are listed on Nasdaq, our units, Class A common stock and public warrants are covered
securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states
to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers
to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale
of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not
be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection
with our initial business combination.
We
may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of
the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 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. There are 82,750,000 and 5,687,500 authorized but unissued shares of Class A
common stock and Class B common stock, respectively, available for issuance, which amount does not take into account the shares
of Class A common stock reserved for issuance upon exercise of outstanding warrants nor the shares of Class A common stock issuable
upon conversion of Class B common stock. There are currently 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 common or preferred stock to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate
of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business
combination activity). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation
provides, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock
that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with the approval of our stockholders. However, our executive officers and directors have agreed,
pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
(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 March 17, 2022 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon
approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public
shares.
The
issuance of additional shares of common or preferred stock:
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may
significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock;
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could
cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and
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may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any
state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon
exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will
not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants issued in our initial public offering
under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have
agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination,
we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the
shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same
to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating
to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the
provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise
which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements
contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants issued in our initial public offering are not registered under the Securities Act, we will be required
to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless
basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of
the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an
exemption from registration is available. Notwithstanding the foregoing, if a registration statement covering the Class A common
stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial
business combination, warrant holders may, until such time as there is an effective registration statement and during any period
when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the
exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption
is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on
a cashless basis. We will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent
an exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation
in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable
state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants issued
in our initial public offering is not so registered or qualified or exempt from registration or qualification, the holder of such
warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event,
holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the
shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may not exercise our
redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification
under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts
to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which
the warrants were offered by us in our initial public offering. However, there may be instances in which holders of our public
warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private
warrants.
If
you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from
such exercise than if you were to exercise such warrants for cash.
There
are circumstances in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First,
if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective
by the 60th business day after the closing of our initial business combination, warrantholders may, until such
time as there is an effective registration statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9)
of the Securities Act or another exemption. Second, if a registration statement covering the Class A common stock issuable upon
exercise of the warrants is not effective within a specified period following the consummation of our initial business combination,
warrant holders may, until such time as there is an effective registration statement and during any period when we shall have
failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act, provided that such exemption is available; if that exemption, or another exemption,
is not available, holders will not be able to exercise their warrants on a cashless basis. Third, if we call the public warrants
for redemption, our management will have the option to require all holders that wish to exercise warrants to do so on a cashless
basis. In the event of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants
for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of
shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants
and the “fair market value” (as defined in the next sentence) by (y) the fair market value. The “fair market
value” is the average reported last sale price of the Class A common stock for the 10 trading days ending on the third trading
day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is
sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A common stock from such
exercise than if you were to exercise such warrants for cash.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement entered into concurrently with our initial public offering, our initial stockholders and their permitted transferees
can demand that we register 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 warrants that may be
issued upon conversion of working capital loans may demand that we register such warrants or the Class A common stock issuable
upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such
a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class
A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or
difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the
combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock
that is expected when the securities owned by our initial stockholders or holders of working capital loans or their respective
permitted transferees are registered.
Unlike
many other similarly structured blank check companies, our initial stockholders will receive additional shares of Class A common
stock if we issue shares to consummate an initial business combination.
The
founder shares will automatically convert into Class A common stock at the time of our initial business combination, on a one-for-one basis,
subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities
convertible or exercisable for Class A common stock, are issued or deemed issued in excess of the amounts offered in our initial
public offering and related to the closing of the initial business combination, the ratio at which founder shares shall convert
into Class A common stock will be adjusted so that the number of shares of Class A common stock issuable upon conversion of all
founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of all outstanding shares
of common stock upon completion of the initial business combination, excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the business combination and any private placement-equivalent warrants issued to our sponsor
or its affiliates upon conversion of loans made to us. This is different from most other similarly structured blank check companies
in which the initial stockholder will only be issued an aggregate of 20% of the total number of shares to be outstanding prior
to the initial business combination. Additionally, the aforementioned adjustment will not take into account any shares of Class
A common stock redeemed in connection with the business combination. Accordingly, the holders of the founder shares could receive
additional shares of Class A common stock even if the additional shares of Class A common stock, or equity-linked securities
convertible or exercisable for Class A common stock, are issued or deemed issued solely to replace those shares that were redeemed
in connection with the business combination. The foregoing may make it more difficult and expensive for us to consummate an initial
business combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least a majority of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant
could be decreased, all without your approval.
Our
warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any 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 report, or correct any defective provision, but requires
the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely affects
the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner
adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although
our ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock
purchasable upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption
and provided certain other conditions are met. If and when the warrants become redeemable by us, we may not exercise our redemption
right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification
under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts
to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which
the warrants were offered by us in our initial public offering. Redemption of the outstanding warrants could force you (i) to
exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to
sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept
the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially
less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are
held by the sponsor or its permitted transferees.
Our
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 8,625,000 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 warrants to purchase an
aggregate of 5,200,000 shares of Class A common stock at $11.50 per share. Our initial stockholders currently own an aggregate
of 4,312,500 founder shares. The founder shares are convertible into shares of Class A common stock on a one-for-one basis,
subject to adjustment as set forth herein. In addition, if our sponsor makes any working capital loans, up to $1,500,000 of such
loans may be converted into warrants, at the price of $1.00 per warrant at the option of the lender. Such warrants would be identical
to the private placement warrants, including as to exercise price, exercisability and exercise period.
To
the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential for the issuance
of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could
make us a less attractive business combination vehicle to a target business. Any such issuance will increase the number of issued
and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete
the initial business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate an initial
business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including
the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised
by the holders on a cashless basis.
A
provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
Unlike
most blank check companies, if
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(i)
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we
issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share;
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(ii)
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the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of our initial business combination on the date of the consummation of our initial business combination (net of
redemptions), and
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(iii)
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the
Market Value is below $9.20 per share,
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then the exercise price of the warrants will be adjusted to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes
Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other
applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance
costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly
after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and,
if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard,
significant resources and management oversight may be required. As a result, management’s attention may be diverted from
other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in
the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued
by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statements may also be required to be prepared in accordance with GAAP in connection with our current
report on Form 8-K announcing the closing our initial business combination within four business days following such closing. 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.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together
these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our securities.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain
other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s
counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain
other actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action
(A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to
the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court
of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum
other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person
or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and
consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may
limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such
claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate
of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such
action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision is applicable to the fullest extent
permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction
over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As
a result, the exclusive forum provision does not apply to suits brought to enforce any duty or liability created by the Exchange
Act or any other claim for which the federal courts have exclusive jurisdiction.
Unless
we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall
be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Risks
Related to the Otonomo Business Combination
The
Company may not have sufficient funds to consummate the Otonomo Business Combination.
As
of December 31, 2020, the Company had approximately $1,188,000 available to it outside the Trust Account to fund its working capital
requirements. If the Company is required to seek additional capital, it would need to borrow funds from the Sponsor, its management
team or other third parties to operate or it may be forced to liquidate. None of such persons is under any obligation to advance
funds to the Company in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or
from funds released to the Company upon completion of the Otonomo Business Combination. If the Company is unable to consummate
the Otonomo Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations
and liquidate the Trust Account. Consequently, the Company’s public stockholders may receive less than $10 per share and
their warrants will expire worthless.
If
the Company’s stockholders fail to properly demand redemption rights, they will not be entitled to convert their common
stock into a pro rata portion of the Trust Account.
Company
stockholders holding public shares may demand that the Company convert their public shares into a pro rata portion of the Trust
Account, calculated as of two (2) business days prior to the special meeting. To demand redemption rights, Company stockholders
must deliver their shares (either physically or electronically) to the Company’s transfer agent no later than two (2) business
days prior to the special meeting. Any stockholder who fails to properly demand redemption rights by delivering his, her or its
shares will not be entitled to convert his, her or its shares into a pro rata portion of the Trust Account.
The
Otonomo Business Combination remains subject to conditions that the Company cannot control and if such conditions are not satisfied
or waived, the Otonomo Business Combination may not be consummated.
The
Otonomo Business Combination is subject to a number of conditions, including the condition that the Company have at least $5,000,001
of net tangible assets (as determined in accordance with Rule 3a51-5(g)(1) of the Exchange Act) either immediately prior to or
upon consummation of the Otonomo Business Combination, that there is no legal prohibition against consummation of the Otonomo
Business Combination, that the Otonomo ordinary shares be approved for listing on Nasdaq subject only to official notice of issuance
thereof and the requirement to have a sufficient number of round lot holders, receipt of securityholder approvals, continued effectiveness
of the Otonomo Registration Statement, the truth and accuracy of the Company’s and Otonomo’s representations and warranties
made in the Business Combination Agreement, the non-termination of the Business Combination Agreement and consummation of certain
ancillary agreements. There are no assurances that all conditions to the Otonomo Business Combination will be satisfied or that
the conditions will be satisfied in the time frame expected.
If
the conditions to the Otonomo Business Combination are not met (and are not waived, to the extent waivable), either the Company
or Otonomo may, subject to the terms and conditions of the Business Combination Agreement, terminate the Business Combination
Agreement.
The
exercise of the Company’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms
of the Otonomo Business Combination may result in a conflict of interest when determining whether such changes to the terms of
the Otonomo Business Combination or waivers of conditions are appropriate and in the Company’s stockholders’ best
interest.
In
the period leading up to the closing of the Otonomo Business Combination, events may occur that, pursuant to the Business Combination
Agreement, would require the Company to agree to amend the Business Combination Agreement, to consent to certain actions taken
by Otonomo or to waive rights that the Company is entitled to under the Business Combination Agreement. Waivers may arise because
of changes in the course of Otonomo’s business, a request by Otonomo to undertake actions that would otherwise be prohibited
by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect
on Otonomo’s business and would entitle the Company to terminate the Business Combination Agreement. In any of such circumstances,
it would be at the Company’s discretion, acting through its board of directors, to grant its consent or waive those rights.
The existence of the financial and personal interests of the directors and officers described in the following risk factors may
result in a conflict of interest on the part of one or more of the directors or officers between what he or they may believe is
best for the Company and what he or they may believe is best for himself or themselves in determining whether or not to take the
requested action.
Future
resales of the Otonomo ordinary shares issued in connection with the Otonomo Business Combination may cause the market price of
the Otonomo to drop significantly, even if Otonomo’s business is doing well.
Certain
equityholders of Otonomo and certain equityholders of the Company entered into the Confidentiality and Lockup Agreement with Otonomo.
Pursuant to the Confidentiality and Lockup Agreement, such Otonomo equityholders the Company equityholders have agreed that, during
the Lockup Period, they will not, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,
make any short sale or otherwise dispose of any shares, or any options or warrants to purchase any share or any securities convertible
into, exchangeable for or that represent the right to receive shares, or any interest in any of the foregoing, whether now owned
or hereinafter acquired, owned directly by such shareholder (including holding as a custodian) or with respect to which such shareholder
has beneficial ownership within the rules and regulations of the SEC (in each case, subject to certain exceptions set forth in
the Confidentiality and Lockup Agreement).
Further,
concurrently with the execution of the Business Combination Agreement, Otonomo, certain equityholders of Otonomo and certain equityholders
of the Company entered into the Registration Rights Agreement, providing such stockholders with customary demand registration
rights and piggy-back registration rights with respect to registration statements filed by Otonomo after the closing.
Upon
expiration of the applicable Lockup Period and upon the effectiveness of any registration statement Otonomo files pursuant to
the above-referenced Registration Rights Agreement, in a registered offering of securities pursuant to the Securities Act or otherwise
in accordance with Rule 144 under the Securities Act, the Otonomo shareholders may sell large amounts of Otonomo ordinary shares
and warrants in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility
in the trading price of the Otonomo ordinary shares or the Otonomo warrants or putting significant downward pressure on the price
of the Otonomo ordinary shares or warrants. Additionally, downward pressure on the market price of the Otonomo ordinary shares
or Otonomo warrants likely will result from sales of Otonomo ordinary shares issued in connection with the exercise of warrants.
Further, sales of Otonomo ordinary shares or warrants upon expiration of the applicable Lockup Period could encourage short sales
by market participants. Generally, short selling means selling a security, contract or commodity not owned by the seller. The
seller is committed to eventually purchase the financial instrument previously sold. Short sales are used to capitalize on an
expected decline in the security’s price. Short sales of Otonomo ordinary shares or warrants could have a tendency to depress
the price of the Otonomo ordinary shares or the Otonomo warrants, respectively, which could increase the potential for short sales.
Additionally,
through the Subscription Agreements and the Share Purchase Agreement, Otonomo has agreed with the PIPE Investors and the Secondary
PIPE Investors to register the PIPE Shares and the Secondary PIPE Shares on a resale registration statement following the closing
of the Transactions. These shares will be freely tradable without restriction or further registration under the Securities Act,
unless the shares are held by any of the Company’s “affiliates” as such term is defined in Rule 144 under the
Securities Act. This additional liquidity in the market for Otonomo ordinary shares may lead to downward pressure on the market
price of the Otonomo ordinary shares.
We
cannot predict the size of future issuances of Otonomo ordinary shares or warrants or the effect, if any, that future issuances
and sales of shares of Otonomo ordinary shares or warrants will have on the market price of the Otonomo ordinary shares or warrants.
Sales of substantial amounts of Otonomo ordinary shares (including those shares issued in connection with the Otonomo Business
Combination), or the perception that such sales could occur, may adversely affect prevailing market prices of Otonomo ordinary
shares or warrants.
The
Company’s board of directors did not obtain a third-party fairness opinion in determining whether or not to proceed with
the Otonomo Business Combination.
The
Company’s board of directors did not obtain a third-party fairness opinion in connection with their determination to approve
the Otonomo Business Combination. In analyzing the Otonomo Business Combination, the Company’s board of directors and management
conducted due diligence on Otonomo and researched the industry in which Otonomo operates and concluded that the Otonomo Business
Combination was fair to and in the best interest of the Company and its stockholders. Accordingly, investors will be relying solely
on the judgment of the Company’s board of directors and management in valuing Otonomo’s business, and the Company’s
board of directors and management may not have properly valued such business. The lack of a third-party fairness opinion may lead
an increased number of stockholders to vote against the proposed Otonomo Business Combination or demand redemption of their shares
for cash, which could potentially impact the Company’s ability to consummate the Otonomo Business Combination or adversely
affect Otonomo’s liquidity following the consummation of the Otonomo Business Combination.
The
Company and Otonomo will incur significant transaction and transition costs in connection with the Otonomo Business Combination.
The
Company and Otonomo have both incurred and expect to incur significant, non-recurring costs in connection with consummating the
Transactions and operating as a public company following the consummation of the Transactions. Otonomo may also incur additional
costs to retain key employees. All expenses incurred in connection with the Otonomo Business Combination, including all legal,
accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring
such fees, expenses and costs or paid by Otonomo following the Closing.
Subsequent
to the completion of the Otonomo Business Combination, the combined company may be required to take write-downs or write-offs,
restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results
of operations and the combined company’s ordinary share price, which could cause you to lose some or all of your investment.
Although
the Company has conducted extensive due diligence on Otonomo, the Company cannot assure you that this diligence will surface all
material issues that may be present in Otonomo’s business, that it would be possible to uncover all material issues through
a customary amount of due diligence, or that factors outside of Otonomo’s business and outside of its control will not later
arise. As a result of these factors, the combined company may be forced to later write-down or write-off assets, restructure its
operations, or incur impairment or other charges that could result in its reporting losses. Even if the Company’s due diligence
successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent
with the Company’s preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate
impact on the combined company’s liquidity, the fact that the combined company reports charges of this nature could contribute
to negative market perceptions of the combined company or its securities. In addition, charges of this nature may cause the combined
company to violate net worth or other covenants to which the combined company may be subject as a result of assuming pre-existing
debt held by Otonomo’s business or by virtue of the combined company obtaining post-combination debt financing. Accordingly,
any stockholders who choose to remain shareholders following the Otonomo Business Combination could suffer a reduction in the
value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
The
Otonomo securities to be received by the Company’s securityholders as a result of the Otonomo Business Combination will
have different rights from Company securities.
Following
completion of the Otonomo Business Combination, the Company’s securityholders will no longer be securityholders of the Company
but will instead be securityholders of Otonomo. There will be important differences between your current rights as a Company securityholder
and your rights as an Otonomo securityholder.
The
Company’s stockholders will have a reduced ownership and voting interest after consummation of the Otonomo Business Combination
and will exercise less influence over management.
After
the completion of the Otonomo Business Combination, the Company’s stockholders will own a smaller percentage of the combined
company than they currently own of the Company. At the Closing, existing Otonomo shareholders would hold approximately 70.5% of
the issued and outstanding Otonomo ordinary shares and current stockholders of the Company (including the Sponsor) would hold
approximately 16.4% of the issued and outstanding Otonomo ordinary shares (assuming no holder of common stock exercises redemption
rights as described in the Otonomo Registration Statement, and based on current estimates of transaction expenses). Consequently,
the Company’s stockholders, as a group, will have reduced ownership and voting power in the combined company compared to
their ownership and voting power in the Company.
Otonomo
may issue additional Otonomo ordinary shares or other equity securities without seeking approval of the Otonomo shareholders,
which would dilute your ownership interests and may depress the market price of the Otonomo ordinary shares.
Upon
consummation of the Otonomo Business Combination, Otonomo will have warrants outstanding to purchase up to an aggregate of 13,825,000
Otonomo ordinary shares. Further, Otonomo may choose to seek third party financing to provide additional working capital for the
Otonomo business, in which event Otonomo may issue additional equity securities. Following the consummation of the Otonomo Business
Combination, Otonomo may also issue additional Otonomo ordinary shares or other equity securities of equal or senior rank in the
future for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding warrants or
repayment of outstanding indebtedness, without shareholder approval, in a number of circumstances.
The
issuance of additional Otonomo ordinary shares or other equity securities of equal or senior rank would have the following effects:
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Otonomo’s
existing shareholders’ proportionate ownership interest in Otonomo will decrease;
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the
amount of cash available per share, including for payment of dividends in the future,
may decrease;
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the
relative voting strength of each previously outstanding Otonomo ordinary share may be
diminished; and
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the
market price of the Otonomo ordinary shares may decline.
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Even
if we consummate the Otonomo Business Combination, there is no guarantee that the Otonomo warrants will ever be in the money,
and they may expire worthless and the terms of the Company’s warrants may be amended.
The
exercise price for the Otonomo warrants will be $11.50 per ordinary share. Upon consummation of the Otonomo Business Combination,
each Company warrant will become one Otonomo warrant, and the exercise price and number of shares issuable upon exercise of such
warrants may change if the Stock Split is not effected or does not result in a price per Otonomo ordinary share of $10.00. There
is no guarantee that the Otonomo warrants, following the Otonomo Business Combination, will ever be in the money prior to their
expiration, and as such, the warrants may expire worthless.
The
Company’s current directors’ and executive officers’ affiliates own shares of common stock and private placement
warrants that will be worthless if the Otonomo Business Combination is not approved. Such interests may have influenced their
decision to approve the Otonomo Business Combination.
If
the Otonomo Business Combination or another business combination is not consummated by March 17, 2022 (or such later date as may
be approved by the Company’s stockholders in an amendment to the Company Charter), the Company will cease all operations
except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of
its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the 4,312,000 shares of Class
B Stock held by the Sponsor, which is affiliated with certain of the Company’s directors and officers and other certain
officers, that were acquired for an aggregate purchase price of $25,000 prior to the the IPO of the Company, would be worthless
because the holders are not entitled to participate in any redemption or distribution with respect to such shares. Further, the
Sponsor purchased an aggregate of 5,200,000 private placement warrants at a price of $1.00 per warrant, simultaneously with the
consummation of the IPO and the subsequent exercise of the underwriter’s overallotment option, for an aggregate purchase
price of $5,200,000. The Class B Stock and the private placement warrants will become worthless if the Company does not consummate
a business combination by March 17, 2022 (or such later date as may be approved by the Company’s stockholders in an amendment
to the Company Charter). On the other hand, if the Otonomo Business Combination is consummated, each outstanding share of Class
B Stock will convert into one Otonomo ordinary share, subject to adjustment described herein, at the closing and each outstanding
Company warrant will become an Otonomo warrant.
These
financial interests may have influenced the decision of the Company’s directors and officers to approve the Otonomo Business
Combination and to continue to pursue the Otonomo Business Combination.
The
Sponsor, an affiliate of current officers and directors of the Company, is liable to ensure that proceeds of the Trust Account
are not reduced by vendor claims in the event the Otonomo Business Combination is not consummated. Such liability may have influenced
the Company’s board of directors’ decision to pursue the Otonomo Business Combination and the Company’s board
of directors’ decision to approve it.
If
the Otonomo Business Combination or another business combination is not consummated by the Company on or before March 17, 2022,
the Sponsor, an affiliate of current officers and directors of the Company, will be liable to ensure that the proceeds in the
Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by
the Company for services rendered or contracted for or for products sold to the Company, but only if such a vendor or target business
has not executed a waiver agreement. If the Company consummates a business combination, on the other hand, the Company will be
liable for all such claims. The Company has no reason to believe that the Sponsor will not be able to fulfill its indemnity obligations
to the Company.
These
obligations of the Sponsor may have influenced the Company’s board of directors’ decision to pursue the Otonomo Business
Combination with Otonomo or the Company’s board of directors’ decision to approve the Otonomo Business Combination.
The
Company’s 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 the Company’s public stockholders in the event a
business combination is not consummated.
If
proceeds in the Trust Account are reduced below $10.00 per public share 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, the Company’s independent
directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While the
Company currently expects that its independent directors would take legal action on the Company’s behalf against the Sponsor
to enforce the Sponsor’s indemnification obligations, it is possible that the Company’s independent directors in exercising
their business judgment may choose not to do so in any particular instance. If the Company’s independent directors choose
not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to the Company’s
public stockholders may be reduced below $10.00 per share.
Activities
taken by existing Company stockholders to increase the likelihood of approval of the Business Combination Proposal and other proposals
could have a depressive effect on the common stock.
At
any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding
the Company or its securities, the Company, the Sponsor, the Company’s officers and directors, Otonomo, the Otonomo officers
and directors and/or their respective affiliates may purchase common stock from institutional and other investors who vote, or
indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such
investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to
acquire shares of common stock or vote their shares of common stock in favor of the Business Combination Proposal. The purpose
of such purchases and other transactions would be to increase the likelihood of approval of the Business Combination Proposal
by the holders of a majority of the outstanding shares of common stock and ensure that the Company has in excess of $5,000,001
of net assets to consummate the Otonomo Business Combination where it appears that such requirement would otherwise not be met.
While the exact nature of any such incentives has not been determined as of the date of annual report, they might include, without
limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting
of put options and the transfer to such investors or holders of shares owned by the Sponsor for nominal value. Entering into any
such arrangements may have a depressive effect on the common stock. For example, as a result of these arrangements, an investor
or holder may have the ability to effectively purchase shares of common stock at a price lower than market and may therefore be
more likely to sell the common stock he owns, either prior to or immediately after the special meeting.
In
addition, if such purchases are made, the public “float” of the Otonomo ordinary shares following the Otonomo Business
Combination and the number of beneficial holders of Otonomo securities may be reduced, possibly making it difficult to obtain
or maintain the quotation, listing or trading of Otonomo securities on Nasdaq or another national securities exchange or reducing
the liquidity of the trading market for the Otonomo ordinary shares.
The
Otonomo Business Combination may be completed even though material adverse effects may result from the announcement of the Otonomo
Business Combination, industry-wide changes and other causes.
In
general, either the Company or Otonomo may refuse to complete the Otonomo Business Combination if there is a material adverse
effect affecting the other party between the signing date of the Business Combination Agreement and the planned closing. However,
certain types of changes do not permit either party to refuse to consummate the Otonomo Business Combination, even if such change
could be said to have a material adverse effect on Otonomo or the Company, including the following events (except, in certain
cases where the change has a disproportionate effect on a party):
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changes
generally affecting the economy and the financial or securities markets, including the
COVID-19 pandemic;
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the
outbreak or escalation of war or any act of terrorism, civil unrest or natural disasters;
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changes
(including changes in law) or general conditions in the industry in which the party operates;
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changes
in GAAP, or the authoritative interpretation of GAAP; or
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changes
attributable to the public announcement or pendency of the Transactions or the execution
or performance of the Business Combination Agreement.
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Furthermore,
the Company or Otonomo may waive the occurrence of a material adverse effect affecting the other party. If a material adverse
effect occurs and the parties still consummate the Otonomo Business Combination, the market trading price of the Otonomo ordinary
shares and Otonomo warrants may suffer.
Delays
in completing the Otonomo Business Combination may substantially reduce the expected benefits of the Otonomo Business Combination.
Satisfying
the conditions to, and completion of, the Otonomo Business Combination may take longer than, and could cost more than, the Company
expects. Any delay in completing or any additional conditions imposed in order to complete the Otonomo Business Combination may
materially adversely affect the benefits that the Company expects to achieve from the Otonomo Business Combination.
The
Company and Otonomo have no history operating as a combined company. The unaudited pro forma condensed combined financial information
may not be an indication of Otonomo’s financial condition or results of operations following the Otonomo Business Combination,
and accordingly, you have limited financial information on which to evaluate Otonomo and your investment decision.
If
the Company is unable to complete the Otonomo Business Combination or another business combination by March 17, 2022 (or such
other date as approved by Company stockholders through approval of an amendment to the Company Charter), the Company will cease
all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval
of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, the Company public stockholders
may only receive $10 per share (or less than such amount in certain circumstances) and the Company warrants will expire worthless.
If
the Company is unable to complete the Otonomo Business Combination or another business combination within the required time period,
the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding Company public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case,
Company public stockholders may only receive $10 per share, and Company warrants will expire worthless. In certain circumstances,
Company public stockholders may receive less than $10 per share on the redemption of their shares.
If
the Otonomo Business Combination is not completed, potential target businesses may have leverage over the Company in negotiating
a business combination, the Company’s ability to conduct due diligence on a business combination as it approaches its dissolution
deadline may decrease, and it may have insufficient working capital to continue to pursue potential target businesses, each of
which could undermine its ability to complete a business combination on terms that would produce value for the Company stockholders.
Any
potential target business with which the Company enters into negotiations concerning an initial business combination will be aware
that, unless the Company amends its existing charter to extend its life and amend certain other agreements it has entered into,
then the Company must complete its initial business combination by March 17, 2022. Consequently, if the Company is unable to complete
this Business Combination, a potential target business may obtain leverage over it in negotiating an initial business combination,
knowing that if the Company does not complete its initial business combination with that particular target business, it may be
unable to complete its initial business combination with any target business. This risk will increase as the Company gets closer
to the timeframe described above. In addition, the Company may have limited time to conduct due diligence and may enter into its
initial business combination on terms that it would have rejected upon a more comprehensive investigation. Additionally, the Company
may have insufficient working capital to continue efforts to pursue a business combination.
In
the event of liquidation by the Company, third parties may bring claims against the Company and, as a result, the proceeds held
in the Trust Account could be reduced and the per-share liquidation price received by stockholders could be less than $10 per
share.
Under
the terms of the Company Charter, the Company must complete the Otonomo Business Combination or another business combination by
March 17, 2022 (unless such date is extended by the Company’s stockholders) or the Company must cease all operations except
for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders
and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against the Company. Although
the Company has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the
prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of
any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they or other vendors who did
not execute such waivers will not seek recourse against the Trust Account notwithstanding such agreements. Furthermore, there
is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account
could be subject to claims which could take priority over those of the Company’s public stockholders. If the Company is
unable to complete a business combination within the required time period, the Sponsor has agreed that it will be liable to the
Company if and to the extent any claims by a vendor for services rendered or products sold to it, or a prospective target business
with which it has discussed entering into a transaction agreement, reduces the amount of funds in the Trust Account to below $10.00
per public share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust
Account and except as to any claims under the Company’s indemnity of the underwriter of the initial public offering against
certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed
to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party
claims. Furthermore, the Sponsor will not be liable to public stockholders and instead will only have liability to the Company.
The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and,
therefore, the Sponsor may not be able to satisfy those obligations. The Company has not asked the Sponsor to reserve for such
eventuality. Therefore, the per-share distribution from the Trust Account in such a situation may be less than the approximately
$10.00 estimated to be in the Trust Account as of December 31, 2020.
Additionally,
if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed,
or if the Company otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be
subject to applicable bankruptcy law and may be included in its bankruptcy
The
Company’s stockholders may be held liable for claims by third parties against the Company to the extent of distributions
received by them.
If
the Company is unable to complete the Otonomo Business Combination or another business combination within the required time period,
the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding the Company public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The Company cannot
assure you that it will properly assess all claims that may be potentially brought against the Company. As a result, the Company’s
stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any
liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, the Company
cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by the Company.
Additionally,
if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed,
any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a
“preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by the Company’s stockholders. Because the Company intends to distribute the proceeds held in the Trust
Account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may
be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to
or distributions from its assets. Furthermore, the Company’s board of directors may be viewed as having breached their fiduciary
duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the Company to claims of punitive
damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors. The Company cannot
assure you that claims will not be brought against it for these reasons.
The
Company may be a target of securities class action and derivative lawsuits which could result in substantial costs and may delay
or prevent the Otonomo Business Combination from being completed.
Securities
class action lawsuits and derivative lawsuits are often brought against companies that have entered into business combination
agreements or similar agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial
costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative
impact on the Company’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction
prohibiting consummation of the Transactions, then that injunction may delay or prevent the Transactions from being completed.
Currently, the Company is not aware of any securities class action lawsuits or derivative lawsuits being filed in connection with
the Transactions.
The
Sponsor has agreed to vote in favor of the Otonomo Business Combination, regardless of how the Company’s public stockholders
vote.
The
Sponsor owns and is entitled to vote an aggregate of approximately 20% on an as-converted basis of the outstanding common stock.
These holders have agreed to vote their shares in favor of the Business Combination Proposal. These holders have also indicated
that they intend to vote their shares in favor of all other proposals being presented at the meeting. Accordingly, it is more
likely that the necessary stockholder approval for the Business Combination Proposal and the other proposals will be received
than would be the case if these holders agreed to vote their founder shares in accordance with the majority of the votes cast
by the Company’s public stockholders.
The
ongoing COVID-19 pandemic may adversely affect the Company’s and Otonomo’s ability to consummate the Transactions.
The
COVID-19 pandemic has resulted in governmental authorities worldwide implementing numerous measures to contain the virus, including
travel restrictions, quarantines, shelter-in-place orders and business limitations and shutdowns. More generally, the pandemic
raises the possibility of an extended global economic downturn and has caused volatility in financial markets. The pandemic may
also amplify many of the other risks described in this annual report.
The
Company and Otonomo may be unable to complete the Transactions if continued concerns relating to COVID-19 restrict travel and
limit the ability to have meetings with potential investors or the Otonomo personnel. The extent to which COVID-19 impacts the
Company’s and Otonomo’s ability to consummate the Transactions will depend on future developments, which are highly
uncertain and cannot be predicted, including new information that 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 extended period of time, the Company’s and Otonomo’s ability to consummate the Transactions may be
materially adversely affected.
The
Otonomo Business Combination may not qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”) or may be taxable under Section 367(a) of the Code, potentially causing U.S. Holders of common
stock and/or Company warrants to recognize gain or loss for U.S. federal income tax purposes.
It
is intended that the Otonomo Business Combination (i) qualify as a “reorganization” within the meaning of Section
368(a) of the Code, and (ii) does not result in gain being recognized by U.S. Holders of common stock and Company warrants immediately
prior to the Effective Time under Section 367(a) of the Code (other than with respect to any such holder that would own, actually
or constructively, 5% or more (by vote or value) of the outstanding Otonomo ordinary shares immediately after the Otonomo Business
Combination that fails to enter into a valid “gain recognition agreement” with respect to the transferred common stock)
(collectively, the “Intended Tax Treatment”). The parties intend to report the Otonomo Business Combination in a manner
consistent with the Intended Tax Treatment. However, there are significant factual and legal uncertainties as to whether the Otonomo
Business Combination will qualify for the Intended Tax Treatment. For example, under Section 368(a) of the Code, the acquiring
corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of
the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business
assets in a business. However, there is an absence of guidance directly on point as to how the provisions of Section 368(a) of
the Code apply in the case of an acquisition of a corporation with only investment-type assets, such as the Company. Moreover,
Section 367(a) of the Code and the applicable Treasury regulations promulgated thereunder provide that where a U.S. Holder exchanges
stock in a U.S. corporation for stock in a non-U.S. corporation in a transaction that would otherwise qualify as a reorganization
within the meaning of Section 368(a) of the Code, the U.S. Holder is required to recognize gain, but not loss, realized on such
exchange unless certain requirements are met. There are significant factual and legal uncertainties concerning the determination
of certain of these requirements. Moreover, the closing of the Otonomo Business Combination is not conditioned upon the receipt
of an opinion of counsel that the Otonomo Business Combination will qualify for the Intended Tax Treatment, and neither the Company
nor Otonomo intends to request a ruling from the Internal Revenue Service (the “IRS”) regarding the U.S. federal income
tax treatment of the Otonomo Business Combination. Accordingly, no assurance can be given that the IRS will not challenge the
Intended Tax Treatment or that a court will not sustain a challenge by the IRS.
If,
as of the Closing Date, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder of common stock and/or Company
warrants may recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the Closing
Date) of Otonomo ordinary shares and/or Otonomo warrants received in the Otonomo Business Combination, over such U.S. Holder’s
aggregate tax basis in the corresponding common stock and/or Company warrants surrendered by such U.S. Holder in the Otonomo Business
Combination.
If,
as of the Closing Date, the Otonomo Business Combination qualifies as a “reorganization” within the meaning of Section
368(a) of the Code, but any requirement for Section 367(a) of the Code is not satisfied, then a U.S. Holder of common stock would
recognize gain (but not loss) in an amount equal to the excess, if any, of the fair market value as of the Closing Date of Otonomo
ordinary shares (and, if U.S. Holder’s Company warrants convert to Otonomo warrants, the fair market value of the Otonomo
warrants) received in the Otonomo Business Combination, over such U.S. Holder’s aggregate tax basis in the common stock
(and Company warrants, if any) surrendered by such U.S. Holder in the Otonomo Business Combination.
U.S.
Holders of common stock and/or Company warrants are urged to consult their own tax advisors to determine the tax consequences
if the Otonomo Business Combination does not qualify for the Intended Tax Treatment.
The
IRS may not agree that Otonomo should be treated as a non-U.S. corporation for U.S. federal income tax purposes.
Under
current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income
tax purposes if it is created or organized in the United States or under the law of the United States or of any State. Accordingly,
under generally applicable U.S. federal income tax rules,
Otonomo,
which is incorporated and tax resident in Israel, would generally be classified as a non-U.S. corporation for U.S. federal income
tax purposes. Section 7874 of the Code and the Treasury regulations promulgated thereunder, however, contain specific rules that
may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. If it were determined
that Otonomo is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code and the Treasury
regulations promulgated thereunder, Otonomo would be liable for U.S. federal income tax on its income in the same manner as any
other U.S. corporation and certain distributions made by Otonomo to Non-U.S. Holders of Otonomo may be subject to U.S. withholding
tax.
Based
on the terms of the Otonomo Business Combination and certain factual assumptions, Otonomo does not currently expect to be treated
as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code after the Otonomo Business Combination.
However, the application of Section 7874 of the Code is complex, subject to detailed regulations (the application of which is
uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations with possible retroactive effect)
and subject to certain factual uncertainties, some of which must be finally determined after the completion of the Otonomo Business
Combination. Accordingly, there can be no assurance that the IRS will not challenge the status of Otonomo as a non-U.S. corporation
for U.S. federal income tax purposes under Section 7874 of the Code or that such challenge would not be sustained by a court.
If
the IRS were to successfully challenge under Section 7874 of the Code Otonomo’s status as a non-U.S. corporation for U.S.
federal income tax purposes, Otonomo and certain Otonomo shareholders may be subject to significant adverse tax consequences,
including a higher effective corporate income tax rate on Otonomo and future withholding taxes on certain Otonomo shareholders,
depending on the application of any applicable income tax treaty that may apply to reduce such withholding taxes.
You
should consult your own advisors regarding the application of Section 7874 of the Code to the Otonomo Business Combination and
the tax consequences if the classification of Otonomo as a non-U.S. corporation is not respected.
General Risk Factors
We
are an early stage 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 an early stage company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
We may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will
never generate any operating revenues.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination and results of operations.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to a variety of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to any special considerations or risks associated with companies operating in an international setting, including any
of the following:
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higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and
legal requirements of overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles and challenges in collecting accounts receivable;
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tax
issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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cultural
and language differences;
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employment
regulations;
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changes
in industry, regulatory or environmental standards within the jurisdictions where we operate;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States; and
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government
appropriations of assets.
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We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may
adversely impact our results of operations and financial condition.
We
are an “emerging growth company” and “smaller reporting company” within the meaning of the Securities
Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller
reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our
performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have
access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the
following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these
exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading
prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it
has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of
using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues
exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds
$700 million as of the prior June 30. 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.
There
are risks related to the software industry to which we may be subject.
Business
combinations with companies with operations in the software industry entail special considerations and risks. If we are successful
in completing a business combination with a target business with operations in the software industry, we will be subject to, and
possibly adversely affected by, the following risks, including but not limited to:
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if
we do not develop successful new products or improve existing ones, our business will suffer;
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we
may invest in new lines of business that could fail to attract or retain users or generate revenue;
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we
will face significant competition and if we are not able to maintain or improve our market share, our business could suffer;
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disruption
or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access our products
and services, may cause our users, advertisers, and partners to cut back on or stop using our products and services altogether,
which could seriously harm our business;
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mobile
malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm our
business and reputation;
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if
we are unable to successfully grow our user base and further monetize our products, our business will suffer;
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if
we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and
our business may be seriously harmed;
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we
may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs or
require us to change our business practices in a way that could seriously harm our business; and
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components
used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render
our devices inoperable.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses are not limited to the software industry. Accordingly, if we acquire a target business in another
industry, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry in
which we operate or target business which we acquire, none of which can be presently ascertained.