Item
1. Business.
Introduction
We
are a blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “business combination”).
While we may pursue an initial business combination target in any industry or geographic region, we intend to focus on high growth
technology and tech-enabled businesses. We have neither engaged in any operations nor generated any revenue to date. Based
on our business activities, the Company is a “shell company” as defined under the Exchange Act of 1934 (the “Exchange
Act”) because we have no operations and nominal assets consisting almost entirely of cash.
On
November 27, 2020, we consummated our initial public offering (the “initial public offering”) of 17,500,000 units
(the “units”). Each unit consists of one share of Class A common stock and one-half of one redeemable warrant, with
each whole warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per share. The units
were sold at a price of $10.00 per unit, generating gross proceeds of $175 million. In connection with the initial public offering,
the underwriters were granted an option to purchase up to an additional 2,625,000 units to cover over-allotments, if any. On December
18, 2020, the underwriters exercised the over-allotment option and purchased an additional 2,625,000 units, generating additional
gross proceeds of $26,250,000.
Simultaneously
with the consummation of the initial public offering, we completed the private sale (the “private placement”) of an
aggregate of 5,500,000 warrants (the “private placement warrants”) to 10X Capital SPAC Sponsor I LLC (the “Sponsor”)
at a purchase price of $1.00 per warrant, generating gross proceeds of $5,500,000.
Prior
to the consummation of the initial public offering, on August 10, 2020, we issued an aggregate of 6,325,000 shares (the “founder
shares”) of our Class B common stock to our Sponsor for an aggregate purchase price of $25,000 in cash. On November 16,
2020, our Sponsor forfeited an aggregate of 1,293,750 founder shares to us for no consideration, resulting in our Sponsor holding
an aggregate of 5,031,250 founder shares.
A
total of $201,250,000, comprised of $197,750,000 of the proceeds from the initial public offering and the closing of the over-allotment
option (which amount includes $7,568,750 of the underwriters’ deferred discount) and $3,500,000 of the proceeds of the sale
of the private placement warrants, was placed in a U.S.-based trust account (the “trust account”) at J.P. Morgan Chase
Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee.
The
funds held in the trust account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of
the Investment Company Act of 1940, as amended (the “Investment Company Act”), 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 until the earlier of: (i) the completion of an 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, or (iii) the redemption of our public shares if we are unable to complete an initial business combination
by May 27, 2022,
As
of December 31, 2020, there was $201,251,614 in investments and cash held in the trust account, which includes interest income
available to us for franchise and income tax obligations of approximately $1,614 and $1,462,570 of cash held outside the trust
account. As of December 31, 2020, we have not withdrawn any interest earned from the trust account to pay taxes.
Effecting
Our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. All activity through
December 31, 2020 relates to the Company’s formation and the initial public offering. The Company will not generate any
operating revenues until after the completion of its initial business combination, at the earliest. The Company will generate
nonoperating income in the form of interest income from the proceeds derived from the initial public offering.
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.
Selection
of a target business and structuring of our initial business combination
While
we may pursue an initial business combination target in any industry or geographic region, we intend to focus on high growth technology
and tech-enabled businesses domestically and abroad in the consumer internet, ecommerce, software, healthcare and financial services
industries, as well as other industries that are being disrupted by advances in technology and on technology paradigms including
artificial intelligence (“AI”), automation, data science, ecommerce and Software-as-a-Service (“SaaS”).
Our amended and restated certificate of incorporation (as amended on November 24, 2020, our “amended and restated certificate
of incorporation”) prohibits us from effectuating a business combination with another blank check company or similar company
with nominal operations.
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.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority (“FINRA”)
or a valuation or appraisal from an independent accounting firm 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 the target’s assets or prospects.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders, or for other reasons,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even
if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to
the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account
for purposes of Nasdaq’s 80% of net assets test described above. If the business combination involves more than one target
business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
In
evaluating prospective business combinations, we expect to conduct a due diligence review that may encompass, among other things,
meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspections of facilities,
as well as reviewing financial and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of, and negotiation with, a prospective target business with which our initial business combination
is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business
combination.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our Sponsor or our officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our Sponsor,
our officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment
banking firm that is a member of FINRA or an independent accounting firm that our initial business combination is fair to our
Company from a financial point of view.
Redemption
rights for holders of public shares upon consummation of the initial business combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided
by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
is approximately $10.00 per public share as of December 31, 2020. The per-share amount we will distribute to investors who properly
redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our Sponsor,
our 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 shares of Class A common stock underlying the private placement warrants (the “private
placement shares”) and any public shares held by them in connection with the completion of our initial business combination.
Conduct
of redemptions pursuant to tender offer rules
If
we conduct redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”),
we will, pursuant to our amended and restated certificate of incorporation: (a) conduct the redemptions pursuant to Rule 13e-4
and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and (b) 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.
Submission
of our initial business combination to a stockholder vote
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 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 are voted in favor of the initial business combination. In such case, our initial stockholders have agreed to vote
their founder shares, private placement shares and any public shares purchased, in favor of 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.
In addition, our initial stockholders have agreed to waive their redemption rights with respect to their founder shares, private
placement shares and any public shares they may hold in connection with the consummation of the initial business combination.
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, executive 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 business combination. There is no limit on the number of shares
our initial stockholders, directors, advisors or their affiliates may purchase in such transactions, subject to compliance with
applicable laws 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. None of the funds held in the trust account will be
used to purchase shares or public warrants in such transactions. Such persons will be subject to restrictions in making 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 Securities Exchange Act of 1934, as amended, or 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. We expect 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.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the initial business combination or (ii) to satisfy a closing condition in
an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our 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 warrant holders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such
purchases are made, the public “float” of our shares of Class A common stock or public 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.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing redemption rights, 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 redeeming its shares with respect to more than an aggregate of 15% of the shares sold in the 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
redeem their shares 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 against a business combination
if such holder’s shares are not purchased by us, our Sponsor 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, 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 a business combination with a target
that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have 18 months from the closing of our initial public
offering, or until May 27, 2022, to complete our initial business combination. If we are unable to complete our initial business
combination by May 27, 2022, 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
(which interest is net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. 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 by May 27, 2022.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from
other entities having a business objective similar to ours, including other special purpose acquisition companies, private equity
groups and leveraged buyout funds public companies, and operating businesses seeking strategic acquisitions. Many of these entities
are well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire
larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage
in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders
who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding
warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either
of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have four (4) officers: Hans Thomas, David Weisburd, Guhan Kandasamy and Oliver Wriedt. These individuals are not obligated
to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary
to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period
will vary based on whether a target business has been selected for our initial business combination and the stage of the initial
business combination process we are in. We do not intend to have any full-time employees prior to the completion of our initial
business combination.
Recent
Developments
On
February 3, 2021, we entered into a Merger Agreement with REE Automotive Ltd., a company organized under the laws of Israel (“REE”)
and Spark Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of REE (“Merger Sub”), which
provides for, among other things, the merger (the “Merger”) of Merger Sub with and into the Company, with the Company
surviving as a wholly owned subsidiary of REE (the Merger and the other transactions contemplated by the Merger Agreement, the
“Business Combination”).
Immediately
prior to the effective time of the Business Combination (the “Effective Time”), (i) each preferred share, par value
NIS 0.01 each, of REE (each, a “REE Preferred Share”) will be converted into ordinary shares, par value NIS 0.01 each,
of REE (each, a “REE Class A Ordinary Share”) in accordance with REE’s organizational documents and (ii) immediately
following such conversion but prior to the Effective Time, REE will effect a stock split of each REE Class A Ordinary Share into
such number of REE Class A Ordinary Shares calculated in accordance with the terms of the Merger Agreement such that each REE
Class A Ordinary Share will have a value of $10.00 per share after giving effect to such stock split (the “Stock Split”
and, together with the conversion of REE Preferred Shares, the “Capital Restructuring”).
The
Stock Split will be calculated based upon an enterprise valuation of REE of $3.0 billion on a cash-free and debt-free basis, estimated
at the time of the signing of the Merger Agreement. No purchase price adjustments will be made in connection with the closing
of the transactions contemplated by the Merger Agreement.
Pursuant
to the Merger Agreement, immediately prior to the Effective Time, (i) each issued and outstanding unit of the Company comprising
one share of Company Common Stock and one-half of one warrant to purchase one share of Company Common Stock, shall be automatically
separated and the holder thereof shall be deemed to hold one share of Company Common Stock and one-half of one Company warrant;
and (ii) each outstanding share of Class B common stock, par value $0.0001 per share, of the Company (“Company Class B Common
Stock”) shall convert into 1.5763975 (the “Class B Share Conversion Ratio”) shares of Company Common Stock.
Immediately thereafter, each outstanding share of Company Common Stock will be converted into the right to receive one newly issued
REE Class A Ordinary Share. Upon conversion of the Company Class B Common Stock into Company Common Stock, the holders of Company
Class B Common Stock shall be entitled to receive a number of additional shares (the “Anti-Dilution Shares”) of Company
Common Stock equal to 25% of the number of shares of Company Common Stock issued to the PIPE Investors. Pursuant to the Letter
Agreement (as defined in the Merger Agreement), the holders of the shares of the Company Class B Common Stock have agreed to waive
their right to receive any Anti-Dilution Shares in excess of 2,900,000 (the “Conversion Ratio Adjustment”), with such
waiver resulting in the Class B Share Conversion Ratio. In addition, up to 1,500,000 of the 2,900,000 Anti-Dilution Shares to
be received upon the conversion of the Company Class B Common Stock will be subject to subsequent forfeiture without consideration
if trading prices of REE Class A Ordinary Shares specified below are not achieved following the Business Combination. The Company’s
outstanding warrants to purchase one share of Company Common Stock shall be converted into the right to receive an equal number
of warrants to purchase one REE Class A Ordinary Share (the “REE Warrants”).
The
Merger Agreement contains customary representations, warranties and covenants by the parties thereto and the closing is subject
to certain conditions as further described in the Merger Agreement.
Available
Information
We
are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required
to disclose certain material events in a Current Report on Form 8-K. The SEC maintains an Internet website that contains reports,
proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s
Internet website is located at www.sec.gov. In addition, the Company will provide copies of these documents without charge upon
request from us in writing at 1 World Trade Center, 85th Floor, New York, New York 10007 or by telephone at (212) 257-0069.
Item
1A. Risk Factors.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Form 10-K, before making a decision to invest in our units. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of your investment.
Risk
Factor Summary
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We
are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
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Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may
complete our initial business combination even though a majority of our public stockholders do not support such a combination.
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Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash.
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If
we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to
vote in favor of such initial business combination, regardless of how our public stockholders vote.
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The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
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The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
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The
requirement that we complete our initial business combination by May 27, 2022 may give potential target businesses leverage over
us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business
combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our
initial business combination on terms that would produce value for our stockholders.
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The
novel coronavirus, or COVID-19, pandemic, including the efforts to mitigate its impact, has and may continue to have a material
adverse effect on our search for a business combination, as well as any target business with which we ultimately consummate a
business combination.
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If
we seek stockholder approval of our initial business combination, our Sponsor, directors, officers, advisors or their affiliates
may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our securities.
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If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for submitting or tendering its shares, such shares may not be redeemed.
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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.
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You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
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Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
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You
will not be entitled to protections normally afforded to investors of many other blank
check companies.
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Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our
redemption of their shares, and our warrants will expire worthless.
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Past
performance by our management team and their affiliates, including investments and transactions in which they have participated
and businesses with which they have been associated, may not be indicative of future performance of an investment in the Company.
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Unlike
some other similarly structured special purpose acquisition companies, our initial stockholders will receive additional shares
of Class A common stock if we issue certain shares to consummate an initial business combination.
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Risks
Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination
Our
stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote,
holders of our founder shares will participate in such vote, which means we may complete our initial business combination even
though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require
stockholder approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock
exchange requirement, the decision as to whether we will seek stockholder approval of a proposed business combination or will
allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require
us to seek stockholder approval. Even if we seek stockholder approval, the holders of our founder shares will participate in the
vote on such approval -- Accordingly, we may complete our initial business combination even if a majority of our public stockholders
do not approve of the business combination we complete.
If
we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to
vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders own 20% of our outstanding common stock. Our initial stockholders and management team also may from time
to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation
provides that, if we seek stockholder approval of an initial business combination, such initial business combination will be approved
if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares. As a result,
in addition to our initial stockholders’ founder shares, we would need 7,546,876, or 37.5%, of the 20,125,000 public shares
sold in the initial public offering to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted). Accordingly, if we seek stockholder approval of our initial
business combination, the agreement by our initial stockholders and management team 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 may be limited to the exercise of
your right to redeem your shares from us for cash.
You
may not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our
board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity
to affect the investment decision regarding our initial business combination may be limited to exercising your redemption rights
within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
stockholders in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a minimum cash requirement for (i) cash consideration
to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions. If too many public stockholders exercise their redemption rights, we would not be able to
meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event
will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make
us unable to satisfy a minimum cash condition as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and,
thus, may be reluctant to enter into a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash
in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve
a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a
larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to
reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party
financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore,
this dilution would increase to the extent that the anti-dilution provision of the Class B common stock results in the issues
of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock at
the time of our initial business combination. In addition, the amount of the deferred underwriting commissions payable to the
representatives of 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 amount held in trust will continue to reflect
our obligation to pay the entire deferred underwriting commissions. The above considerations may limit our ability to complete
the most desirable business combination available to us or optimize our capital structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your shares.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the
open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the trust account. In
either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with your
exercise of redemption rights until we liquidate or you are able to sell your shares in the open market.
The
requirement that we complete our initial business combination by May 27, 2022 may give potential target businesses leverage over
us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business
combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our
initial business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination by May 27, 2022. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete our initial business combination with that particular target business,
we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer
to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial
business combination on terms that we would have rejected upon a more comprehensive investigation.
The
novel coronavirus, or COVID-19, pandemic, including the efforts to mitigate its impact, has and may continue to have a material
adverse effect on our search for a business combination, as well as any target business with which we ultimately consummate a
business combination.
The
COVID-19 pandemic, including efforts to combat it, has and may continue to adversely affect our search for a business combination.
In addition, the outbreak of COVID-19 has resulted in a widespread health crisis that has and may continue to adversely affect
the economies and financial markets worldwide. As such, the business of any potential target business with which we may consummate
a business combination could be materially and adversely affected.
In
response to the pandemic, public health authorities and local, national and international governments have implemented measures
that may directly or indirectly impact our ability to search for and acquire any target business, including measures such as voluntary
or mandatory quarantines, restrictions on travel and orders to limit the activities of non-essential workforce personnel. We may
be unable to complete a business combination if concerns relating to COVID-19 continue to restrict travel, limit the ability to
have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable
to negotiate and consummate a transaction in a timely manner.
Moreover,
the COVID-19 pandemic and the measures implemented to contain it have had, and are expected to continue to have, a significant
negative effect on the travel industry, having led to unprecedented levels of cancellations and limited new travel bookings. According
to the October 2020 issue of the World Tourism Barometer, international tourist arrivals declined 70% in the first eight months
of 2020 as compared with the same period in 2019. According to forecasts published by Statista in October 2020, global revenue
for the travel and tourism industry will be an estimated US$396.3 billion in 2020, a decrease of around 42.1% from the previous
year. In addition, the duration and severity of the COVID-19 pandemic are uncertain and difficult to predict. The pandemic could
continue to impede global economic activity for an extended period, even as restrictions are beginning to be lifted in many jurisdictions,
leading to decreased per capita income and disposable income, increased and sustained unemployment or a decline in consumer confidence,
all of which could significantly reduce discretionary spending by individuals and businesses on travel.
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 personnel of any target business, vendors and services providers are unavailable
to negotiate and complete a transaction in a timely manner. The extent to which COVID-19 impacts our search for a target business
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge
concerning the severity of the COVID-19 pandemic 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, it could have a material
adverse effect on our ability to complete a business combination, or the operations of a target business with which we ultimately
complete a business combination.
We
may not be able to complete our initial business combination by May 27, 2022, in which case we would cease all operations except
for the purpose of winding up and we would redeem our public shares and liquidate.
We
may not be able to find a suitable target business and complete our initial business combination by May 27, 2022. Our ability
to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital
and debt markets and the other risks described herein. If we have not completed our initial business combination within such time
period, we will: (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 (which interest shall
be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
If
we seek stockholder approval of our initial business combination, our Sponsor, initial stockholders, directors, executive officers,
advisors and their affiliates may elect to purchase shares or public warrants from public stockholders, which may influence a
vote on a proposed business combination and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our Sponsor, initial stockholders, directors, executive 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, although they are under no obligation to do so. 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 the Nasdaq rules. However, other than as expressly stated herein,
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
purchases may include a contractual acknowledgment 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, initial stockholders, directors, executive officers, advisors or their affiliates purchase shares
in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such
selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases
of shares could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder
approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our 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. We expect any such purchases of our securities may result in the completion of our initial
business combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and
Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants and the number
of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing
or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender
offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy
materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our
initial business combination will describe the various procedures that must be complied with in order to validly tender or submit
public shares for redemption. For example, we intend to require our public stockholders seeking to exercise their redemption rights,
whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver
their stock certificates to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date
set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up
to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct
redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public
shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the
name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other
procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of the 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 selected, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon
the completion of the initial public offering and the sale of the private placement warrants and will file a Current Report on
Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections
of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time
to complete our initial business combination than do companies subject to Rule 419. Moreover, if the 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.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in the 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
shares in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We
expect to encounter competition from other entities having a business objective similar to ours, including private investors (which
may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services
to various industries. Many of these competitors possess similar or greater technical, human and other resources to ours or more
local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many
of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds
of the initial public offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to
offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in
conjunction with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available
to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may
receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
If
the net proceeds of the initial public offering not being held in the trust account are insufficient to allow us to operate until
May 27, 2022, 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 and to complete our initial
business combination.
As
of December 31, 2020, we had $1,462,569.79 available to us outside of the trust account to fund our working capital requirements.
The funds available to us outside of the trust account may not be sufficient to allow us to operate until May 27, 2022, assuming
that our initial business combination is not completed during that time. Of the funds available to us, we could use a portion
of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use
a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger
agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors
on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do
not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right
to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our
breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to,
a target business.
If
we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per
share (based on the trust account balance as of December 31, 2020) 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
(based on the trust account balance as of December 31, 2020). See “— If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), 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 consider whether competitive alternatives are reasonably available to us and will only
enter into an agreement with such third party if management believes that such third party’s engagement would be in the
best interests of the Company under the circumstances. The underwriters of the initial public offering as well as our registered
independent public accounting firm 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 public
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 other
similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i)
$10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per public share due to reductions in the value of the trust assets, less taxes payable,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver
of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to
any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked 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.
As a result, if any such claims were successfully made against the trust account, the funds available for our initial business
combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete
our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your
public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of 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 public share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per public
share due to reductions in the value of the trust assets, in each case less taxes payable, 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 our independent directors choose not to enforce these indemnification
obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below
$10.00 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, by paying
public stockholders from the trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims
of punitive damages.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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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 with the SEC;
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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 that we are not subject to.
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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 of securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for
the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to
buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. 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 either: (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 our amended and
restated certificate of incorporation 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 May 27, 2022; and (iii) absent an initial business combination
by May 27, 2022 or with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity, 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 a business combination.
If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata
portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire
worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to
comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may
be difficult, time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination and results of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the Delaware General Corporation Law (“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 May 27, 2022 may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 18th month from the closing of the initial public offering in the event we do not complete
our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination by May 27, 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.
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.
Our
efforts to identify a prospective initial business combination target will not be limited to a particular industry, sector or
geographic region. Our amended and restated certificate of incorporation prohibits us from effectuating a business combination
with another blank check company or similar company with nominal operations. To the extent we complete our initial business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with
a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks
inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some
of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more
favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such
reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy materials or tender offer documents, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public stockholders may only receive their
pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants
will expire worthless.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of
revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
To
the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity
lacking an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the
business with which we combine. These risks include investing in a business without a proven business model or with limited historic
financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
Some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks
will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders
from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board of directors cannot independently determine
the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required
to obtain an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm
that the price we are paying is fair to our stockholders 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.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise
incur outstanding debt following the initial public offering, we may choose to incur substantial debt to complete our initial
business combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the
lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no
issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
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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 is payable on demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding;
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our
inability to pay dividends on our Class A 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 Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation; and
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of the 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 products
or services. This lack of diversification may negatively impact our operations and profitability.
The
net proceeds from the initial public offering and the private placement of warrants provided us with $193,681,250 that we may
use to complete our initial business combination (after taking into account the $7,568,750 of deferred underwriting commissions
being held in the trust account).
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we
would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our business combination strategy, we may seek to effectuate our initial business combination with a privately held company.
Very little public information generally exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete our initial business combination with which a substantial majority of our stockholders or warrant holders 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 in an amount that would cause our net tangible assets to be less than $5,000,001. In addition,
our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to
the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of
cash to satisfy other conditions. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers,
directors, advisors or any of 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 business combination exceed the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares in connection with such initial business combination, all shares of Class A
common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business
combination.
In
order to effectuate an initial business combination, special purpose acquisition companies have, in the recent past, amended various
provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we
will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make
it easier for us to complete our initial business combination that our stockholders may not support.
In
order to effectuate a business combination, special purpose acquisition companies have, in the recent past, amended various provisions
of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies
have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial
business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged
for cash and/or other securities. Amending our amended and restated certificate of incorporation requires the approval of holders
of 65% of our common stock, and amending our warrant agreement requires a vote of holders of at least 50% of the public warrants
and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement
with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition,
our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem
their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation to modify the
substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination
by May 27, 2022 or with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity. To the extent any of such amendments would be deemed to fundamentally change the nature of the 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 at least 65% of our outstanding common stock, which is a lower amendment threshold than that of some other special
purpose acquisition companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity
(including the requirement to deposit proceeds of the initial public offering and the private placement of warrants into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein) may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon
and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved
by holders of at least 65% of our outstanding 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. Our initial stockholders, who beneficially own
20% of our outstanding common stock following the closing of the initial public offering, may participate in any vote to amend
our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner
they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which
govern our pre-business combination behavior more easily than some other special purpose acquisition companies, and this may increase
our ability to complete a business combination with which you do not agree. Our stockholders may pursue remedies against us for
any breach of our amended and restated certificate of incorporation.
Our
Sponsor, executive officers and directors have agreed, pursuant to written agreements with us, that they will not propose any
amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by May 27, 2022 or with respect to any other
material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our
public stockholders with the opportunity to redeem their 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 (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability
to pursue remedies against our Sponsor, executive officers or directors for any breach of these agreements. As a result, in the
event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
Certain
agreements related to the initial public offering may be amended without stockholder approval.
Each
of the agreements related to the initial public offering to which we are a party, other than the warrant agreement and the investment
management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the
letter agreement among us and our initial stockholders, Sponsor, officers and directors; the registration rights agreement among
us and our initial stockholders; the private placement warrants purchase agreement between us and our Sponsor; and the administrative
services agreement among us, our Sponsor and an affiliate of our Sponsor. These agreements contain various provisions that our
public stockholders might deem to be material. For example, our letter agreement and the underwriting agreement contain certain
lock-up provisions with respect to the founder shares, private placement warrants and other securities held by our initial stockholders,
Sponsor, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and
would need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial
business combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior
to our initial business combination, it may be possible that our board of directors, in exercising its business judgment and subject
to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection
with the consummation of our initial business combination will be disclosed in our proxy materials or tender offer documents,
as applicable, related to such initial business combination, and any other material amendment to any of our material agreements
will be disclosed in a filing with the SEC. Any such amendments would not require approval from our stockholders, may result in
the completion of our initial business combination that may not otherwise have been possible, and may have an adverse effect on
the value of an investment in our securities. For example, amendments to the lock-up provision discussed above may result in our
initial stockholders selling their securities earlier than they would otherwise be permitted, which may have an adverse effect
on the price of our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
We
have not selected any specific business combination target but intend to target businesses with enterprise values that are greater
than we could acquire with the net proceeds of the initial public offering and the sale of the private placement warrants. As
a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed
to satisfy any redemption by public stockholders, we may be required to seek additional financing to complete such proposed initial
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent
that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled
to either restructure the transaction or abandon that particular business combination and seek an alternative target business
candidate. Further, we may be required to obtain additional financing in connection with the closing of our initial business combination
for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment
of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the purchase
of other companies. If we are unable to complete our initial business combination, our public stockholders may only receive their
pro rata portion of the funds in the trust account that are available for distribution to public stockholders, 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.
Our
initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support.
Our
initial stockholders own 20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on
actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and
restated certificate of incorporation. If our initial stockholders purchase any additional Class A common stock in the aftermarket
or in privately negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge,
any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this
Annual Report on Form 10-K. 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 sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years with only
one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior
to the completion of our initial business combination, in which case all of the current directors will continue in office until
at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our initial business combination.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that the proxy statement with respect to the vote on an initial business combination include historical
and pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender
offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to
be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America
(“GAAP”), or international financial reporting standards as issued by the International Accounting Standards Board
(“IFRS”), depending on the circumstances and the historical financial statements may be required to be audited in
accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). These financial
statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to
provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete
our initial business combination within the prescribed time frame.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2020. 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
business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Risks
Relating to the Post-Business Combination Company
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
the price of our securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
identify all material issues that may be present with a particular target business, that it would be possible to uncover all material
issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control
will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our
operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial
business combination or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant
holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant
holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able
to successfully bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
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 only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, 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 requires substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to
public stockholders, and our warrants will expire worthless.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management or advisory positions following our initial business combination, it is likely that
some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These
agreements may provide for them to receive compensation following our initial business combination and as a result, may cause
them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with our Company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such
reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of
a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure our initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a
minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business
combination. 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 Class A common stock, our stockholders
immediately prior to such transaction could own less than a majority of our outstanding Class A 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 shares than we initially acquired. Accordingly, this may make it more
likely that our management will not maintain control of the target business.
Risks
Relating to Acquiring and Operating a Business in Foreign Countries
If
we effect our initial business combination with a company located outside of the United States, we would be subject to a variety
of additional risks that may adversely affect us.
If
we pursue a target company with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination,
and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact
our operations.
If
we pursue a target a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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costs
and difficulties inherent in managing cross-border business operations;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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exchange
listing and/or delisting requirements;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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local
or regional economic policies and market conditions;
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unexpected
changes in regulatory requirements;
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challenges
in managing and staffing international operations;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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underdeveloped
or unpredictable legal or regulatory systems;
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protection
of intellectual property;
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social
unrest, crime, strikes, riots and civil disturbances;
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regime
changes and political upheaval;
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terrorist
attacks and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial
business combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely
impact our business, financial condition and results of operations.
Risks
Relating to our Management Team
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek
recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied
by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers
or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team or businesses associated with them is presented for
informational purposes only. Past performance by our management team is not a guarantee either (i) of success with respect
to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial
business combination. No member of our management team has had management experience with special purpose acquisition corporations
in the past. You should not rely on the historical record of the performance of our management team’s or businesses associated
with them as indicative of our future performance of an investment in us or the returns we will, or is likely to, generate going
forward.
We
may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We
will consider a business combination outside of our management’s areas of expertise if a business combination candidate
is presented to us and we determine that such candidate offers an attractive business combination opportunity for our Company.
Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot
assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an
investment in our units will not ultimately prove to be less favorable to investors in the initial public offering than a direct
investment, if an opportunity were available, in a business combination candidate. In the event we elect to pursue a business
combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this Annual Report on Form 10-K regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may
not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders who choose to remain
stockholders following our initial business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
We
are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our
initial business combination. In addition, our executive officers and directors are not required to commit any specified amount
of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities,
including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of
one or more of our directors or executive officers could have a detrimental effect on us.
Our
executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in
a conflict of interest in allocating their time between our operations and our search for a business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each
of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation,
and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent
directors also serve as officers and board members for other entities. If our executive officers’ and directors’ other
business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels,
it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity
should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more
businesses. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business
combination opportunity to such entity. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may
be presented to another entity prior to its presentation to us. Our 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 the Company and such opportunity is one we are
legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation. In addition, our Sponsor and
our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other
business or investment ventures during the period in which we are seeking an initial business combination. Any such companies,
businesses or ventures may present additional conflicts of interest in pursuing an initial business combination. However, we do
not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Our
executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that
conflict with our interests.
We
have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having
a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is
affiliated with our Sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a policy
that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by
us. Accordingly, such persons or entities may have a conflict between their interests and ours.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in
identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms,
conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. If this
were the case, it would be a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might
have a claim against such individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful
in any claim we may make against them for such reason.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our Sponsor, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with our Sponsor, executive officers, directors or existing holders. Our directors also serve as officers
and board members for other entities, including, without limitation, those described under “Management — Conflicts
of Interest.” Such entities may compete with us for business combination opportunities. Our Sponsor, officers and directors
are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with
which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity
or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we
would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and such
transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion
from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding the fairness
to our Company from a financial point of view of a business combination with one or more domestic or international businesses
affiliated with our Sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Since
our Sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not
completed (other than with respect to public shares they may acquire), a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our initial business combination.
On
August 10, 2020, our Sponsor purchased an aggregate of 6,325,000 founder shares for a purchase price of $25,000, or approximately
$0.004 per share. On November 16, 2020, our Sponsor forfeited 1,293,750 founder shares back to the Company for no consideration,
resulting in our Sponsor holding an aggregate of 5,031,250 shares of Class B common stock issued and outstanding. Prior to
the initial investment in the Company of $25,000 by our Sponsor, the Company had no assets, tangible or intangible. The purchase
price of the founder shares was determined by dividing the amount of cash contributed to the Company by the number of founder
shares issued.
The
founder shares will be worthless if we do not complete an initial business combination. In addition, our Sponsor has purchased
an aggregate of 5,500,000 private placement warrants, each exercisable for one share of Class A common stock at $11.50 per
share, for an aggregate purchase price of $5,500,000, or $1.00 per warrant, that will also be worthless if we do not complete
our initial business combination. The personal and financial interests of our executive officers and directors may influence their
motivation in identifying and selecting a target business combination, completing an initial business combination and influencing
the operation of the business following the initial business combination. This risk may become more acute as the 18-month anniversary
of the closing of the initial public offering nears, which is the deadline for our completion of an 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 memorandum and articles of association, 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 payable and up to $100,000 of interest to pay dissolution expenses. 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.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier 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
tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by May
27, 2022 or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, and the redemption of our public shares if we are unable to complete an initial business combination by May 27, 2022,
subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we are unable
to complete an initial business combination by May 27, 2022 is not completed for any reason, compliance with Delaware law may
require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds
held in our trust account. In that case, public stockholders may be forced to wait beyond May 27, 2022 before they receive funds
from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust
account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
We
cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial
business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must
maintain certain financial, distribution and share 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 share 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 requires 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 and
eventually our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants
will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our securities,
the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding
of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are
not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies,
other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these
powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if
we were no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject
to regulation in each state in which we offer our securities.
You
will not be permitted to exercise your warrants unless we register and qualify the underlying Class A common stock or certain
exemptions are available.
If
the issuance of the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration
or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise
such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants as
part of a purchase of units will have paid the full unit purchase price solely for the Class A common stock included in the
units.
We
are not registering the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state
securities laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable,
but in no event later than 15 business days, after the closing of our initial business combination, we will use our best efforts
to file with the SEC a registration statement covering the registration under the Securities Act of the Class A common stock
issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60
business days following our initial business combination and to maintain a current prospectus relating to the Class A common
stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the provisions of the warrant
agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental
change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated
by reference therein are not current or correct or the SEC issues a stop order.
If
the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under
the terms of the warrant agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for
cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act
or another exemption.
In
no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
If
our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange
such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we
may, at our option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require
them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we
will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the warrants
under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify
the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In
no event will we be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described
above) or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying
the warrants under the Securities Act or applicable state securities laws.
You
may only be able to exercise your public warrants on a “cashless basis” under certain circumstances, and if you do
so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for
cash.
The
warrant agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not
be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9)
of the Securities Act: (i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered
under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares
of Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that
they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if
we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you
would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal
to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the
warrants, multiplied by the excess of the “fair market value” of our shares of Class A common stock (as defined
in the next sentence) over the exercise price of the warrants by (y) the fair market value. The “fair market value”
is the average reported closing price of the shares of 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 and holders of our private placement warrants 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 shares of Class A common stock.
Our
initial stockholders, the holders of our private placement warrants, the holders of warrants that may be issued upon conversion
of working capital loans and their permitted transferees can demand that we register the shares of Class A common stock into
which founder shares are convertible, holders of our private placement warrants and their permitted transferees can demand that
we register the private placement warrants and the Class A common stock issuable upon exercise of the private placement warrants
and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants
or the Class A common stock issuable upon conversion of such warrants. The registration rights will be exercisable with respect
to the founder shares and the private placement warrants and the Class A common stock issuable upon exercise of such private
placement 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 shares of common stock owned by our initial stockholders, holders of our private placement warrants or holders
of our working capital loans or their respective permitted transferees are registered. We may issue additional shares of Class A
common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the
founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained in our 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 280,000,000 shares of Class A common stock,
par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares
of preferred stock, par value $0.0001 per share. Immediately after the initial public offering and the closing of the over-allotment
option, there were 259,875,000 and 14,968,750 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 shares reserved for issuance upon exercise
of outstanding warrants or shares issuable upon conversion of the Class B common stock. The Class B common stock is
automatically convertible into Class A common stock concurrently with or immediately following the consummation of our initial
business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated
certificate of incorporation. There are no shares of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock or shares of preferred stock to complete our
initial business combination or under an employee incentive plan after completion of our initial business combination. We may
also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one
at the time of our initial business combination as a result of the anti-dilution provisions as set forth therein. However, our
amended and restated certificate of incorporation provides, among other things, that prior to our initial business combination,
we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or
(ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment
to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination
beyond 18 months from the closing of the initial public offering or (y) amend the foregoing provisions. 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. The issuance of additional shares of common stock or shares of preferred stock:
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may
significantly dilute the equity interest of investors in the initial offering;
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may
subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior
to those afforded our Class A common stock;
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could
cause a change in control if a substantial number of shares of Class A common stock is issued, which may affect, among
other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal
of our present officers and directors; and
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may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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Unlike
some other similarly structured special purpose acquisition companies, our initial stockholders will receive additional shares
of Class A common stock if we issue certain shares to consummate an initial business combination.
The
founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following
the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends,
reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional
shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with our initial business
combination, 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 shares of Class A common stock outstanding after such conversion
(after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number
of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities
or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business
combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible
into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private
placement warrants issued to our Sponsor, officers or directors upon conversion of working capital loans, provided that
such conversion of founder shares will never occur on a less than one-for-one basis. This is different than some other similarly
structured special purpose acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of
the total number of shares to be outstanding prior to our 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 50% 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 Class A common stock purchasable upon exercise of a warrant
could be decreased, all without your approval.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any
holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the
then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then
outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the
consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different
than initially provided), shorten the exercise period or decrease the number of shares of 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 closing price of our Class A common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances
of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial
business combination) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice
of such redemption and provided that certain other conditions are met. If and when the warrants become redeemable by us,
we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your warrants and
pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the
then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price
which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value
of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers
or their permitted transferees.
Our
warrants may have an adverse effect on the market price of our shares of Class A common stock and make it more difficult
to effectuate our initial business combination.
We
issued warrants to purchase 10,062,500 shares of our Class A common stock as part of the units sold in the initial public offering
and, simultaneously with the closing of the initial public offering, we issued in a private placement an aggregate of 5,500,000
private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share. In addition, if
our Sponsor or an affiliate of our Sponsor or certain of our officers and directors makes any working capital loans, such lender
may convert those loans into up to an additional 1,500,000 private placement warrants, at the price of $1.00 per warrant. To the
extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target
business. Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and
reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants may make it
more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because
each unit contains one-half of one warrant and only a whole warrant may be exercised, the units may be worth less than units of
other special purpose acquisition companies.
Each
unit contains one-half of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation
of the units, and only whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common
stock to be issued to the warrant holder. This is different from other offerings similar to ours whose units include one common
share and one warrant to purchase one whole share. We have established the components of the units in this way in order to reduce
the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate
for one-half of the number of shares compared to units that each contain a whole warrant to purchase one share, thus making us,
we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be
worth less than if it included a warrant to purchase one whole share.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our Company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of
or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the
courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that
we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or
claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the
sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be
deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter
of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State
of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the
name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the
state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the
forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in
any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our Company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely
affect our business, financial condition and results of operations and result in a diversion of the time and resources of our
management and board of directors.
General
Risk Factors
We
are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
We
are a blank check company incorporated under the laws of the State of Delaware with no operating results, and did not commence
operations until obtaining funding through the initial public offering. Because we lack an operating history, you have no basis
upon which to evaluate our ability to achieve our business objective of completing our initial business combination. We have no
plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable
to complete our initial business combination. If we fail to complete our initial business combination, we will never generate
any operating revenues.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders
may not have access to certain information they may deem important. We could be an emerging growth company for up to five years,
although circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock
held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be
an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less
attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our
reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. 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 equals or exceeds $250 million as of the prior June 30th, and (2) our annual revenues
equaled or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
equals to or exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations,
it may also make comparison of our financial statements with other public companies difficult or impossible.
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 shares of 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 stock, which may make more difficult the
removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market
prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
Provisions
in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum,
that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a
fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim
against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate
of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed
by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as
to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction
of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within
ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court
of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. If an action is brought outside
of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s
counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law
in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it
is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding
the foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply
to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations thereunder. Additionally, unless we consent in
writing to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint
asserting a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or
agents. Section 22 of the Securities Act, however, created concurrent jurisdiction for federal and state courts over all
suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly,
there is uncertainty as to whether a court would enforce these exclusive forum provisions, and the enforceability of similar choice
of forum provisions in other companies’ charter documents has been challenged in legal proceedings. While the Delaware courts
have determined that such exclusive forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim
in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will
be enforced by a court in those other jurisdictions. Any person or entity purchasing or otherwise acquiring any interest in our
securities shall be deemed to have notice of and consented to these provisions; however, we note that investors cannot waive compliance
with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing
increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may limit
our stockholders’ ability to obtain a favorable judicial forum for disputes with us and may have the effect of discouraging
lawsuits against our directors and officers.
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.