Item
1. Business.
General
We
are an early stage blank check company formed as a Delaware corporation for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout
this Report as our initial business combination.
True
Wind Capital, a technology-focused private investment firm, is our advisory platform. We intend to capitalize on the ability of our management
team and the broader True Wind Capital platform to identify, acquire, and operate a business in the technology and technology-enabled
services sectors that may provide opportunities for attractive long-term risk-adjusted returns, though we reserve the right to pursue
an acquisition opportunity in any business or industry.
True
Wind Capital
True
Wind Capital is a San Francisco-based private equity firm that is focused on investing in leading technology companies with a broad mandate
including software, financial technology, industrial technology, healthcare IT, internet, semiconductors, and IT services. True Wind
Capital is a value-added partner, providing support and expertise that is rooted in its teams’ 75+ years of collective investing
experience. True Wind Capital currently has a team of 16 full-time investment professionals with deep technology investing expertise.
We
have utilized True Wind Capital’s platform to provide complete access to its team, deal prospects, and network, along with any
necessary resources to aid in the identification, diligence, and operational support of a target for the initial business combination.
True
Wind Capital was instrumental in launching Nebula Acquisition Corporation (“Nebula”), a special purpose acquisition company
that completed its initial public offering in January 2018 in which it sold 27,500,000 units, each consisting of one share of Nebula
common stock and one-third of one warrant to purchase one share of Nebula common stock for an offering price of $10.00 per unit, generating
aggregate proceeds of $275,000,000. True Wind Capital sourced several acquisition targets for Nebula, which completed a business combination
in June 2020 with Open Lending, a provider of lending enablement and risk analytics solutions to financial institutions. In addition
to the proceeds from the initial public offering, Nebula contributed another $200 million in proceeds from a private placement completed
at the time of the initial business combination. Open Lending’s common shares trade on Nasdaq under the symbol “LPRO.”
True
Wind Capital is the platform used by TWC Tech Holdings II Corp. (“TWC Tech Holdings II”), a blank check company which raised
an aggregate of $600.0 million in its initial public offering (including exercise of the over-allotment option) in September 2020. In
connection with its initial public offering, TWC Tech Holdings II also entered into forward purchase agreements with several institutional
accredited investors that provided for the aggregate purchase of at least $100,000,000 of Class A common stock at $10.00 per share. TWC
Tech Holdings II completed a business combination in August 2021 with Cellebrite DI Ltd., a leading digital intelligence platform that
helps government agencies and enterprises across the investigative lifecycle. Upon closing of the business combination, TWC Tech Holdings
II was renamed Cellebrite and remains Nasdaq-listed under the ticker symbol “CLBT.”
True
Wind Capital was also critical in launching Nebula Caravel Acquisition Corp. (“Nebula Caravel”), a newly formed blank check
company that completed an aggregate of $275.0 million in its initial public offering (including the partial exercise of the over-allotment
option) in December 2020. In connection with its initial public offering, Nebula Caravel also entered into forward purchase agreements
with several institutional accredited investors (including an affiliate of True Wind Capital) that provided for the aggregate purchase
of at least $100,000,000 of Class A common stock at $10.00 per share. Nebula Caravel completed a business combination in July 2021 with
Rover, Inc., a leading online marketplace for pet care that connects pet parents with local, high-quality pet care providers. Upon closing
of the business combination, Nebula Caravel was renamed Rover Group and remains Nasdaq-listed under the ticker symbol “ROVR.”
Business
Strategy
Our
business strategy is to utilize True Wind Capital’s existing investment identification and evaluation platform to identify and
complete our initial business combination with a company that our management believes, with proper utilization of our network and experience,
has a compelling potential for value creation through our involvement. The True Wind Capital team leverages their vast investment experience,
deep network and technology industry expertise to identify and generate attractive acquisition opportunities among technology companies
with overall transaction values between $750 million and $2.5 billion. To the extent the purchase price for any acquisition to be paid
in cash exceeds the net proceeds available to us, we may issue debt or equity to consummate the acquisition. Such additional financing
may come in the form of bank financings or preferred equity, common equity or debt offerings or a combination of the foregoing. We believe
True Wind’s experience and track record, along with its disciplined direct sourcing and thematic research approach, are particularly
differentiated, and will enable us to successfully identify and execute an initial business combination. We leverage True Wind Capital’s
extensive network of relationships, ranging from senior executives at public and private companies to financial advisory firms around
the globe, to assist in the identification of a target for the initial business combination. True Wind Capital intends to dedicate its
time and resources to conduct diligence in an effort to complete an initial business combination.
True
Wind Capital and our management team has experience in:
|
● |
Operating companies, setting
and changing strategies, and identifying, mentoring and recruiting exceptional talent; |
|
● |
Developing and growing companies,
both organically and through strategic transactions and acquisitions, and expanding the product range and geographic footprint of
a number of target businesses; |
|
● |
Investing in leading private
and public technology companies to accelerate their growth and maturation; |
|
● |
Sourcing, structuring, acquiring,
and selling businesses; |
|
● |
Accessing the capital markets,
including financing businesses and helping companies transition to public ownership; and |
|
● |
Fostering relationships with
sellers, capital providers and target management teams. |
Market
Opportunity
We
are pursuing opportunities with private, high-growth, and high-quality technology companies with an overall transaction value between
$750 million and $2.5 billion. Given our management team’s extensive and diverse technology investing experience, we are seeking
opportunities in software, hardware, and tech-enabled services businesses across a range of different sectors and end-markets. Furthermore,
we are open to combining with businesses that are owned by founders and minority investors, private equity firms, and family-owned businesses.
Private technology companies are at the forefront of innovation and have been driving disruption in legacy industries at an unprecedented
pace, creating brand new markets and business models in the process. We believe that as these companies continue to scale, their addressable
markets continue to expand, and they reach financial maturity, they will make fundamentally attractive long-term investments that will
drive stockholder value creation. We believe that our mandate provides us with a broad pool of potential opportunities to complete an
initial business combination with.
There
has been a significant increase in the amount of capital available and deployed in private markets in recent years, not only from traditional
venture capital firms but also other types of investors including hedge funds, mutual funds, and sovereign wealth funds. This has not
only driven private technology company valuations higher but has resulted in them staying private longer as these companies now have
greater access to growth capital and liquidity that the traditional IPO process has typically provided. However, we believe that there
are significant benefits to companies from being publicly traded at a certain stage of their development. These include increased brand
awareness and development, the ability to create acquisition currency to pursue inorganic growth, and increased access to capital markets.
Although global macroeconomic conditions, including inflation and rising interest rates, may have adverse impact upon availability and
deployment of new capital, we believe we are able to identify appropriate candidates suitable for a Business Combination.
We
believe that combining with a blank check company, especially one with a management team with extensive technology investing experience,
will inherently be an attractive mechanism to go public. Given the current volatility experienced in both the stock market and debt capital
markets as a result of the adverse macroeconomic and market conditions, it has become increasingly difficult for high-quality businesses
that want to go public to do so on favorable terms. First, a traditional IPO process is inherently an inefficient mechanism for price
discovery as pricing and terms of an offering remain unknown until the day of pricing of the offering, resulting in uncertainty of proceeds
and valuation. Second, the traditional IPO book-build process can result in allocation decisions that leave companies with sub-optimal
or short-term focused investors that further drive volatility and hinder management’s ability to drive long-term stockholder value
creation. Furthermore, the nature of the IPO process, including sizeable regulatory requirements and document drafting, selection of
underwriters, and investor roadshows and engagements, serves as an expensive distraction to management from the day-to-day operations
of their business. We believe blank check companies provide a transparent and efficient mechanism to go public due to their ability to
finalize terms of a transaction with a target prior to public disclosure and provide companies with a stable base of long-term focused
investors that have conducted significant due diligence. Our management’s previous involvement with Nebula and its combination
with Open Lending (NASDAQ: LPRO), TWC Tech Holdings II and its combination with Cellebrite DI Ltd. (NASDAQ: CLBT) and Nebula Caravel
and its combination with Rover, Inc. (NASDAQ:ROVR), and our management team’s collective 50+ years of technology investing experience,
provides us with significant differentiation in looking for combination opportunities compared to other technology-focused blank check
companies.
Investment
Criteria
We
seek to identify companies that have compelling growth potential and a combination of the following characteristics. We use these criteria
and guidelines in evaluating acquisition opportunities, but we may decide to enter our initial business combination with a target business
that does not meet these criteria and guidelines. We intend to acquire companies or assets that we believe have the following attributes:
|
● |
Large
and growing market. We focus on investments in industry segments that we believe demonstrate attractive long-term growth prospects
and reasonable overall size or potential; |
|
● |
Attractive,
inherently profitable business with high operating leverage. We seek to invest in companies that we believe possess not only
established business models and sustainable competitive advantages, but also inherently profitable unit economics; |
|
● |
Strong
management teams. We spend significant time assessing a company’s leadership and personnel and evaluating what we can do
to augment and/or upgrade the team over time if needed; |
|
● |
Opportunity
for operational improvements. We seek to identify businesses that we believe are stable but at an inflection point and would
benefit from our ability to drive improvements in the company’s processes, go-to-market strategy, product or service offering,
sales and marketing efforts, geographical presence and/or leadership team; |
|
● |
Differentiated
products or services. We evaluate metrics such as recurring revenues, product life cycle, cohort consistency, pricing per product
or customer, cross-sell success and churn rates to focus on businesses whose products or services are differentiated or where we
see an opportunity to create value by implementing best practices; |
|
● |
Compelling growth prospects.
We view growth as an important driver of value and seek companies whose growth potential can generate meaningful upside; |
|
● |
Minimal technology risk.
We seek to invest in companies that have established market-tested product or service offerings; and |
|
● |
Appropriate valuations.
We seek to be a disciplined and valuation-centric investor that invests on terms that we believe provide significant upside potential
with limited downside risk. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as on other considerations, factors and criteria that our management
may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications
related to our initial business combination, which, as discussed in this Report, would be in the form of tender offer documents or proxy
solicitation materials that we would file with the SEC.
Our
Management Team
Our
management team is supported by True Wind Capital’s team of investment professionals who each have meaningful technology-related
private equity and growth equity investing experience and possess extensive experience in corporate finance, mergers and acquisitions,
equity and debt capital markets, strategic consulting, and operations. Founded in 2015, True Wind Capital has completed 13 platform investments
and 21 add-on acquisitions across a range of structures and types including leveraged buyouts, management buyouts, growth equity, PIPEs,
public-take-privates, and carve-outs. We believe that True Wind Capital’s operating expertise, transaction experience, and relationships
provide us with a substantial number of attractive potential business combination targets.
The
past performance of our management team or of True Wind Capital is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You
should not rely on the historical record of our management’s performance as indicative of our future performance.
Our
Acquisition Process
True
Wind Capital believes that conducting comprehensive due diligence on prospective investments is particularly important within the technology
industry. We have utilized and will continue to utilize the diligence, rigor, and expertise of True Wind Capital’s platform to
evaluate potential targets’ strengths, weaknesses, and opportunities to identify the relative risk and return profile of any potential
target for our initial business combination. Given our management team’s extensive tenure investing in technology companies, we
are familiar with the prospective target’s end-market, competitive landscape and business model.
In
evaluating a prospective initial business combination, we have conducted and will continue to conduct a thorough diligence review that
encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, financial
analyses and technology reviews, as well as a review of other information that will be made available to us.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our sponsor,
our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial business combination
with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that
our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of True Wind
Capital that would make a suitable target for our initial business combination.
Members
of our management team may directly or indirectly own our securities, and accordingly, they may have a conflict of interest in determining
whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our
initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations
or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity to such entities. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating
another legal obligation. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which
is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor
these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such
entities reject the opportunity and he or she determines to present the opportunity to us. 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. We do not believe, however,
that the fiduciary, contractual or other obligations or duties of our officers or directors will materially affect our ability to complete
our initial business combination.
We
have entered into forward purchase agreements with the forward purchasers that provide for the aggregate purchase of at least $50,000,000
of Class A common stock at $10.00 per share, in a private placement that will close concurrently with the closing of our initial business
combination. The forward purchasers’ commitments under the forward purchase agreements are subject to certain conditions as described
herein. The obligations under the forward purchase agreements will not depend on whether any shares of Class A common stock are redeemed
by our public stockholders. The forward purchasers will not receive any Class B common stock or warrants as part of the forward purchase
agreements; these shares will be identical to the shares of Class A common stock included in the units sold in our initial public offering,
except that the forward purchase shares will be subject to certain transfer restrictions and have certain registration rights, as described
herein.
Our
sponsor, officers, directors and True Wind Capital may participate in the formation of, or become an officer or director of, any other
blank check company prior to completion of our initial business combination. As a result, our sponsor, officers, directors and True Wind
Capital could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank
check company with which they may become involved. Although we have no formal policy in place for vetting potential conflicts of interest,
our board of directors (“Board”) will review any potential conflicts of interest on a case-by-case basis.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (net of amounts disbursed to management for working capital purposes and 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. If our Board is not able to independently determine the fair market value of the
target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from
an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses
in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case. Additionally,
pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which our public
stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such
a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial
business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares,
our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken
into account for purposes of Nasdaq’s 80% fair market value test. If the initial business combination involves more than one target
business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat the target
businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Our
amended and restated certificate of incorporation requires the affirmative vote of a majority of our Board, which must include a majority
of our independent directors to approve our initial business combination (or such other vote as the applicable law or stock exchange
rules then in effect may require).
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However,
if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business
combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior
to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we target businesses
with enterprise values that are greater than we could acquire with the net proceeds of our initial public offering and the sale of the
private placement warrants, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account,
net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such
proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund
our working capital needs and transaction costs in connection with our search for and completion of our initial business combination.
There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances
or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop
arrangements we may enter into. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously
with the completion of our business combination. If we are unable to complete our initial business combination because we do not have
sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial
business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
We
have filed a registration statement on Form 8-A with the SEC on July 15, 2021 to voluntarily register our securities under Section 12
of the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
Corporate
Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following July 20, 2026, (b) in
which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s
second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year
period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Our
executive offices are located at Four Embarcadero Center, Suite 2100, San Francisco, CA 94111, and our telephone number is (415) 780-9975.
Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference
in, and is not considered part of, this Report. You should not rely on any such information in making your decision whether to invest
in our securities.
Sourcing
of Potential Business Combination Targets
We
anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources, including
investment bankers and investment professionals. Target businesses will continue to be brought to our attention by such unaffiliated
sources as a result of being solicited by us by calls or mailings. These sources will also continue to introduce us to target businesses
in which they think we may be interested on an unsolicited basis, since many of these sources will have read our public filings and know
what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates, will continue to
bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or
informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we may receive a number
of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships
of our officers and directors and our sponsor and their respective industry and business contacts as well as their affiliates. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting
fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction only
to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to
us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest
to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid
out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any
entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect
of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered for any services
they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it
is). Although none of our sponsor, executive officers or directors, or any of their respective affiliates, are allowed to receive any
compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated
initial business combination, we do not have a policy that prohibits our sponsor, executive officers or directors, or any of their respective
affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. Some of our officers and directors
may enter into employment or consulting agreements with the post-transaction company following our initial business combination. The
presence or absence of any such fees or arrangements are not used as a criterion in our selection process of an initial business combination
candidate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our sponsor,
our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial business combination
with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that
our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of True Wind
Capital that would make a suitable target for our initial business combination.
If
any of our officers or directors becomes aware of a business combination opportunity that is suitable for one or more entities to which
he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such
business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or
she determines to present the opportunity to us (including as described above).
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer
target businesses an alternative to the traditional initial public offering through a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination. In this situation, the owners of the target business would exchange their
shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor
the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public
company, we believe target businesses will find this method a more certain and cost effective method to becoming a public company than
the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road
show and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and
an additional means of providing management incentives consistent with stockholders’ interests. It can offer further benefits by
augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
Financial
Position
With
funds available in the trust account for a business combination initially in the amount of $162,617,921 assuming no redemptions and after
payment of $5,898,059 of deferred underwriting fees and at least $50,000,000 in proceeds from the sale of the forward purchase shares,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third-party financing and there can be no assurance it will be available
to us.
Significant
Activities Since Inception
On
July 20, 2021, we consummated our initial public offering of 15,000,000 units, at $10.00 per unit, generating gross proceeds of $150.0
million, and incurring offering costs of approximately $8.9 million, of which approximately $5.3 million was for deferred underwriting
commissions and $218,000 was for offering costs allocated to derivative warrant liabilities. We granted the underwriters a 45-day option
to purchase up to an additional 2,250,000 units at the initial public offering price to cover over-allotments. On August 9, 2021, the
underwriters purchased an additional 1,851,598 units pursuant to the partial exercise of the over-allotment option. The over-allotment
units were sold at the offering price of $10.00 per unit, generating additional gross proceeds to us of $18.5 million. We incurred additional
offering costs of approximately $1.0 million in connection with the over-allotment, of which approximately $0.6 million was for deferred
underwriting commissions.
Simultaneously
with the closing of the initial public offering, we consummated a private placement of 3,500,000 warrants at a price of $1.50 per private
placement warrant to the sponsor, generating proceeds of approximately $5.3 million. In connection with the partial exercise of the over-allotment
option on August 9, 2021, the sponsor purchased an additional 246,880 private placement warrants at a purchase price of $1.50 per private
placement warrant, generating additional gross proceeds to us of $370,320.
Upon
the closing of the initial public offering, the over-allotment and the private placement, $168.5 million ($10.00 per unit) of the net
proceeds of the sale of the units in the initial public offering and over-allotment and of the private placement warrants in the private
placement were placed in a trust account established for the benefit of our public stockholders.
Our
units began trading on July 16, 2021 on The Nasdaq Capital Market under the symbol “TWCBU.” Commencing on September 8, 2021,
the securities comprising the units began separate trading. The units, common stock, and warrants are trading on The Nasdaq Capital Market
under the symbols “TWCBU,” “TWCB” and “TWCBW,” respectively.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our
initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement warrants
and the sale of the forward placement shares, if any, our capital stock, debt or a combination of these as the consideration to be paid
in our initial business combination. We may seek to complete our initial business combination with a company or business that may be
financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies
and businesses.
If
our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares,
we may 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 post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing
our initial business combination, to fund the purchase of other companies or for working capital.
We
may seek to raise additional funds in connection with the completion of our initial business combination through a private offering of
equity securities or debt securities or loans, and we may effectuate our initial business combination using the proceeds of such offerings
or loans rather than using the amounts held in the trust account.
In
the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy
materials disclosing the business combination would disclose the terms of the financing and, only if required by applicable law, we would
seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection
with our initial business combination.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (net of amounts disbursed to management for working capital purposes and excluding the deferred
underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a definitive agreement
in connection with our initial business combination. The fair market value of our initial business combination will be determined by
our Board based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation
based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable
businesses. If our Board is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, with respect
to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction
with our initial business combination, although there is no assurance that will be the case. Subject to this requirement, our management
has virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we are not permitted
to effectuate our initial business combination solely with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be
taken into account for purposes of Nasdaq’s 80% fair market value test.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective target business, we have conducted and will continue to conduct a thorough due diligence review which encompasses,
among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review
of financial, operational, legal 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 a prospective target business with which our initial business combination
is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business.
Unlike
other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable
that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing
our initial business combination with only a single entity, our lack of diversification may:
|
● |
subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the
particular industry in which we operate after our initial business combination; and |
|
● |
cause
us to depend on the marketing and sale of a single product or limited number of products or services. |
Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible
that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is highly
unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we
cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the
particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business or other reasons.
Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder
approval is currently required under Delaware law for each such transaction.
Type of Transaction | |
Whether Stockholder Approval is Required |
Purchase of assets | |
No |
Purchase of stock of target not involving a merger with the company | |
No |
Merger of target into a subsidiary of the company | |
No |
Merger of the company with a target | |
Yes |
Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
|
● |
we issue
shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then
outstanding; |
|
● |
any of
our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively
have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or |
|
● |
the issuance
or potential issuance of common stock will result in our undergoing a change of control. |
The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval
is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a
variety of factors, including, but not limited to:
|
● |
the timing
of the transaction, including in the event we determine stockholder approval would require additional time and there is either not
enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result in other
additional burdens on the company; |
|
● |
the expected
cost of holding a stockholder vote; |
|
● |
the risk
that the stockholders would fail to approve the proposed business combination; |
|
● |
other
time and budget constraints of the company; and |
|
● |
additional
legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders. |
Permitted
Purchases of Our Securities
In
the event we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates
may purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either
prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq
rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions. In the event our initial stockholders, directors, officers, advisors or any of their respective
affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such
purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account
will be used to purchase public shares in such transactions. If they engage in such transactions, they will be restricted from making
any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases
are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder,
although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. We have adopted an insider trading policy which requires insiders to (1) refrain from purchasing securities when they are in
possession of any material non-public information and (2) to clear all trades with our compliance personnel or legal counsel prior to
execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be
dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances,
our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against
our initial business combination, such selling stockholders would be required to revoke their prior elections to redeem their shares
and any proxy to vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such
rules, the purchasers will comply with such rules.
The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining
stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires
us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that
such requirement would otherwise not be met. This 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 common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our
securities on a national securities exchange.
Our
sponsor, officers, directors, advisors and/or any of their respective affiliates may identify the stockholders with whom our sponsor,
officers, directors, advisors or any of their respective affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in
connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or any of their respective
affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their
election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination. Such persons
would select the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and
such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may
be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial
business combination. Our sponsor, officers, directors, advisors or any of their respective affiliates will purchase shares only if such
purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18
under the Exchange Act will only be made to the extent such purchases are made in compliance with Rule 10b-18, which is a safe harbor
from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or any
of their respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act.
Redemption
Rights for Public Stockholders Upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares 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 our initial business combination, including interest (net of permitted withdrawals),
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
as of December 31, 2022 was approximately $10.02 per public share. The per share amount we will distribute to investors who properly
redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption right
will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in
order to validly redeem its shares. Each public stockholder may elect to redeem its public shares without voting, and if they do vote,
irrespective of whether they vote for or against the proposed transaction. There will be no redemption rights upon the completion of
our initial business combination with respect to our warrants. Our sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares
held by them in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination either: (1) in connection with a stockholder meeting called to approve the business combination;
or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or
conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of
the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock
exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval
while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common
stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure a business
combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether
to seek a stockholder vote to approve the proposed business combination. We currently intend to conduct redemptions pursuant to a stockholder
vote unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions
pursuant to the tender offer rules of the SEC for business or other reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we are required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to
our amended and restated certificate of incorporation:
|
● |
conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and |
|
● |
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. |
Upon
the public announcement of our initial business combination, we and our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount
that would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that
we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than
we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If,
however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to
obtain stockholder approval for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
|
● |
conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules; and |
|
● |
file proxy
materials with the SEC. |
We
expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we
expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice
of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently
intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we
are not able to maintain our Nasdaq listing or Exchange Act registration.
In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial
business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company
representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting.
Our initial stockholders, officers and directors will count towards this quorum and have agreed to vote any founder shares and any public
shares held by them in favor of our initial business combination. These quorum and voting thresholds and agreements, may make it more
likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares without
voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor, officers
and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with
respect to any founder shares and any public shares held by them in connection with the completion of a business combination.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would
cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not
then become subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher
net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed
business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target
for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with
the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares
of 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, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption Upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with
respect to more than an aggregate of 15% of the shares sold in our initial public offering, without our prior consent, which we refer
to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination
as a means to force us or our affiliates to purchase their shares at a significant premium to the then-current market price or on other
undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial
public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our affiliates
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.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business
combination in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination
at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares
in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery
requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must
identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender
offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination
if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant
to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final
proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption
if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge the tendering
broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be
incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver
shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
In
order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy
materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business
combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the
business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate
to verify ownership. As a result, the stockholder then had an “option window” after the completion of the business combination
during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price,
he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become
“option” rights surviving past the completion of the business combination until the redeeming holder delivered its certificate.
The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is
irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the
date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered
its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until the end of the completion window.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only the time of the completion window to complete our initial
business combination. If we are unable to complete our initial business combination within such period, we will: (1) cease all operations
except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the
public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(net of permitted withdrawals 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), subject to applicable law; and (3) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There are no redemption
rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business
combination within the completion window.
Our
initial stockholders, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial
business combination within the completion window. However, if our sponsor or any of our officers and directors acquires public shares,
it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our
initial business combination within the completion window.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of
our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within the completion window, unless we provide our public stockholders with the opportunity to redeem their
shares of Class A common stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest (net of permitted withdrawals), divided by the number of then outstanding public
shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred
underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock”
rules).
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose.
However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the
extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us
an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments
or expenses for the dissolution of the trust, the per share redemption amount received by stockholders upon our dissolution would be
$10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher
priority than the claims of our public stockholders. We cannot assure you that the actual per share redemption amount received by stockholders
will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against
us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims
must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such
amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers (other than our independent registered public accounting
firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against
the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as
well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against
our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to
the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter
into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses
to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find
a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims
they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that it will
be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) the actual amount per public share held in
the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value
of the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any
and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. We have not 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 and, therefore, our sponsor may not be able to satisfy those obligations.
We have not asked our sponsor to reserve for such obligations. 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 in the trust account 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 will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses. None of our other officers will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below: (1) $10.00 per public share; or (2) the actual amount per public
share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable to satisfy its
indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in certain instances. For
example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or
the independent directors may determine that a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims
of creditors the actual value of the per share redemption price will not be substantially less than $10.00 per share.
We
seek to reduce the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have
all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies
held in the trust account. Our sponsor is not liable as to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. In the event that we liquidate and it is subsequently determined
that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for
claims made by creditors.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within the completion window may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to
ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within the completion window, is not considered a liquidating distribution under
Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidating distribution. If we are unable to complete our initial business combination within the completion window, we will: (1)
cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including interest (net of permitted withdrawals 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), subject to applicable law; and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend
to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we are complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that
will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
ten years. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement,
we have sought and will continue to seek to have all vendors, service providers (other than our independent registered public accounting
firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account.
As
a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that
would result in any liability extending to the trust account is remote.
Further,
our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below: (1) $10.00
per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in value of the trust assets, in each case net of permitted withdrawals and
will not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our Board may be
viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons. Please see “Risk Factors — 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 may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our Board and us to claims of punitive
damages.”
Our
public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares
if we do not complete our initial business combination within the completion window or if they redeem their respective shares for cash
upon the completion of the initial business combination. In no other circumstances will a stockholder have any right or interest of any
kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with our initial business combination alone will not result in a stockholder’s redeeming its shares to us
for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public offering
that applies to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended and
restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public
shares in complete our initial business combination within the completion window or with respect to any other material provisions relating
to the rights of holders of our Class A Common Stock or pre-initial business combination business activity, we will provide public stockholders
with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders, officers and directors
have agreed to waive any redemption rights with respect to any founder shares and any public shares held by them in connection with the
completion of our initial business combination. Specifically, our amended and restated certificate of incorporation provides, among other
things, that:
|
● |
prior
to the consummation of our initial business combination, we shall either: (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or
against, or abstain from voting on, the proposed business combination, into their pro rata share of the aggregate amount on deposit
in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net
of permitted withdrawals); or (2) provide our public stockholders with the opportunity to tender their shares to us by means of a
tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount
on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including
interest (net of permitted withdrawals), in each case subject to the limitations described herein; |
|
● |
we will
consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and,
solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business
combination at a duly held stockholders meeting; |
|
● |
if our
initial business combination is not consummated within the completion window, then our existence will terminate and we will distribute
all amounts in the trust account; and |
|
● |
prior
to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to
(1) receive funds from the trust account or (2) vote on any initial business combination. |
These
provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval in
connection with our initial business combination, our amended and restated certificate of incorporation provides that, unless otherwise
required by applicable law or stock exchange rules, we may consummate our initial business combination only if approved by a majority
of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we have encountered and may continue to
encounter intense competition from other entities having a business objective similar to ours, including other blank check companies,
private equity groups and leveraged buyout funds, 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 is 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.
Sponsor
Indemnity
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, in each case, net of permitted withdrawals, except as to any claims by a third party
that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. We have not 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 and, therefore, our sponsor may not be able to satisfy
those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would
be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because
we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any
right, title, interest or claim of any kind in or to monies held in the trust account.
Employees
We
currently have three officers and do not intend to have any full-time employees prior to the completion of our initial business combination.
Members of our management team are not obligated to devote any specific number of hours to our matters but they devote as much of their
time as they deem necessary to our affairs and intend to continue doing so until we have completed our initial business combination.
The amount of time that any such person devotes in any time period to our company may vary based on whether a target business has been
selected for our initial business combination and the current stage of the business combination process.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and we have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, this Report
contains financial statements audited and reported on by our independent registered public accounting firm.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. These financial statements may
be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial
statements may be required to be audited in accordance with the Public Company Accounting Oversight Board (“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 financial statements in accordance with federal proxy rules and
complete our initial business combination within the completion window. We cannot assure you that any particular target business identified
by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that the potential
target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that
these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential
business combination candidates, we do not believe that this limitation will be material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company
will we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions of
the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following July 20, 2026, (b) in
which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s
second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year
period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.